Purchasing an oceanfront condominium for full time residency or investment property should not be done on a whim. The financial considerations should be studied and weighed before making such a purchase. Each party has its obligations.
For you, can you afford the monthly maintenance fees without stressing your wallet in the event your rentals are on the slow side? Can you afford a condo facelift every five years or so to freshen up your place to make it a desirable unit?
For the condominium, do you have sufficient insurance coverage in place in the event of a catastrophic event, such as a hurricane? Does the condominium have adequate reserves to repair roofs, pave parking lots and paint the buildings when it’s needed?
Here are 5 tips to purchasing an ocean front condominium.
Does the condominium association have sufficient reserves for painting, roofing and paving?If you don’t understand the amounts you’ve received, ask an accountant to explain it to you and ask if the condominium has sufficient or close to sufficient funding to cover these reserves. If not, you the owner, will be asked to pay a special assessment to cover these items.
Is everything well maintained and kept up?High short term rental activity in the summer is a constant maintenance headache. If the outward appearance feels rundown then it probably is run down and not a well maintained area.
How old are the buildings?Older concrete buildings on the ocean will show evidence of spalling (erosion of the rebar support system embedded in the concrete supports). Spalling if not addressed quickly can be a costly to repair. Look for chunks of concrete missing in horizontal and vertical concrete supports with exposed rusted rebar.
Does the association board of directors or Management Company provide their financial information to prospective buyers freely or was it a fight to get it?While condominium boards may not want to hand out their information, to make an educated decision about your purchase you must know and understand the financial condition of the association. If they don’t give their financial information then they could be hiding something.
If you’re purchasing for rental property, what are the rental conditions?One of the biggest battles is between on site owners and rental property owners. One condominium board of directors voted to only allow seven night minimum rentals which created a three year legal battle. If you plan to place your condo on the rental market, be very clear about the rental requirements.
Understanding the financial impact of condominium ownership will go a long way to making a smart purchase. By having a grasp of how condominiums operate, you can shop the market until you find the group that meets all of the criteria. To research Rehoboth Beach condominiums, contact us today.