Best Coast Association Management

22645 Canal Road, Suite D
Orange Beach, AL 36561
T: 251.923.4320






I've heard a lot about condominiums. What exactly is a condo, and why should I buy one?
A condominium can be defined as "The absolute ownership of a unit in a multi-unit building, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners." (Modern Real Estate Practice in Illinois, fourth edition, Galaty, Allaway and Kyle, authors. Copyright 2001 by Dearborn Financial Publishing, Inc.)

Condominium ownership has proven very popular because it is a great way to receive the benefits of home ownership, at about the price of market rent! Why waste another dollar with a landlord, when you can be building something of value for yourself? Did you know that at only $850 a month, you as a tenant will be giving your landlord $51,000 in a mere five years? Surely there is a better use of your hard-earned money! You have to live somewhere, but why live under a landlord's roof, where you're doing nothing other than paying his bills! Condo ownership can be the perfect stepping stone into something larger someday, such as a house, or a condo can be a great place to live as long as you wish. A condominium is property, which can even be passed along to loved ones or anyone else of your choosing.

In addition, communities as a whole typically benefit from condominium ownership. Why? Because the residents have a financial stake in the property, versus apartment dwellings.

What are the benefits of owning a condominium?
In condominium ownership, the owner has control, unlike an apartment setting. Want a full wall of artwork or family photos? Want border paper around the room? Want a vividly-colored wall and exotic carpet? It's all your choice as a condo owner. Other benefits include equity, which can build with each payment you make, unlike rent, in which you own nothing, even after years of payments. In addition, real estate traditionally appreciates over time. Another potential benefit, depending on the individual situation, is the tax advantage that may be realized by home ownership. Of course, be sure to check with an accountant or financial advisor for more information. OwnACondo.com is giving no tax advice.

How do I purchase a condo?
We're more than happy to accept your check for the total price, but most homebuyers make a down payment, obtain a loan from a lender, and then pay back the loan in monthly installments. The total amount loaned to the buyer is called a mortgage The monthly payments to the lender include principal and interest, and often also include an amount for property taxes and an amount for Private Mortgage Insurance, or PMI, which is discussed below. Once a month, a condo owner will make this payment to the lending institution, and the condo owner will also make an assessment payment to the condo association.

How do I obtain a mortgage?
Generally speaking, the first step is to get pre-qualified by a loan officer or other financing professional. We typically have a lender present at our open houses who is available to speak with visitors about basic information such as income, debt and the projected amount of the loan. There is never a charge or obligation for pre-qualification. Following pre-qualification, the loan officer will work with you on a more complete loan application, which will include more detailed information such as a credit report, employment history, etc. You're now on your way toward pre-approval and final approval for your loan!

How much do I have to put down, and what will my monthly payment be?
The greater the down payment, the less the monthly mortgage payment will be. The lenders we work with offer programs that feature down payments as low as 0% to qualified individuals. These lenders will review your credit report with you and even offer advice on how to correct inaccuracies and/or rectify problematic areas.

Who loans the money, and what will the interest rate be?
A lender can be a bank, mortgage company or anyone who is willing to make a loan, including a friend or family member. Since most condo buyers seek loans from financing professionals and not personal friends or family, we are pleased to be associated with lenders who work closely with us at our various projects and know our product. These professionals specialize in condominium financing. Of course, our clients are always welcome to seek the financial services of any lender of their choosing.

Interest rates are variable but can generally be described currently as among the lowest in decades. Low interest rates are attractive to buyers because they have to pay back less money in interest during the course of the loan. However, there is no guarantee that low interest rates will be with us forever. Acting now can lock in today's low rate for the entire life of the loan. This is a fantastic time to buy!

What about property taxes?
A condominium is a piece of property, and condominium owners pay property taxes. Like income taxes, most buyers prefer to pay property taxes a bit at a time, rather than at once, so lenders will include an amount for taxes in the payment you send in each month.

What's an assessment?
A condo assessment, sometimes called an association fee, is a dollar amount paid each month by the condominium owner to cover a proportional share of the common expenses of the property. These expenses can typically include, but are not limited to: gas; sewer; water, electricity for common areas; scavenger; lawn cutting; snow removal; hallway cleaning; insurance for common areas; professional management, parking lot maintenance; legal and audit fees; as well as short- and long-term replacement reserve. Be sure to consult the budget for any particular property to learn what is covered in the assessment for that property.

How is the assessment calculated?
Assessments are based on the annual estimated expenses for the property. The assessments are calculated by using what is known as the Percentage of Ownership of Common Elements. The Percentage of Ownership of Common Elements is based on the value of the individual units in relation to the value of the property as a whole, and the monthly assessment is proportioned in the same ratio as Percentage of Ownership of the Common Elements. Assessments are always subject to increase or decrease based on changes in budgeted expenses.

What's the reserve?
As time passes, the necessity arises for repair and/or replacement of items such as the roof, balconies, heating system and the like. Should the condo association wait until these issues actually arise, a large amount of money would have to be collected in a short amount of time from the condo owners, in the form of a "special assessment." Rather than wait until that time, it is typically more sensible for the association to save a bit of money every month from each condo owner's assessment fee and put it toward the reserve, where it can grow and earn interest until such time when it is needed.

Do I have to obtain my own insurance?
It is recommended that a condominium owner obtain insurance to cover any loss within his or her own condominium in the case of fire, theft or other unforeseen circumstance. Insurance for the common elements and general liability around the property is covered in the monthly assessment fee. In addition, a third type of insurance is often discussed when buying a home. Called PMI, or Private Mortgage Insurance, this insurance is required of buyers who put down less than 20% of the total purchase price. PMI is usually made part of your monthly payment to your mortgage lender, although you may purchase it yourself. PMI is no longer needed after you reach 20% equity in your loan. Be sure to monitor this from time to time so you can stop paying this insurance when you no longer need it.

Please define "common elements."
Areas of the property that are to be used by all residents are called common elements. These can include, but are not limited to, laundry rooms, halls, walkways and lawns. Each condo owner has an undivided ownership interest in the common elements.

Who takes care of things around the property?
The developer or a professional management firm typically runs the day-to-day operations in and around the property while condo sales are underway. After 75% of the condominiums are sold and closed, the developer turns the reins of the condo association over to the condo owners, who elect directors and officers among themselves to handle the future decision-making and operations. The directors may then choose to manage the property themselves, or they may seek the services of a professional management firm. Arrangements with management firms vary, but services typically do not include maintenance and repair within the individual condo units.

How does the condo association work?
The association's main purpose is to control, regulate and maintain the common elements of the property. Through the bylaws, the association's board of directors is authorized to regulate and administer the affairs of the property, especially in regard to maintenance and repair of the common elements. The association has the authority to assess and collect sufficient money to maintain the common areas and to ensure the financial stability of the condo property.

What do the directors and officers do?
Simply stated, the condo association directors make the major decisions about the property, and the condo association officers implement those decisions. For instance, the directors may meet to decide that the hallway cleaning service is no longer satisfactory and that a new provider needs to be found. One of the officers, typically the president, will then be responsible for gathering bids and bringing this information to the board. The president will then follow the wishes of the board and hire the cleaning service which best suits the needs of the association.

In addition to the president, other officers' positions typically are: vice president, who assists the president; treasurer, who handles the financials; and secretary, who keeps records of the meetings and maintains the association's important paperwork and files.

What if I don't want to be involved to that extent?
The reality is that most condominium owners do not serve in a director's or officer's capacity, simply because there are usually more condos in a property than there are director and officer positions. Every condo owner has a vote, and a say-so, in the running of the property, even if an owner chooses not to serve as an officer or director.