Washington condo in distress

Foreclosures
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Washington condo in distress

Gerald L.
Los Angeles, CA · Member since 2012 · 50 posts · 6 votes

i was looking at a Washington condo, where they just had an emergency assessment, the city required the condo association to redo the club house due to land slide. the association came up with 1.5 million dollars to make the new clubhouse. charging those that have cashed their condos and putting liens on those that financed. After the renovation of the clubhouse i presume they went bankrupt because this was 2 years ago and the club house is completely empty. And the property is looking understaffed. The floors are maintained but the stairways reek of spider webs. Many foreclosures and sales in this complex. market rate for these condos are anywhere from 120k to 289k. pretty leveled with market asking I found one unit that is currently being auctioned off starting bid at 15k. i'm thinking about biding to 50k-60k My question is how likely could a condo association being hit with such fines recover and re-beautify the area.

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  • Dion DePaoliPro Member
    Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
    14y

    If the HOA went BK you need to look into that and I would do so before you bid on any of the properties. The HOA still would have power to levy special assessments on you as a new owner. And they could do that during their BK since the residents are responsible to pay for the debts of the property. You need to see what they are doing with the massive city assessments and any other large debts the HOA carries.

    Your assessment of $289k to $120k seems extremely off. If a unit is about to sell for $15k, there is your market price. Condos are fairly homogenous, there should not be a big difference between two similar units in the building. So comps are being set by the foreclosures. Granted you said starting off, so look at some recent sales. If they were worth $120k even, they would have no need to start bidding at such a low number.

    The complex has likely lost its warrant for loans. This restricts the universe of buyers who can now purchase a unit. This will also stall the recovery of value in the complex.

    How likely is recovery for the HOA? Well that depends on how many units are occupied and paying dues. There is your revenue and then you have to look at what expenses they will have do "re-beautify" the complex along with simply operate. Ask for the condo budget and inquire about the health of the HOA. There you will find your answer.

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  • Jeff S.
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    14y

    Check out your board members. These are the people making the decisions. Talk things over with them. In something like that being on the board is critical. It all sounds interesting if you know what you are doing.

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  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    14y

    We lived in WA state for a few years and looked at buying a few condos as they appeared to be priced very low. Found out most of them, even if financially stable, have a list for rentals where you either owner occupy or wait until you come up on the list, done by percentages, to allow you to rent. Buying would put you at the bottom of that list, so could be years, literally, before you'd be allowed to rent it out. If you just ask them the question, Can you rent them out?, the answer is usually just, Yes, without explaining the issue until you fully read the condo docs. I know there are ways around it, but not worth the hassle for us.

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  • David Galan
    Real Estate Investor · Beaverton, OR · Member since 2010 · 6 posts · 1 vote
    14y

    If you really want to play it safe, you should invest some $$$ for a competent attorney to check out the HOA docs, city assessments, liens, etc... That's if you want to play it real safe.
    Then if you get it, also factor in about $5k-$15k in attorney's fees if things go bad with with HOA. They have a propensity to make things ugly.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    14y

    I agree with all the above. But, this sounds like an Auction.com, REOauction. If so, the
    " opening bid" has no relation to the reserve price, which is not revealed. The reserve could be $150-200K.

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  • Gerald L.
    OP
    Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    14y

    Dion DePaoli how do i check if they lost their warrant for loan.

    Lynn M. i checked this one is rentable

    David Galan i check myself.

    Wayne Brooks **** auction.com i'm not paying 5% to someone that doesn't deserve it. and another 6% upon sale.

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