Buying a property in Boca Raton, South Florida

Along the east coast of Florida from St Augustine (in the north) to Miami (in the south) there is a string of long and very narrow islands, separated by the continent by a water channel named „intercostal”. The houses boarding both the intercostal and the ocean are the most  expensive ones due to their view and easy access of boats. Owners of these houses also pay the most expensive property and local taxes; insurance fees are extremely high due to the increased risk of damages (closer to the ocean during the hurricanes).

Boca Raton Overview

According to Wiki Boca Raton („Boca”), Palm Beach County, is one of the wealthiest communities in South Florida, with some 300,000 permanent inhabitants (including recent developments in West Boca) and a couple of millions of „snow birds”, meaning temporary residents during the winter months, most of them owning local properties.

Boca has a flat relief and is 12 miles large from west to east, and another 12 miles long from north to south and is bordered:

• north and south by Delray Beach, respectively by Deerfield Beach,
• east and west by the Atlantic Ocean and the Everglades Wildlife Park.

Downtown Boca (with the City Hall and Mizner Park) is located at some 1.5 miles of the ocean, with buildings designed in a Spanish Colonial style.

There are several highways N-S crossing Boca (named from west to east US441 and Florida’s Turnpike in the west, Military in the middle and 95 and A1 in the east). The most important roads west-east are (named from south to north): Camino Real, Palmetto, Spanish River, Yamato, Linton and many others that I may have forgotten.

Communities

Based on their location, the neighboring apartments and houses are grouped in communities. Usually a community has some hundreds of households to take care of, grouped in small buildings with one to four apartments, or large 1 to 3 floors buildings (most of them with lift) accommodating dozens of apartments, all spread in large green places, having most of the buildings separated by trees. Some houses have garages, most of them do not have; however all the communities have large parkings assuring at least one parking place for each apartment and at least one parking place for guests.

Communities are ranked and priced depending on:

• their location (close to the beach or ocean or close to specific interest points like schools, shopping centers, churches, bus stations, new developments, etc),
• their wealth (a rich community is easily financed by banks),
• their residents (rich people, mid-range, etc),
• whether they include a Golf Club or Tennis Club,
• clubhouse/clubroom, theater, movies, library, courtesy buses,
• resources offered to residents (indoor heated pool, sauna, exercise room, extra storage, business center, bike path etc)
• containing old or new buildings,
• only for 55+ people, etc.

The communities are managed by a Board of Directors composed of 3 to 5 Directors, all of them being residents in that community and volunteering their services, and a paid Management Company chosen by the Board, in charge with managing all the services provided to the community: maintenance and repairs (garbage, roads, sidewalks, plumbing, electricity, sometimes internet, etc.), replacement of roofs, planting trees and flowers and maintaining them, often maintaining a lake or a small water channel and so on. Based on each community’s By Laws, the Board monitors the Management Company’s services and fees invoiced and decides on the well-being of its residents, sometimes approving to approach banks for dedicated medium-term loans, thus increasing or decreasing the monthly maintenance fee. The Board also decides the residents rights to (1) own one or more properties in the community or (2) to rent their property on annual leases or seasonal rentals (short or long term) or no rent at all, (3) the term after acquisition when a property is free to be rented (immediately, after some months, after one year, etc.), (4) own pets, (5) establish a max weight/pet! Ex: < 20 lbs (9 kg) ETC All the communities have an outdoor (sometimes heated) pool (serving only its residents), public roads, exterior lighting, green spaces (trees, shrubs and flowers); some are "gated" meaning that they have one or two guarded gates and the access is only approved by residents. Some communities offer transport by bus for their residents (towards Downtown Boca or shopping malls or supermarkets and back), others have a medical cab, others accommodate a church or temple inside, etc. The communities do not have their own website, and are marketed only via realtors and real estate agents; some have a Facebook page. Examples of such communities are: Boca Bridges, Boca Ridge, Boca Largo, Century Village, Brighton Community, etc.

Properties are marketed on websites like MLS (Multiple Listing Service) owned by an association of licensed realtors and can be acquired or sold only via a real estate broker working with several real estate licensed agents. Buyers do not pay to the broker or real estate agents any transaction fees, but Sellers pay a 5 to 6% fee applied to the selling price.

My friend Maria Marandici is such a licensed real estate agent, very experienced and having deep knowledge of properties’ issues and transaction tricks. She sold and acquired for her clients all kinds of properties all over Palm Beach County and can be reached at Maria@ISellBocaHomes.com. Her website marketing local properties is Boca Raton Homes for Sale.

Apartments – prices and fees

The prices and the costs of maintenance depend much on the apartment’s position – houses closer to the ocean are more expensive due to their increased insurance cost and also due to higher maintenance costs motivated by lots of damages (at buildings, roads and plants) to be repaired annually after hurricanes. I haven’t visited properties close to the ocean and do not refer to them in this paper.

The maintenance fee covers the cost of the upkeep of the buildings, grounds, and common areas. The monthly fees are used to pay for the common area of the building, landscaping, elevator service, custodial services, security, insurance, pool maintenance, recreational amenities, management, water, trash pickup service, and sometimes other utilities, etc.

The price of a 1-bedroom apartment varies around $50,000; the price of a 2-bedroom apartment can be from $100,000 to $200,000 or more.

The average annual cost of taxes and maintenance fees for a 2-bedroom apartment situated in a central or west-area of Boca does not exceed $10,000 (composed of an annual property tax of some $3,000 and a monthly maintenance fee up to $500).

I visited apartments with 1, 2 and 3 bedrooms  and 1 to 3 bathrooms located in well rated communities located central-Boca, west-Boca and south-Boca. All of them were clean and recently whitewashed and had the kitchen fully furnished and equipped (with dishwasher, microwave, refrigerator, electric range, granite counters, etc.), some were fully furnished, others were partially furnished and others had no furniture, some had carpet others had laminated floor and others had tiles; some had storm/security shutters, some had heating. All had walk-in closets, storage, AC, hot water tanks, washing and drying machines, and offered great views on all their windows; some had a large terrace or patio, others had a balcony. Only the corner apartments had one of the bathrooms with window; all other bathrooms had no window. The AC was centralised in the apartment (compared to Europe where each room has its own AC unit).

Some were located in country clubs with non-mandatory membership. Explanation: being in a community with a country club is a plus, non mandatory membership is already a plus-plus 🙂

1-bedroom apartments

The offer for one bedroom apartments is large, as these are placed only in communities 55+ with limited rights to be owned only by 55+ persons, having limited or no rights to be rented and without rights to own a pet. Due to the large supply and little demand, the price of such apartments (all visited were built in 1979) and the costs were as following:

2-bedroom apartments

All have 2 or 3 bathrooms; some have the interior rearranged as a suite-in, meaning that one bedroom and its hall, closet and bathroom is somehow separated of the rest of the apartment.

Ownership

Florida has a tax regime more favorable than many other American states. Apartments or houses can be acquired by non-citizens and non-residents.

If an apartment located in a community 55+ is acquired by citizens or permanent residents younger than 55 (let’s say by a child for parents), the parents’ names appear as residents on the sale-purchase contract and the owner may be granted financial facilities.

Seniors, locally named 55+, have special tax benefits in Florida, like small reductions in residential taxes when acquiring a property, smaller increases in the annual tax of their residential property and some others that I forgot.

EXIT. An apartment stays in the market a couple of months: a 1-bedroom apartment can be sold in max 6 months, and a 2-bedroom apartment can be sold in max 2 months. The acquisition value is conserved or increased over time.

INVESTMENT. Florida is a seasonal region, most people visiting it during the first 3 months of the year.

My understanding is that most or all of the 1-bedroom apartments are located in communities not allowing the annual lease.

The 2-bedroom apartment owners prefer to rent their properties on long term, and the monthly rent for a one-year lease varies, depending of the status of the property, between $1,500 and $1,800; thus makes an annual income before tax of $18-$21,000. After subtracting the annual expense with maintenance, taxes and fees the owner still remains with $8-$10,000 per annum, making at least 5% return-on-investment.

The rents are much higher for apartments rented on short-term, as during the first quarter of each year the demand is high and the supply is scarce; however an owner renting his/her apartment only during the season is unable to cover all the annual expenses only from the rental income.

As for apartments rented via Airbnb, a large majority of communities do not accept short leases.

PS: Am studiat piața imobiliară din Boca Raton în ianuarie 2020. De atunci prețurile au crescut mult – un 1-bedroom depășeste $100K, prețul unui 2-bedroom a crescut cu peste 10%; proprietățile peste medie (>$500K) sunt și mai scumpe. Vecinul prietenei mele a vrut să-și vândă casa (5-bedroom) cu puțin peste $600K, dar a primt oferta de $1M!