BiggerPockets

Don't do it! You give KNOWN monthly expenses of $260 plus $230 ($490 total for those), and the rent is only $800!! TOTAL of ALL expenses should come in no more than 50% of rents IMO (and I'd bet others agree on that).

What do you know about the association? Condos are scary right now and there are so many ways things can go wrong. In fact, it would be amazing to find one that wasn't experiencing problems.

Consider: you have people making huge decisions for your property that you don't know, that have a tendency to be control freaks. They are called a board of directors and may have no experience whatsoever taking care of properties.

There are many people with their hands out. They are called lawyers, accountants, property managers, landscape companies, engineers, general contractors etc. They know you have money coming in and a reserve account and they will exploit weakness when they see it.

Consider: you are owning real estate with many other nice folks who may or may not be employed. If they can't pay their share then you will pay for it.

The concept is nice but I would just as soon sell mine if I could.

Buyer beware.

Rent is $800. Expenses, capital and vacancy are $400 (*see below). That makes net operating income $400. From that you have to make your payment. Assume $20K down and a $60K loan. Your payment (5%, 30 years) is $322.09 leaving you $77.91 a month in cash flow. That's $934.88 a year on a $20K investment. 4.7% cash on cash.

Trouble with condos is they can end up being much more expensive than the 50% rule would imply. A badly run board with deferred maintenance and upcoming special assessments can kill you.

If its a REO and the bank has it listed at $80K, a $30K offer has a very tiny chance of getting accepted.

The qualification requirement is a common part of REO offerings. Nothing unusual there.

You say prices haven't taken a hit, yet this $130K condo is still on the market for $80K. Sounds like a hit to me. Yes, its a REO, probably trashed, maybe with HOA troubles. But overall, you're correct. Case-Shiller shows 116 for Dallas in July 2004 and 114 in December 2010.

You're looking for selling at a higher price. That could happen. Or, prices could continue to fall. That's speculation, and could be a good plan.

Its a condo, I wouldn't buy it at all. I've been really tempted by tiny condos in south beach around $100K, but they're condos.

it is that temptation i am trying to fight.

zillow has it for 110k. prices havent dropped much really, that is why i assume bank wants 80k to recoup what's owed on it?

ive seen it. top shape, move in ready. 75% of building is owner occupied, 25% rentals. HofA doesn't manage it, property management company does and is one of the most reputable in the dallas area.

any changes to your thoughts / opinions???

i know i know....it's a condo. but still???

Are you working with someone that writes offers every day on REO's and knows about the complex? Have they sold other units in this same complex?

Jon has great advice for you, the what it sold for number has no effect on what you need to pay. Have a good Realtor pull last 5 months sold listings for you.

Project a 4-8% reduction in market price for good measure after purchase, run your numbers again. Are you still positive cash flow after that?

Are you going to manage property or pay someone to do it? Add this price into your fixed costs. 10 percent is normal.

Get a second opinion before spending your money. You are correct Dallas is a better market, but if they do not have good reserves, you could be paying 20K in special assessment down the road. You have cash reserve to do that?

Is it a new property? Does it have new roofs on all buildings?

Tons of questions need to be answered first before buying.

Do it every day for my investors here in Jacksonville Florida.

Good luck...

The best price you will get from the bank is going to be at the end of one of their quarters...especially December.

Rental property always has a way of costing more than you anticipate and is simply too much of a headache for me.

There are deals all over for 50% -65% of tax accessed value. Keep looking.......

I am working on my first 5 posts so please excuse the brevity of each.

There are deals all over for 50% -65% of tax accessed value. Keep looking

I have three condos currently, all of which are positive cash flow. I invested for the long term (equity buy down) and not appreciation or built in equity.

Please keep in mind that as stated, condos may be a good investment for some and in very specific cirumstances with adequate abilities of the investor, but in the case based on the statements made by you, looks like you got into some deals that are not such good deals. As such, your strategy to exit and move into better deals may be a good one.
This of course is all opinion, not to be construed as legal or financial advise.