Purchasing a cheap, older condo in South Florida might seem like an attractive deal, especially given the region’s popularity and desirable weather. Buyers should tread cautiously, as the real cost of these seemingly budget-friendly units can skyrocket due to unforeseen expenses and ongoing maintenance issues.
Older condos, especially those built more than 30 years ago, are increasingly subject to Florida’s stringent safety regulations. After the tragic collapse of the Champlain Towers South in 2021, which killed 98 people, Florida enacted the Condo Safety Act. This law mandates that older buildings undergo regular structural inspections and complete necessary repairs swiftly. If these inspections reveal significant structural deterioration, condo associations are required to carry out repairs—often passing hefty bills onto owners.
Condo buildings are also facing substantial assessments. For example, at Surfside Club South in Ormond Beach, each property owner was billed over $100,000 for repairs. Similarly, owners in other developments, such as the Cricket Club in Biscayne Bay, have faced assessments as high as $134,000. These unexpected expenses can leave new buyers in a financial bind.
Another financial burden comes from soaring insurance premiums. With increasing hurricane risks and other weather-related disasters, insurance for older buildings has surged, leading to even higher monthly costs for owners. Additionally, many older condos are dealing with deferred maintenance issues that result in years of construction work and noise.
The situation becomes more precarious when owners can’t pay these assessments upfront. Condo boards often refuse to approve sales unless the buyer covers these fees, making it difficult for both sellers and prospective buyers.
The financial strain on owners is compounded by the fact that the value of older condos has been plummeting. From January to August 2023, the value of condos over 30 years old dropped by 21%, while newer units increased in value by 9%. Despite the lower prices, fewer than 1% of these older units are selling, while over 90% of newer condos are being snapped up. This stark contrast reflects a deepening divide in the market, making it harder for buyers of older units to see a return on their investment.
While the situation looks grim, there are some discussions around possible solutions. Florida Governor Ron DeSantis has hinted at potential no-interest loans to help condo owners meet repair and maintenance costs. However, even with such financial assistance, the long-term outlook for many older condo buildings remains uncertain.
Older condo in South Florida may initially seem like a smart investment, the hidden costs associated with maintenance, safety regulations, and insurance can make it a risky and expensive mistake. Prospective buyers should conduct thorough research and consider these potential costs before committing to a purchase.
