Florida is currently undergoing the worst condo crisis in history.

But the silver lining is that it has become a buyer’s market — if you arm yourself with knowledge of what to look for first.

Buyers seeking a getaway or an investment property during the pandemic frequently proceeded without caution, often failing to view a building in person or research its background.

This meant that many got stuck in undesirable neighborhoods or developments they didn’t want to live in and ended up selling at a loss or not at all.

In the four years following the Surfside residential building collapse, which resulted in 98 fatalities, the condo industry has experienced a challenging transformation.

It has turned into a mix of skyrocketing insurance premiums, intricate inspection reports, unexpected expenses, and a surge of inventory deluging the market. Essentially, Florida homeowners have lost hope of selling unwanted properties. 

Still, experts advise to buy if you can as prices plummet — but you must do your research first. 

Here’s what experts say you need to know before you even consider buying a condo in the current housing market in Florida.

Find out what your insurance access and cost will be

First, check if insurance is even available.

While the condos themselves may be affordable, the Florida homeowners insurance market has been in crisis, with companies leaving the state, going out of business, or choosing not to renew policies in high-risk areas.

Insurance companies that have left Florida or reduced coverage in the state include Farmers, Progressive, and AAA.

If insurance is available, make sure you find out the monthly and yearly cost and what exactly it covers. Also research natural disasters, hurricanes and flooding in the areas you’re looking.

Make sure you also double check the building’s past insurance rates as they can be sky-high, especially in older or coastal buildings.

‘With increased pressure on condominium board members and unit owners it is important to speak with the association and understand how the cost of a building’s structural repairs will be passed down,’ said South Florida based insurance attorney Gina Clausen Lozier.

‘It is also prudent to speak with an insurance agent regarding your special assessment coverage.’

Special assessments are extra fees your HOA board may charge you under certain conditions. The board usually levies these costs only in emergencies, such as unexpected disasters or damages due to storms.

Investigate an HOA’s financial health

Review if the HOA has enough reserves to cover repairs.

Avoid buildings with underfunded HOAs or looming special assessments. Go for a newer build if you can, but if considering an older building ask to see recent budgets. 

If the HOA board refuses to co-operate, walk away.

‘In today’s market, buyers need to prioritize newer construction or fully updated buildings with strong reserves,’ Ruthie and Ethan Assouline, a team at Douglas Elliman in Florida, told the Daily Mail.

Following the Surfside collapse in 2021, some HOA boards woke up to the fact that they needed serious change and took the proper steps to get up to code, said lawyer David Podein. 

But many others did not, explained the equity partner and chair of the real estate and transactional law group at Miami-based firm Haber Law. 

‘Some buildings are doing the necessary work. They’re going out and doing special assessments and they’re financing those special assessments with loans that allow the unit owners to repay the fund over a longer period of time,’ he said.

‘Others are not.’

Building condition and reserves

Request inspection reports and check for deferred maintenance, violations, or costly repair needs.

Older can be better — but only if the building has been well maintained and has healthy reserves.

‘Always ask about the building’s 40-year recertification and inspection history,’ the Assouline team told the Daily Mail.

‘Look for location, privacy, views, and something that matches your preferred lifestyle.

‘Whether it’s a full move or just a pied-à-terre, you want something turnkey that holds long-term value.’

Maintaining the structural integrity of buildings as they age is the reason behind Florida’s newer laws requiring structural inspections and structural reserve studies, said Lozier, the insurance attorney.

‘As a unit owner, this can be a worrisome process as the law requires the inspection of the building’s critical components. 

‘Not only can the inspections themselves come with a hefty price tag, but the necessary funds required for an association’s reserves can be passed to the owners through special assessments,’ she said. 

‘In some cases, a unit owner’s insurance policy will cover special assessments up to a certain amount if the special assessment is the result of a covered loss, such as a hurricane, fire or other catastrophic event.’

But she warned that a claim for the reimbursement of a special assessment associated with structural integrity reserve studies would likely be challenged by an insurer.

Hurricane and flood risk

First, know that every property in Florida is in a flood zone. It’s just a matter of whether it is in a low, moderate or high-risk flood zone, which you can find out with some quick research.

Know the particular building’s flood zone (this can be found on Zillow on the listing page) and past and current hurricane exposure.

Flood maps are also available through FEMA’s Flood Map Service Center and if you just plug in an address, it can help determine a property’s specific flood risk.

High natural disaster probability will drive up costs and can impact the building’s safety and value.

Community makeup

Location is extremely important, and this is especially true if you plan to buy a condo as an investment and want to rent it out. 

You are likely to get better rental income if your unit is in an area with essentials like good hospitals, schools, and public transport systems.

Buying a condo in an unsafe or noisy neighborhood can ruin the investment.

Be nosy.

Talk to residents in the development and neighborhood — they’ll tell you what it’s really like to live there day by day. 

Ask about noise levels, clean up, maintenance and what the neighbors are like. 

Get yourself a great broker 

‘Working with a broker who understands the nuances of the markets and can help you identify the most suitable location and available properties in that area is essential,’ the Assouline team at Douglas Elliman advised. 

Ask around for the brokers who know the area best, including which HOA boards are shady and which are transparent.

Multiple Miami condo associations have filed for bankruptcy, buried under tens of millions in debt due to bad HOA boards.  

When an HOA collapses, the impact on residents is immediate and painful. Pools, gyms, and other shared amenities are shut down, landscaping is neglected, and basic maintenance stalls, leaving condos unsellable. 

Find out if you can rent it

You can rent out a condo you own and make extra income, but many HOA boards prevent owners from renting outside immediate family. Make sure you know the rules before you buy.

A condominium lets you build wealth through home equity. 

You can rent out a unit you own and enjoy tax write-offs. Condos are an excellent investment because their value appreciates over time. 

Ask yourself if the purchase falls under the five-year-rule

If the HOA fee is doable, you can land a reasonable insurance rate and you like the location, then see if you can check off the five-year-rule. 

Ask yourself if staying in the home for at least five years would be financially prudent to avoid a financial loss? Can you rent it out? Is the location good? Is it safe?

In the end, condo buyers typically spend less on maintenance and upkeep compared to those who own single-family homes, so often it’s worth it.