How Much Do You Spend On Your Car?
You did not have to do anything in 5 years? Didn't even change the oil? Great car. I am buying it.
Funny, isn't it?
But people spend way more money on a condo-hotel than on a 20 –year old car just because there were no oil change Special Assessments.
I got a call from the agent today and she was asking about Fountain Beach Resort, which is an oceanfront condo-hotel in the heart of Daytona's Beachside.
She wanted to know how many Special assessments and for how much were in the Fountain Beach Resort in the past 5 years.
I am getting these calls all the time. This is yet another guru, who will BS her client about the assessment. It is simple logic.
No assessments - good. Assessments - bad. Even in the past, because thinking about it ... donna wanna...
Let me clarify the concept of assessments for condo-hotels. Basically, Special Assessments happen when there is an expense, that was not budgeted and for which there either no or not enough insurance money.
Example: the city tells you to bring electric to code, and it will cost $150K, and this was not an item in the reserves (which may or may not even be in the resort), so the work is done and every owner is assessed his/her fair share.
That's how in general it works. Every reasonable person should understand that Special Assessments are part of condo ownership, and Special Assessment may happen and WILL happen at one point or another.
There are three instances (at a glance) when it happens. One, physical condition of the building. There is a problem, and it has to be taken care of. Unpleasant, but you usually at least know that it is coming. It is not a bolt from the blue.
Another instance is when a person in wheelchair got stuck in your restroom, which does not exactly conform to ADA requirements, and s/he is suing the association. Not conforming to ADA is not covered by the insurance, the Association needs to hire an attorney, and pay the Settlement or judgment, so they will have to assess everybody and make them pay their fair share.
Then, there may be a situation, when condo owners lose their jobs, and stop paying their Association dues (also called «assessment» but do not confuse it with Special Assessment). If the resort has more than just a couple of these guys/gals, you now don't have enough money to pay for the utilities and services, and have to assess those who pay, to cover the gap.
So, how about the assessments for the last 5 years? What is the value of this information?
None, zero, zilch, nada...
I could understand if the question was about what has been done to the property in the past 5 years.
Let's say, new roof, new 220 electric, and now the resort is up to code; balconies fixed (concrete work and then sealed), which will extend their useful life for another 15 years, etc.
At least this gives useful information. But knowing that there were 3 or 5 or 7 (just throwing the number) assessments, without knowing what has been done, is useless piece of information.
But my dear local agents derive something from nothing. For them if there were no assessments, means that it is a good buy. And if there were many assessments, it is a bad buy.
Well, it very well can be the opposite.
You haven't been sick for the last 5 years? Oh, this means that you are in great physical shape and you are not going to get sick ever...
But this is the logic used by many real estate agents. Do they ever change oil in their cars?
If you are looking for an alternative to vacation condos, condo-hotels can be for you. To know whether they are just call me 386-405-4408.