Emerald Coast Real Estate

The Real Estate Environment in Destin may have changed in the past few years but a few things are the same.  In particular, buyer’s are still looking for the “hot” deals.  In 2003 and 2004 pre-construction condos were the rage.

In those days, the phones literally rang off the hook for people looking for pre-construction properties.  Many buyer’s didn’t care about the condo layout, project amenities, location, costs of ownership or anything else.  They just wanted to know where to sign the contract and where to send the deposit.

Today, the phones are ringing off the hook for buyer’s looking for lists of foreclosures and short sales in Destin and the surrounding area.  In both cases, the bank or mortgage holder is involved in the selling process.  Banks are one group of motivated seller and buyer’s can often get a great deal.

The fact is that the early buyer’s of pre-construction condos got in at the right time and made a lot of money.  Some short sale and foreclosure buyer’s will do the same thing.

The key for buyer’s though is that the most important characteristic of a good buy is not about the category that the sale falls in but in the true value that the property represents.  For example, many people that bought pre-construction in 2005 could have bought an existing property at the same time for 10-15% less than the pre-construction that they were looking at.  Because their friend, relative, or someone at a party said pre-construction was the way to go, they overlooked the best investments and made an uninformed decision.

The same pitfall exists today.  While foreclosures and short sales represent one group of motivated seller’s, they are not the only group.  Other motivated seller’s include:

1) Estate Sales
2) Couples Getting Divorces
3) Long term owner’s with low cost basis
4) Seller’s with unexpected illnesses

There are other groups that could be added to the list, but the point is this…..

DON’T GET CAUGHT UP CHASING THE LATEST CATCH PHRASE.  IF YOU WANT A GOOD DEAL, LOOK AT ALL OF THE MOTIVATED GROUPS, NOT JUST ONE.

I had a buyer in the office today inquiring about the cost of owning a condo.  I thought I’d share my answer with you because there are a few things that you should consider if you are thinking of buying a condo:

Maintenance:  the nice thing about owning a condo or townhome in Destin or along the Emerald Coast is that the Home Owner’s Association takes care of most of the maintenance to the structure of the building.  The rule of thumb is that if a repair is needed to the outside of your condo, common walls and balconies, the Home Owner’s Association will take care of it.  If the repair is needed inside your unit, it is your responsibility.

It certainly takes away from having to worry about a lot of repairs that most home owners are faced with like roof, water intrusion, etc.

You are limited though in what can be done to the outside of your property by the rules of the association.  So, if you’re thinking of doing something creative like changing a door or the type of windows that you have, you will need the review and permission of the association’s board first.

Rules & Regulations/CC&Rs:  mostly all condos and townhomes are governed by CC&Rs (Covenants, Conditions & Regulations) that have been created by the original developer of the complex and possibly modified by the board of directors over the years.  There is also a separate document for Rules & Regulations listing additional items to consider.

It is very important that you read both documents thoroughly prior to purchasing your condo or townhome to ensure that you are comfortable with the association’s pet policy, quiet hours, move in/move out process, etc.

Financial Documents/Meeting Minutes:  please review the balance sheets and budget of the association to ensure that it is in good financial shape.  You want to see a healthy amount of reserves for unanticipated repairs and for needed replacement items down the road.  If there are no reserves or the reserves are limited, you might face a special assessment.  Special assessments can be levied and add to the cost of ownership if the association is unable to pay for needed expenses.

I also recommend that you review a full 12 months worth of meeting minutes.  This will give you a pretty good idea of the issues that have been encountered in the past and what is anticipated for the future.

Insurance:  most associations have structural insurance and in and around Destin most carry earthquake insurance.  Your Realtor will ask for the insurance certificate to see the limits and the type of coverage for a particular condo complex.  I always suggest buying additional insurance coverage for the interior of your condo or townhome.  This policy will cover your furniture, jewelry and liability.  Most insurance carriers will provide them and they are not overly expensive.

COSTS OF OWNING A CONDO/TOWNHOME:On top of the regular expenses like your mortgage, taxes (usually run about 1.2% of selling price in Destin),insurance and utilities, you will have to pay Home Owner Association (HOA)Dues. 

HOA dues are monthly fees that support the maintenance of the outside of the complex, gardening, pool & spa and other amenities, structure insurance, water (yeah!  most condo/townhome owners do NOT need to pay for water), and common area electrical and gas.

So… if you are thinking of buying a condo or townhome, make sure to add the HOA dues, set aside some funds for a possible unexpected special assessment and include funds for an interior insurance policy.

I get a lot of people asking about “the numbers” and how they work for condominiums.  Specifically, people want to know about taxes, insurance, association fees, and other monetary costs associated with a condominium.  I had such a request today and will share with you the work up that I done.  The unit that I used for the analysis was Emerald Towers Unit 306 in Destin.  This particular unit has 3 bedrooms, is located on the sixth floor, and feautes over 1700 square feet of living space.  View the complete details here:  Emerald Towers 606

The complete expense analysis is quite complicated and will depend on many different factors.  Depending on your personal financial situation, there can be significant tax advantages including; depreciation, property tax, property expense, and interest reductions.  These factors can greatly reduce the after tax cost of ownership.  Combine these benefits with the long term appreciation enjoyed with real estate and you can see why so many people have to have a place on the beach.