Condo in South Florida - advice?

In My Humble Opinion
1

So the in-laws (mid-to-late 70s), through a lifelong series of bad choices compounded by some bad luck, are about to be foreclosed on and will need to move. Their only income is Social Security, and in their county (Palm Beach) this just gets them under the wire for some senior-priced apartments.

BUT - condos down there are stupid cheap - like a 2 BR for 45K. Not as nice as the place they currently live, but a better choice than they could afford rent on, and a better choice for many reasons than having them come live with us (mid-Atlantic) or their daughter (NYC metro). I actually saw some LARGE condos selling for less than 10,000 dollars, not sure what THAT’s about. I assume there’s something Very Scary about them.

We can come up with that down payment - it’ll mean selling a little stock, but we could do it and still be in-budget for what I’d figured we can do w/o jeopardizing the kids’ college funds. The monthly payment would then be 300ish (taxes and mortgage) which they could afford, the HOA fee puts it out of their price range but we could chip in on that (and the siblings could chip in a little also). We’re literally the only ones in the family who could qualify for the loan, as well.

The places they’re looking at: one is supposedly partly in a hurricane evacuation zone but not the whole place. What kind of questions should we be asking about that?

We’d be looking at a 55+ community. We are not quite old enough to purchase such a place (though we’re close), and I’d be strongly inclined to insist on the place being in our name either fully or as co-owners. Pitfalls of that approach? We’d want to make sure the place was safe from judgments against the in-laws (they filed bankruptcy last year and have no assets at all); would having them as co-owners be an issue?

What logistical / tax / financial issues aren’t we thinking of? I suppose we could qualify to deduct the mortgage interest (though if the in-laws are paying the mortgage that seems wrong); should we try to treat it as a rental property?

This is in Palm Beach County (Boynton / Delray / Fort Worth etc.) if anyone knows the general area. Any thoughts on what the real estate market is projected to be doing over the next few years? I don’t mind going in with the assumption that we’d be paying the down payment and eventually have to let it go and lose that money, I just don’t want to be stuck with having to basically pay money to unload the place when the time comes.

As a side note: one of the reasons I want them to be paying the mortgage themselves (directly to the bank), even if it’s in our name, is the experience of a family member. Her parents were living in a condo owned by her sister and the sister’s husband. They were paying the sister/husband rent - and the sister/husband quit paying the mortgage. Basically stealing money from their parents - who were evicted of course when it foreclosed. Nice people - NOT. The husband passed away not long after that, and my only reaction was “Good”.

And the self-absorbed whine: We’re literally the only ones in the family who’ve never filed for bankruptcy. In one case it was after a disastrous string of ill-health. In the others it was after strings of bad decisions. So yay - our prudence is rewarded by costing us money. /self-absorbed whine.

2

Difficult question, hope you take it in the manner I intend, which is supportive. As background, my mother lived in a condo in Broward (next county south of your scenario) until she was no longer able to live on her own. So, the question –

How long do you project they – or either of them individually – will be able to live on their own? Mid to late 70s isn’t necessarily old, but some people decline more rapidly than others. Will they be able to occupy this place and take care of themselves long enough to make it economically realistic? You know, you have to amortize the closing costs as well as the actual monthly payments, and (as you apparently recognize) be mindful of eventual resale value. You may also note that older folks living with – uhh, shallow financial resources :wink: and possibly declining health may not perform upkeep in a manner that will support resale at top value. And how do you plan to help them when even making meals becomes difficult for them?

There are other “buy-in” options you might look into. I’m not sure what each may call itself. Perhaps “staged living” or “phased living” developments. I have a close friend whose parents “bought into” one such. Initially, they were ambulatory and self-sustaining, and they owned what was for all intents and purposes a condo apartment. Later, as he declined, they moved to an assisted living apartment. He passed away soon after, and she remained in assisted living, but the further option is a full nursing care facility. I was told that eventually the originally purchased apartment will be salable to a successor occupant. Since you and the family are taking this on as your answer to ongoing care for the inlaws, an option like this may be useful and longer-term than purchase of a regular condo.

3

Be VERY careful when looking at the financials/reserves of the building. In recent years there have been a lot of problems in FL when a large proportion of the units go into foreclosure, and the remaining owners who are still solvent end up being on the hook for money needed for basic building maintenance, etc. Even if many owners aren’t paying their assessments, the building still needs cash to function. The parents of a dear childhood friend of mine are currently finding this out the hard way a few miles south of the area you’re talking about…

4

My main concern about a place like that is the financial health of the condo association as well as the current state of the buildings and grounds. Look at their books. Are many owners in default on their maintenance fees? What is Florida law regarding the payment of those fees when the bank forecloses a unit? (Some states require the bank to pay, some don’t). Does the association have sufficient capital reserve? If it doesn’t, the bank may not give you a mortgage on the place and you won’t find out until you apply. One of the reasons these prices are often low is that banks have stopped giving mortgages for them. They are priced for cash sales. Save yourself trouble and money by finding out if mortgages have been granted recently and which banks have granted them.

My only other question would be about mobility. Are any services available nearby? Could your parents survive without a car? Perhaps a golf cart?

5

How about renting?

6

Rents are actually higher than we’d be paying in condo fees and mortgages for the 55+ communities they’re interested in, which is bizarre (but 55+ condos are really low-priced now). They looked at some senior subsidized apartments that were at least 100 more, for less space.

Very good questions. The two developments they’re looking at both have transit - the one has its own shuttle of sorts, the other doesn’t (but there’s some kind of county van). Supposedly the places are OK financially - but what kinds of steps would we need to go through to check this out? I mean, I assume it’s not as simple as walking into the management office and asking “do you have enough cash squirreled away?”.

I know that some (but not all) units in one (or both) of the complexes flooded during some hurricane or other. That’s a concern - both in terms of making sure their place isn’t one of them, and in terms of the association needing to pony up for repairs and/or exorbitant insurance.

CannyDan, you raise good points as well. With a condo, at least the exterior is taken care of by the association, and they’ve been managing well enough with the interior of their current place. Neither is in the best of health; MIL has multiple myeloma (currently stable after a year of misery-making treatment), she also has had one hip replacement and needs the other one done, so her mobility is very poor. FIL has… Type 2 diabetes, a bad back, a pacemaker, frighteningly bad eyesight (somehow corrected enough to be legal to drive), glaucoma, kidney damage (due to diabetes), and what is almost certainly a classic case of sleep apnea (I must assume they have never told his doctor about the snoring - you can hear the man a block away). And at about 5’5" tall, he’s finally down to 230 pounds in weight.

But, 3 of their 4 parents lived to their late 80s and were generally in good shape until near the end, so… But it is a very real concern.

Trouble with the retirement step-up places is their required deposits tend to be large, on top of the monthly rent or whatever. None of us has that kind of cash.

One real worry for when they do decline enough to not be able to manage: there is no money for any kind of care. This, I gather, means relegating them to a Medicaid-funded nursing home which sounds horrible. I hope it doesn’t come to that - a swift final decline is better than lingering in such a warehouse.

7

How active do they want to be, and are there activities/clubs/theaters/etc available? My parents live in one of the Kings Point developments in Broward, one county south of Palm Beach. They have a huge club house with just about everything available…and a regular bus system that stops at all the buildings, plus local shopping. They paid for the condo, but I did all the leg work finding them the place, and did all the paperwork before they ever saw it. Talk about a nerve-wracking experience!

I don’t know the places in Palm Beach too well, but…well, I do have retired parents who might. If you want to drop me a PM with any specifics, I’d be happy to ask them if they know anything useful. Depending on where the places are, I might be able to do a drive by, even. I find myself in the northern part of the county periodically anyway, so it might not be too much out of the way.

8

There is no such thing as “a condo” beyond legal definition.

There is simply too many, many variables and they can change rapidly.

Southern FL real estate is dominated by one thing, more so than about anywhere else - human mortality. There is heavy turn-over due to death of owner.
Add that variable to the already volatile mix of a condo - HOA vs Owners, owner occupied or rental (a HUGE difference - dues are set by the owners, not the tenants - and absentee landlords are not noted for raising their expenses), what is common and up to the HOA to pay for, deferred maintenance etc., and you have something to worry about.

Investigate thoroughly - the bigger the grounds, the higher the dues have to be. Clubhouses need maid service, pools require service, grounds need mowing.

I would walk into the office, cold, say “I’m looking to buy a unit here - can I see your books?”. Just their reaction would be of interest - if they offer you a seat and start bringing up their budgets, A/R, etc. vs “just as soon as you get a court order”.

9

I’m sorry to say it, but their health issues are substantial. While they might both live independently for years and years, the odds of that happening are small. That being the case, I think (just my humble opinion) that buying a condo and expecting them to just live in it is unrealistic. The pressure to maintain their independence, great enough for anyone growing older, will be even more intense for them, knowing that the whole family has chipped in and set them up.

My own mother continued to insist that “I’m doing just fine!” far past the point of safety, while my siblings and I were happy enough to let her convince us. “You sure you’re OK Mom? You eating good food? Doing your laundry? Bathing? Taking your meds?” “Oh sure, I get around fine! I eat like a pig!” Finally she fell in the shower and spent 2 days unable to get up or reach her “button”. After that, we talked her into an assisted living facility. Later, after the painful transition and accepting the reality of her lack of independence, she thanked us.

It sounds like your in-laws have medical problems that require constant and diligent attention. The difficulties of living alone (shopping, cooking, bathing, cleaning, etc.) will be exacerbated by their health problems. They are likely to become overwhelmed, skip meals, skip medical appointments, and generally spiral downward. That’s the danger of total independence. Or they could trade some of that independence for some amount of help. That would, I think, be a benefit to them.

Finally, since something like this is inevitable, and likely sooner rather than later, it makes sense to give it really serious consideration, even persuasion, now. If they transition into an independent condo now, then have trouble, they will feel themselves to be failures. No point in inflicting that upon them, and having to also impose another transition at that sad point. They’re moving now. So now is the time to seek more than just a temporary situation for them. IMHO.

10

One idea which you can do at home:

Get the zip codes of the places and plug them into Zillow - get current and historical prices - as well as Zillow’s estimate of current value (which may or may not be accurate).

Don’t know how Zillow reports on past foreclosures - it will start flagging a property when the Notice of Default is filed (at least my guess).
Find out how many of the units are/have been in foreclosure.

Talk to local agents - see what they know of the histories of the properties of interest. If they are getting 5 calls a day from people wanting to sell a unit it the place, well…

11

Probably Chinese drywall.