Beach condominiums can be a fabulous lifestyle investment whether you’re an owner occupier or someone seeking a consistent home away from home to lay your holiday hat. However, buying a beach condo in California isn’t necessarily a straightforward affair. A labyrinth of legalities, fees and “in-house” rules must be cautiously examined and weighed prior to signing on the dotted line. This means condo buyers have to ask the right questions (a lot of them) to be sure that Californian condo dream is a good investment decision, not a nightmare.
One of the perks of owning a condo is that its management services can liberate owners from many of the chores and maintenance typically associated with owning a property – in common areas, anyway. However, these services command regular monthly fees that can escalate depending on the facilities provided and level of maintenance required. For instance, condo communities with pools and fitness centers are likely to cost more than those without such amenities. Condo owners are also responsible for property tax, insurance and additional unit maintenance costs that don’t fall under the responsibility of the management.
Examine the Homeowner Association’s Finances
Look into the financial status of the homeowners association (HOA) to ensure it is not in debt and has sufficient financial reserves to accommodate emergency repairs and general maintenance. Ask to see recent financial statements and inquire about any major anticipated expenditures that could drive up fees or hinder the residents’ lifestyle (in the event of construction or significant maintenance, for instance). If the place is about to have the roof or elevator replaced, you’ll want to know about it ahead of time. Fees can go up periodically, so analyze the HOA’s history in this regard. Find out when the last three monthly dues were increased and by what percentage.
Analyze HOA Insurance Coverage
To what extent does the HOA maintain insurance? Given that the beach condo is in California, Is the building or development protected against water damage and earthquakes? If not, in the event of a natural disaster, neither reconstruction of your unit nor the building itself will be covered. Make absolutely sure the complex is adequately protected for the sake of obtaining both financing and peace of mind.
Review Covenants, Conditions, Restrictions (CC&Rs) and Rules
Closely examine any CC&Rs that have been implemented by the condominium’s board. They can place a variety of restrictions on the use of your unit pertaining to the extent of interior updates, renting out the unit, accommodating pets and visitors, operating a home business and use of common areas. Know also that even if your condo is right on the beach, public rights-of-way and easements permit access to the beach for all below the high tide line.
Check the Condition of the Unit and the Building
Especially given the wear and tear of ocean breezes and salt spray, be sure that both the unit you hope to live in and the building as a whole are in good condition. This is not the time to skimp on a home inspection. Once you’ve moved in, there’s a limit to what you can do to improve a shoddy building.
Talk to Residents
Given condos are run like a community, you’ll essentially be a part of one while you’re there. Make sure you familiarize yourself with the community you’ll be buying into if you purchase a condo. If you’re a young professional, buying a condo that’s popular with the retirement crowd might not be an ideal fit – and vice versa.
Even more important, ask residents what it’s like to live there. Are they happy with the management company? They may quickly reveal whether they’re happy campers – or not. Also research the condo’s management company online. If it has a bad reputation, there’s more than likely a record of it. It is not always easy to dispose of a property that is located substantially outside of your usual residential location, so a hasty decision could result in unnecessary stress or significant loss.
Determine Finance Considerations
Lenders view condos as risky investments, and some have been known to reject condo loans altogether. Not only does the purchaser have to qualify, the condo association has to qualify, too. Banks and other lenders need to feel confident in the condo development’s financial viability. That essentially means low delinquency rates, reasonable fees and a high percentage of owner occupants.
The Bottom Line
Beach condos can make the dream of owning a vacation home an affordable reality for many, offering a low-maintenance residential lifestyle for owner occupiers. When considering a beach condo, a good starting point is to compile a list of appealing developments and check their approval status with your lender. The more research you undertake upfront, the safer your investment decision and the less likelihood of disappointment down the track.
It’s easy to get carried away with the romance of owning a beach condo, but just like any other investment, acquiring one should be treated as a business transaction. Seek a stable, established and well-managed condo community. Acquire a sound understanding of how the place is managed, inquire about its financial status and research the development’s history. These steps give you the best shot of ending up with a good investment and a serene and pleasant place to live.