What Is A Condominium?

The term condominium (or condo) is a legal term used in the United States and most provinces of Canada. “Condo” is often used, colloquially, in reference to apartments in managed communities, typically with communal swimming pools, club houses, landscaped gardens, etc.

However, the term is actually a form of home ownership whereby individual units in larger complexes are sold, as opposed to rented out, by owner of the whole complex. Therefore, condos can be renovated apartments, coach houses / town houses, or even commercial warehouses. The British equivalent of this type of tenure would be to own a share of the freehold.

What do I get when I buy a condo?

A dictionary definition of a condominium says: “an apartment, house, office building, or other multiple-unit complex, the units of which are individually owned, each owner receiving a recordable deed to the individual unit purchased, including the right to sell, mortgage, etc., that unit and sharing in joint ownership of any common ground, passageways, etc.; a unit in such a building.”

When you purchase a unit in a condo, you technically own everything from the walls inwards. All individual unit owners have shared rights to the communal areas (swimming pools, club houses, gymnasiums, gardens etc) and the maintenance of these areas becomes the responsibility of a condominium association.

What amenities can I expect from a condo community?

This condo management association is also known as a Home Owners Association (HOA). Its members are the unit owners and a board of directors is elected by the membership. Every unit owner also owns a share of interest in the condo association, plus an obligation to pay monthly fees towards the upkeep of the communal areas and general management of the community.

Condo communities are generally set within landscaped gardens and surrounded by nature reserves, with lakes and woodland etc. Typical condo community amenities include:

• Residents’ club house
• Business and media centres
• Swimming pool/s, often in a resort-style setting
• Gymnasiums, Jacuzzi hot tubs and spas
• Tennis and basketball courts, often floodlit
• Children’s playgrounds
• Picnic and BBQ areas
• Car care and laundry centres
• Gated security and on site, 24 hour, emergency maintenance

Depending upon the extent of the amenities, condo HOA fees can vary between $150 USD (c. £94 GBP) to $350 USD (c. £ 219 GBP) per month.

Who lives in condos?

Condo complexes of this type are ideal for renters who are happy to live in an active community, with close neighbours and a variety of resort-style amenities on their doorstep. Condo living is incredibly popular throughout Florida, particularly in areas of high employment for young professionals such as the Orlando-Kissimmee region.

Apartments are typically in blocks of two or three storeys and set around the swimming pool areas. They typically come with their own balconies or patios and provide optimum views of the gardens and nature reserve setting. Size wise, one bedroom / one bathroom apartments are generally around 700 sq ft, with two bedroom / two bathroom apartments coming in at around 1,000 sq ft.

What returns can I expect from my investment?

Condo tenants (who rent from the unit owner, as opposed to the complex owner or developer) typically pay $700 USD (c. £438 GBP) to $850 (c. £531 GBP) per month. Axis clients can purchase fully-refurbished and tenanted condo apartment investments for around $49,900 USD (c. £31,188 GBP). This gives you a typical 10% net rental yield, alongside projected capital appreciation of 100% - 300% in 3 to 5 years.

What’s a coach house / town house condo?

Coach house / town house condo communities are typically located in particularly affluent, desirable postcode areas such as Naples, on the Gulf coast of south-west Florida. The principle is the same, but the apartments are much larger (1,500 sq ft plus) and more opulent, as are the amenities.

Luxury, coach house condo investments offer a dual strategy. Firstly, they are performing property assets which provide positive cash flow from rental income. Secondly, they are perfectly placed as future holiday homes.

One such community is Bella Vita - a high-end, Mediterranean-styled community of 1744 sq ft plus, luxury residences. Selling for $500,000 USD (c. £312,500 GBP) plus at the peak of the US market, Axis clients can now purchase these coach house, condo investments for as little as $185,000 USD (c. £115,625). This is possible because you can purchase these units, in foreclosure, directly from the bank.

What returns can I expect from my investment?

Rents in this style of community are in a higher range, around $1,500 USD (c. £938 GBP) per month and the HOA fees are also in a slightly higher range of $390 USD (c. £244 GBP) per month. Axis clients purchasing in the Bella Vita community, however, enjoy the added benefit of having their first year’s HOA fees paid for by the bank – saving $4,680 USD (c. £2,925 GBP).

You can anticipate a lower yield in these high-end communities (around 5% net), but your potential profit and equity from capital growth is higher. For example, on a $185,000 USD (c. £115,625 GBP) property in Bella Vita, you can anticipate total profits of around $218,000 USD (c. £136,250 GBP) in just three years.

This example gives you a projected 110% return on your investment. Consider that the highest bank interest rates available today (June 2011) are around 3.50% per year and you can see how much greater a return this property investment delivers.

Ready to find out more about the benefits of investing in Florida condos?

View our currently available Florida investment properties and download the decision packs right away.

Call our US hotline today on 0333 444 1440 for a no obligation chat (calls charged at standard rate for both landlines and mobiles, so calls may be free with inclusive minutes depending upon your service provider and contract).

Alternatively, contact our US portfolio managers to discuss what investing in Florida property can do for you.

David Ball: +44(0)1273 447 307 or david@axiscontact.com

Russell Bonner: +44(0)1273 447 301 or russell@axiscontact.com

Live with Abundance

Rod Thomas FCA

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