By Tara Galloway / Published October 2023
With its sun-kissed beaches and sunny climate, Florida has long been a haven for individuals who migrate seasonally between colder and warmer climates, or “snowbirds,” who flock to their coastal Florida properties or vacation rentals year after year. Despite its beauty, Florida’s vulnerability to corrosive salt water, hurricanes, and storms has resulted in increased operating costs for homeowners, condominium owners, and community associations. Budgets have already been stretched thin; consequently, difficult decisions are being made regarding maintenance, upgrades, and supported amenities. Rising insurance premiums and recent legislative actions have further led to additional budget increases and, in some cases, special assessments, necessary to effectively maintain the association. As seen across the coastal communities of Florida and by the Sentry Management in-house winter vacation division, New Smyrna Vacation Condos, a snowbird condominium rental and management program, there is a constant worry of a demand-driven surge in winter rentals and an ever-growing concern from seasonal residents of being priced out of their winter homes. Now more than ever, board members should analyze the impact these rising costs have on their residents, whether year-round or seasonal.
Recently a surge in special assessments—one-time fees levied to fund unexpected or extraordinary expenses—has rattled the financial stability of some residents. While historically this may have been a rare occurrence, the risks of such assessments are higher than ever in hurricane-threatened Florida and demand more substantial financial commitments, further impacting the cost of ownership and carefully budgeted retirement plans. These mounting financial pressures leave some reevaluating their winter destinations and housing options, and force board members, residents, and renters alike to analyze the impacts these financial burdens place on them. These factors could lead to declining numbers of residents and renters, contributing to a potential loss of community engagement.
So, how can board members work to proactively address rising costs while considering the unique needs of snowbirds?
Crafting a comprehensive budget that accounts for rising costs and unexpected expenses is recommended. Through careful consideration of the previous year’s activity, current year-to-date expenses, present and future projects, and inflationary trends, the budget can forecast the appropriate level of spending for routine operations and repairs as well as reserve for the anticipated replacement of community assets. This form of cost management helps to ensure there is room in the budget for future planned maintenance, upkeep, and emergency repair expenses, helping to avoid surprises and higher prices for all owners. Seek expert guidance to ensure your budget is realistic and robust. With an appropriate operating and reserve budget in place, the potential for unexpected special assessments is also minimized.
Insurance premiums have been soaring to account for market changes resulting from high payouts, natural disasters, carriers exiting the market, and bad actors. What was once a manageable expense has evolved into a budgetary wildcard for many communities, residents, and owners who struggle to keep up with increased policy prices. In fact, the increased claim threat has translated into significantly higher insurance costs, prompting many communities and owners grappling with balancing risk and coverage to determine whether to invest in costly insurance policies or face the vulnerability of uninsured losses.
Prudent boards should review their current insurance coverage annually and consider what coverage may be necessary or required. If unclear, it may be time to meet with a trusted and reputable insurance expert to discuss necessary coverages for their community. With the help of an insurance professional, the board can further audit coverage limits, deductibles, and exclusions to check for gaps in coverage. Note: Sometimes, having the lowest insurance premium isn’t always the right choice, and the community’s needs are of the utmost importance. Board members have the fiduciary responsibility to represent all owners; in some cases, it may be better to secure a slightly pricier policy to ensure the appropriate coverage, especially in high-risk areas.
Maintaining open lines of communication with owners and keeping them informed about financial matters and proposed changes build trust and understanding. With an increasing trend toward virtual meetings, full-time and seasonal residents alike can stay engaged and contribute to the affairs of their association year-round. Encourage snowbirds to participate in board decisions, even virtually. Active participation in board or committee meetings allows residents to have a voice in decision-making and stay informed about developments within the community.
While some snowbirds’ winter homes may remain unoccupied during the rest of the year, there remains a year-round financial responsibility for upkeep, maintenance requests, assessments, and insurance coverage. It is important to consider this perspective as increased competition is making it more difficult to secure a tenant to cover carrying costs in the off-season.
For some, rental income can serve to offset ownership expenses and rising assessments. If your association has a high concentration of seasonal rentals, consider partnering with a reputable property management company to handle rent collection, tenant requests, and maintenance. This can safeguard everyone’s mutual investment and can provide peace of mind to full-time owners.
Snowbirds are here to stay, and the increased costs of ownership may be as well. Innovative solutions and collective efforts can help ensure that the allure of the warm climate remains. In the face of rising costs, Florida owners can strike a balance between cost management and enjoying the numerous positive aspects that come with ownership in this beautiful state.
Vacation Rental Manager, Sentry Management
Tara Galloway is the vacation rental manager with Sentry Management’s New Smyrna Vacation Condos. She has over 20 years of experience in the vacation condominium industry and has been with Sentry for over 10 years. For more information on Sentry’s snowbird vacation rentals, email email@example.com.