Hot market a few years ago marked the era of condo conversions. Apartment complexes were converted to condos at an astounding pace and offers were getting more and more enticing. First discounts, then offers of first year maintenance fee paid by developer, other incentives...
Daytona Beach, overshadowed by Orlando with its billions in conversion sales, had a much slower pace, and the conversion of another riverfront small complex was nothing out of the ordinary. I remember the signs offering the ownership with, I think, $900. Just bring a check and it's yours. Hurry up, grab it. Proud ownership for sale cheap.
Better deal than rent. To rent you need first month plus security, and often last month rent, so you have to bring more cash than to buy. The mortgage plus maintenance fee was higher than they would have to pay in rental places, so when the market started softening, the rents in the area were getting more and more affordable, and there came the moment when they were paying too much for these condos. With falling values, they were not worth the balance of their loans. There is nothing to hold them.
Would you be surprised that many of the owners stopped making payments both to the Lender and to the Association? Soon the management could not pay for utilities, insurance, or anything else needed to keep it operating. Of course, the Association can force a foreclosure, but they are not in the first position. To do so they would have to buy out the Lender. But these units are not worth what's on the books. So management could only put liens on the units.
Out of 80 units only 8 are still paying maintenance fee. 32 units, according to the manager, are in either short sale or foreclosure. It does not sum up. Well, if only 8 are paying their maintenance fee, and 32 are dropping the units one way or the other, this means that there are another 40 owners, who have not yet received the Notice of Default, that's all. The units that the lender gets, can only be sold for cash, as there is not insurance. The association is 6 months behind with payments, so there is no financing. But without insurance, who are you going to sell it? Wonder why there was a direct riverfront unit, 2 bdr/2 bath for $27,500? Do you want to risk even $27,500?
It is difficult to predict how this will end. Nothing encouraging. And it all started with a terrific idea to make home owneship affordable. So easy to get, so easy to lose.
Jon Zolsky, your Daytona Beach connection