Dockominium

A prospective client called yesterday and wanted to know if they could invest IRA
funds in a “dockominium”. Not being exactly sure what that was, I proceeded to let the prospect educate me about Seaview Marina, in Ocean City, NJ. At Seaview, the marina slips are sold in the same fashion as a condominium operates in the state. There is an association, and dues, and there is a deed to the slip. Slips run from $90,000 to as much as $200,000.00 depending on the size and depth of the slip. Many of these dockominiums are rented for the season at very nice rental amounts. My response was that it was indeed a viable investment for the client as long as he did not store his own boat there and collected rent to the user of the slip. It actually makes a great IRA investment since the Dock Association maintains all the slips and the IRA would just simply pay a monthly maintenance fee. The only issue, of course, is making sure that there is sufficient cash flow from the rental to pay the Association fee.

Incidentally, the client believed the return on these slips was about 7%, and that they have appreciated nicely in good real estate markets. He thinks he is getting it at a very low price.