Condo buildings with marinas have a huge draw for homebuyers in coastal areas who also happen to be boat owners. Rather than assigning slips to units, leasing slips out to a building’s owners or renters can be the best way for associations to maximize the long-term revenue that a marina generates. When access to a waterway is an amenity that everyone at a condo has a chance to enjoy, it can significantly increase the value of every unit. However, associations need to be meticulous about how they manage the logistics, costs, and risks involved in running a marina.
Create a Comprehensive Maintenance Plan
Effective preventive maintenance can help condos avoid storm damage, liability issues, or more extensive capital needs projects. An in-house maintenance team can probably take care of regular upkeep and minor improvements.
Maintenance directors should schedule regular cleaning and groundskeeping in the area to keep it free of trip hazards. Keeping structures in good condition is important to prevent potential injuries or damage to vessels. Sanding and staining can fortify docking materials to withstand continuous exposure to the elements. Replace mooring cleats that are missing or damaged to keep vessels secure. Check local regulations about any signage requirements for marinas. It may be necessary to put up advisories about marine life or warnings that swimming is prohibited.
Don’t Put Off Essential Improvements
When you’re renting out marina slips, you may need to be willing to invest in major improvements. Over time, neglect or natural wear or tear can create unsafe conditions. Structural problems could amount to code violations. Furthermore, outstanding maintenance issues could be grounds for lessees to withhold rental payments.
If you are making extensive improvements to a marina, you will probably need to work with a marine contractor. Installing new piling or any other type of new structure in the water is a big undertaking. Modifications that involve adding onto your structure will almost certainly require a builder’s permit. Structural changes that will block the sun from hitting the seafloor have environmental ramifications.
A marine contracting company that you work with should be familiar with applicable permitting and environmental regulations in your area. As always, you should try to get a minimum of three bids for any major project.
Establish Rental Procedures
You should create a rental contract or license agreement that clearly outlines both parties’ responsibilities. Clarifying expectations and obligations can prevent misunderstandings while also fostering positive landlord-tenant relationships.
Setting rental rates at the right levels is important to optimizing the cashflow that boat slips bring in for an association. Do a market study of rental rates in your area. Even when every slip is the same size, it is common for marinas to set rents according to vessels’ linear footage.
Ideally, the total value of rental revenue that a condo derives from renting out slips should be sufficient to cover all of the costs of operating the marina. If the rents are too low and fall below the facility’s overhead, the maintenance for it will probably need to fall under the scope of the condo’s operating budget. When part of each unit owner’s dues go towards activities that benefit only a portion of the residents, boards and managers need to be mindful about balancing those expenses with care.
You may need to supplement your existing property and liability insurance policies with coverage for the marina. Talk to your carrier about your current coverage and address gaps as necessary. In addition to paying for structural damage to the association’s property and addressing liability claims, you may also need to think about coverage to safeguard the association against damage involving pollution. Remediating spills of any type of contaminant in a body of water can be extremely costly.
It is also a good practice for marinas to require that all lessees carry a minimum level coverage for their vessels. Include a provision in your lease agreement that obliges renters to provide proof of coverage that names the association as an additional insured.
Form a Marina Committee
An association may benefit from appointing a committee to manage decisions about the condo’s marina. This allows the board of directors to keep its focus on more pressing matters. Also, it can be advantageous to get managerial guidance from individuals within a condo’s membership who are knowledgeable about boating or rental policies.
Lastly, it is important to note that all of an association’s activities managing a marina must comply with applicable provisions in their organizational documents. Any major changes may require a formal amendment to a declaration of condominium or the association’s bylaws.