Pay Now, Regret Later? Miami Condo Owners Face Special Assessment Anxiety
In this latest issue of the Miami Condo Market Intelligence Report™, we examine the tough choice facing Miami condo owners: pay special assessments or sell before 2025.
Volume 2024, Issue 33 (Subscribe here)
This week’s Miami Condo Market Intelligence Report™ newsletter examines the pros and cons for unit owners of paying special assessments versus selling in the leadup to Florida’s 2025 Condo Association Financial Cliff.
In our effort to game out the two scenarios, we interviewed Andy “Daro” Rotondaro, a Realtor® with The Daro Team at Compass real estate and a North Bay Village Commissioner, for the second episode of our new podcast series entitled “Special Report: Florida’s 2025 Condo Association Financial Cliff.”
Rotondaro was a perfect guest at this moment as he has worked as a real estate agent with condo buyers and sellers for a decade in South Florida.
As an elected official, he is responsible for protecting legislatively his island community located in Biscayne Bay between Miami and Miami Beach.
Added to that, Rotondaro owns a pair of units in a vintage condo tower in North Bay Village that was built in 1969 and is facing $50,000 in special assessments.
This fee is even before his association receives the final results from a Structural Integrity Report Study (SIRS) that is currently underway.
In the aftermath of the June 24, 2021 collapse of the Champlain Towers South in the town of Surfside on the barrier island of Miami-Dade County, everyone from residents to building inspectors, politicians to bankers understand better than ever the importance of ensuring that no Florida condo building ever unintentionally collapses again.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida Legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until now, the state’s measures were being implemented slowly but that all changes in 2025 when many of the measures take effect.
Beginning in January, condo associations in Florida are required to start collecting money from increasingly cash-strapped unit owners to place into reserve accounts that will be used exclusively to fix, maintain and improve the structural integrity of residential buildings that are at least three-stories tall.
People are dubbing this moment as the 2025 Condo Association Financial Cliff as it is expected to result in significantly higher costs for unit owners. News reports are already chronicling condo owners selling their units at deep discounts ahead of 2025.
It is worth noting, the newly released “2024 High-Rise Edition” of the “Benchmark: The Guide To Residential Association Operating Costs And Budgets” report provided valuable insight in condo maintenance fees in Miami-Dade County compared to 14 other markets in North America.
In reviewing the FirstService Residential report, we found that Miami-Dade County highrise condo towers are paying monthly maintenance fees of far more than $1 per square foot on average.
As expensive as that sounds, the report spells out that only a small percentage of the monthly maintenance fees today are earmarked for the soon-to-be mandatory reserves.
This data point is leading some industry watchers to predict that maintenance fees will likely surge for condo associations that are currently working to finalize their 2025 operating budgets.
Financial institutions such as U.S. Century Bank in Miami are willing to finance the necessary repairs over a period of time that can range from a few years to as long as 12 years in certain circumstances, according to a new report.
The interest rates on special assessment loans are typically on par with the rates being charged for mortgages on residential properties.
For special assessment loans, banks usually enter into agreements with the respective condo associations, not individual unit owners.
The loans are secured by an association’s right to lien units in the future, if necessary, in order for the banks to be repaid.
It is against this backdrop that we interviewed Rotondaro to explore various aspects of the 2025 Condo Association Financial Cliff.
Our first story this week focuses on our one-hour podcast with Rotondaro where we discuss special assessments, insurance, terminations and the outlook for condo prices.
In the second story, we put together an informal case study based on Rotondaro’s situation to flush out the challenges of owning a vintage condo in Miami before the 2025 deadline.
For the third story, we examine the key points of the September 2024 Monthly Meeting of the Miami Condo Market Investing Club™.
For the fourth story, we provide a series of charts analyzing condo association maintenance fees in Miami compared to other North American markets.
It is a lot of information but we are confident our reports will assist you to better understand current market conditions in South Florida.
It is worth noting that we are sharing a portion of our research for free with subscribers to our newsletter and readers of CondoVultures.com.
If you want access to all of our published information and charts, we would encourage you to join the newly launched Miami Condo Market Investing Club™.
The objective of the Club is to create a community that shares realtime, actionable information on the latest real estate trends, opportunities and service providers in South Florida.
The Club is ideally suited for Do-It-Yourself (DIY) condo buyers who can rely on our latest statistics, expert opinions and access to consulting services.
Additionally, we encourage you to listen or view our podcast wherever you get podcasts. The podcast is available on Apple, Spotify and/or YouTube.
As a reminder, we are always available for consulting, expert witness work and buyside brokerage services just as we have been since 2006.
If you are seeking information on condo resales in South Florida, please visit CondoVulturesRealty.com or call the office at 305.865.5859.
— Peter Zalewski, Founder of the Miami Condo Market Investing Club™
Story 1
Pay Up Or Cash Out? Navigating Condo Special Assessments In South Florida
Andy "Daro" Rotondaro, a Realtor® and North Bay Village Commissioner, discusses strategies for owners facing huge Florida condo association special assessments.
Story 2
Case Study: Special Assessment Challenges In Miami's Vintage Condo Market
Andy "Daro" Rotondaro, a Realtor® and North Bay Village Commissioner, explains why he is paying $50,000 in condo special assessments instead of selling his two units.
Story 3
Watch: Expert Peter Zalewski Analyzes Miami Condo Maintenance Fees
This a 60-minute video of the September 2024 Monthly Meeting of the Miami Condo Market Investing Club™.
Story 4
Miami Condo Maintenance Fees By The Numbers From September Meeting
These are the supplemental condo association maintenance fee charts for the September Monthly Meeting of the Miami Condo Market Investing Club™.
This information is believed to be accurate and complete but cannot be guaranteed or warranted.
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