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Condominium or Condo Appraisal

Definition

In select markets such as Mexico and Costa Rica, LOGAN offers appraisals for condominiums (condos). Usually, these are vacation homes – or second homes used for recreational purposes and are owned by foreigners from the United States, Canada, or Europe. There is sometimes a need for an appraisal that follows US standards – and written in English for use by US or international lenders.

Condos are in a multi-unit building but share ownership of common elements. Owners may modify the interior of their units, but the management of the condominium regime maintains the common areas.

Types

Construction

– High-rise

– Mid-rise

– Low-rise (Villa)

Ownership

Traditional – each condominium jointly owns the common property of the building or project. This often includes walkways, entrances, and amenities.

Condotel – condominium projects that have a front-desk and allow for short-term rentals and amenities for guests.

Resort Condominium – a building or cluster of buildings consisting of free-hold ownership, that have co-ownership interest in common elements which are shared with a resort. Units are rented with resort amenities for vacationers, who can enjoy the common elements of the resort.

Approaches, Relevance

Cost – relevant when costs are known and can easily be depreciated. Newer projects may have the cost approach applied.

Sales comp or market approach – the most relevant approach when valuing condominiums, as there are often many similar comparable sales within the same project.

Income capitalization – may be relevant for condotel or resort condominiums, considering that there is a stabilized income.

DCF – can sometimes be applied if there is an income stream that can be evaluated. Such an income stream may come from

Value Impacting Factors

Location – location impacts value significantly even within the same city. In some resort areas, being within a master planned community greatly impacts the value of condominium units. Being directly on a beach is often the most sought-after location in most resort areas, but that depends on the market.

Construction – high-end luxury apartments are designed differently than middle-market condos. This is indicated by ceiling height, the façade of the building, and the internal elements of the unit. High-end condominiums have top of the line appliances, flooring, and counter tops. Further, luxury condominium projects have extensive amenities which include pools, hot tubs, gyms, and sometimes restaurants.

Important Inputs

– Comparable sales that are within the same building or project

– Rental rate (condotel, and resort condominium)

– Management fee of the building

Recent Trends

Continued second home growth for foreigners (US, Canada, Europe) in markets in Mexico and Costa Rica specifically. 

Pandemic and its effects on travel.  Some markets have benefitted from the pandemic and others have suffered from less visitors. 

Luxury condo resort projects that are now branded by some of the most luxurious brands in the world includingRitz CarltonFour Seasonsand Rosewood. 

Deliverable

Short Form Appraisal Report – Form 70

  1. Subject
  2. Contract
  3. Neighborhood
  4. Site
  5. Improvements
  6. Sales Comp Approach
  7. Cost Approach
  8. Income
  9. PUD/HOA Information

Notable Markets and Projects

Condo Project, Riviera Maya, Mexico.

Mayakoba, Riviera Maya, Mexico

Colombia

Cartagena – H2

CR-CA

Papagayo – Four Seasons Residences

Tamarindo – Hacienda Pinilla

Mid-Pacific Coast – Los Sueños

International Mortgage Brokers

International Title and Escrow Companies

Expertise Makes a Difference