Two weeks ago I told you Issue #002 would lead with condo distress crossing into disposition. It has.
The mechanism isn't a mystery and it isn't a prediction — it's a deadline that already passed. Here's the plain version, then what a buyer should actually do about it.
The reserve wall isn't coming. It arrived. The associations that couldn't fund are now the sellers.
The one thing that changed
After Surfside, Florida passed Senate Bill 4-D (2022). Two parts matter for buyers:
- Milestone inspections — condo and co-op buildings three stories or taller must get a structural inspection at 30 years of age (25 near the coast), then every 10 years after.
- Structural Integrity Reserve Studies (SIRS) — those same buildings had to complete a reserve study by December 31, 2024, and associations can no longer vote to waive or underfund reserves for the major structural components.
The translation for our world: a large slice of Florida's aging mid-rise condo stock just got a legally-required, professionally-estimated bill for deferred maintenance — roof, structure, waterproofing, load-bearing walls — that they are no longer allowed to kick down the road. That bill lands on owners as special assessments.
Some associations fund it. Some owners can't pay, and their units foreclose. And some boards do the math on a 40-year-old building and vote to pursue a bulk sale or termination instead of assessing owners into the ground. All three roads produce inventory. The third one produces the kind of inventory this newsletter exists to put in front of you.
Market intel
Two things worth your attention this week:
1. The reserve gap is real money. Reserve studies on older coastal mid-rises are commonly returning multi-million-dollar structural shortfalls — figures that, spread across 60–120 units, translate to five- and sometimes six-figure per-unit assessments. When the assessment exceeds what an owner can refinance or absorb, the unit becomes a forced seller.
2. Buyers are pricing the overhang, not the sticker. The tell in this cycle: comparable condo units in an assessed building trade at a discount that roughly tracks the outstanding assessment plus a risk premium for the unknown. The disciplined buyer underwrites the fully-funded reserve position, not the pre-assessment listing price.
No macro punditry. That's what moved.
What a real buyer does now
If South Florida (or Gulf-coast) condo REO is in your buy box, three moves this quarter:
- Define the buy box in writing — bulk vs. individual units, capital band, submarkets, and whether you'll take a building with an unresolved SIRS gap (more risk, better basis) or only a funded one.
- Get on the sourcing side, not the listing side — by the time an assessed building hits Crexi, the basis is gone. The buildings worth buying move board-to-buyer or servicer-to-buyer. That's the pipeline this list plugs into.
- Be ready to underwrite fast — SIRS report, reserve schedule, current assessment status, title, and unit-level delinquency. When I open a data room, the buyers who close are the ones who can read those five things in a day.
Reply to Mike
Here's my one ask this week, and it's the whole point of this list: reply and tell me your condo buy box. Bulk or units, your capital band, and which coasts. That's it.
I'd rather have 900 buyers whose boxes I know cold than 9,000 names I can't match to a deal. When the right building crosses my desk — and in this cycle they will — I flag it to the handful of you it actually fits, before it's anywhere public.
This email comes from mike@reomind.com. Every reply hits my inbox. No gatekeepers.
See you next week.
— Mike
Reply directly to this email. It goes to me.
Michael R. Linton
Founder · Linton Global Solutions
Reply directly to this issue — mike@reomind.com. It goes to me, not a queue.