Fiddler's Creek Fees
CDD, HOA, Capital Aquisition Fee?
When you see the neighborhood of Fiddler's Creek for the first time, you will immediately be struck by the meticulous landscaping and pristine grounds. Every detail has been expertly crafted and it is magnificent. Your next thought will be, "how is this magnificence paid for?" We'll outline the fees for you below. While they may seem extraordinary at first, the value is there. Further, if you think about how markets work, you may find that the fees actually create value relative to surrounding areas like Naples and Marco Island. I'll explain this later. Let's get to the numbers first.
Capital Aquisition Fee: This is the big one. It's $15,000 and you pay this when you buy any property in Fiddler's Creek, but you get it back when you sell. What is it? It is essentially an equity buy-in to The Club and Spa. That is why you get it back when you sell.
Capital Reserve Assessment: $1500 when you purchase your property but this one is not refundable. You can think of it as a transfer fee that the HOA collects. It gets used for capital improvements, repairs, maintenance, etc.
Current Membership Assessment: $705/quarter for maintenance of Common Areas and Recreational Property.
Telecommunication Assessment: $253.65/quarter for Bulk Rate for Cable and other telecommunications
CDD: This stands for Community Development District. What is it? Think of it as deferred infrastructure development cost and maintenance. Costs that would otherwise be paid on the front end in the purchase price of your home, new or resale, are paid over time. How much is it? It varies depending on the property. Expect to spend about $2000-$5000 per year for your CDD for several years to come. Many people mistakenly construe the CDD as a negative factor. Don't! For more information about what a CDD is exactly, visit our Fiddler's Creek CDD page.
Why the Fees are Good - Yeah, I said Good
The Efficient Market Hypothesis asserts that, in a well organized, reasonably transparent market, the market price is generally equal to or close to the fair value. This is because investors react quickly to incorporate new information about relative scarcity, utility, or potential returns and adjust their bids for real estate accordingly. If applied to the Fiddler's Creek fee structure, one would have to expect that the market has accounted for the fees in the sales prices of the homes. If you look at what you get for your dollar here, you will see conclusive evidence that the efficient market hypothesis applies. There is value here!
It gets better, though. The concept of Behavioral Finance asserts that the market price often diverges from fair value because of various, common cognitive biases among buyers or sellers. In the case of Fiddler's, there will be times when the market discounts the real estate more because of the perceived burden of the fees. Now is one of those times. We are in a recession and subject to other uncertainties so the fees loom larger than they will when the economy has fully recovered. Warren Buffet said, "Be Fearful When Others Are Greedy and Greedy When Others Are Fearful." In a time where the entire country is fearful, it seems the smart money is buying up Fiddler's Creek.
Savvy investors should at least consider the possibility that the fees and the CDD are possibly enhancing the opportunity that exists here. They certainly are not diminishing it as it might appear to some. If you calculate how long it will take for the fees to equal the front-end discount and then consider the time-value of money, it works.