BiggerPockets

Hi,

There's a condo for sale that I might be able to get for a good price. Here are the specs:

* 3 bed/2.5 bath condo
* 2 story, 1200 sf
* Now asking $68,000 (from a recent $89,000)
* Taxes: $1072
* Insurance: $600
* Tax value: 136,600
* Condo assoc. fees... a whopping $240/mo (typically I've seen fees in 140-170/mo range. this is high. includes cable, common area maintenance, community pool, ext. building maintenance, master insurance, pest control, sewer, tax comm area, trash removal, and water)
* Another sold last July for $126,000
* A similar unit is listed at $124,000 and has been on the market about 165 days
* Close to a university
* Rents start at $675/mo. Probably could get $800 after repairs

I figure the property needs $20,000 worth of work (it's a reno in progress - Needs new floors because they are bare to the poured concrete in kitchen and bath areas and to subfloor in other living areas, some manageable plumbing etc.)

Was thinking of offering $48000-ish. The place needs a lot of work and the HOA fee is high, which combined will continue to discourage other buyers. When ready to live in, it could make a decent rental, or flip.

I would appreciate any tips and suggestions you have that would me with this deal.

Thanks!

Honestly, that would be my advice as well. As a rule, condos are pretty hard to nail down in this market, and they carry their own set of risks.
With those HOA numbers on top of it, best to move on I think and look for a solid SFR.

Todd

Hi All, thanks for your feedback. Here are some of my thoughts

Mark and Todd-yes, that was my first reaction too-outrageous HOA fees. I then wondered if there was a price at which it might make sense, especially if the rent can go north of $800 and the price south. This is also why I've generally stayed clear from condos, with some exceptions (owner occupied)

Ted-I get Op. Expenses (including 10% property management and 3% repairs) as 35.36% of gross income of $8400 leaving a seemingly healthy NOI of 64% as compared to 50%. On 70,000 loan (purchase and rehab) at 5.5 with 20% down, there's $100 and change/mo when rent is $700 (at $800, it's 190/mo positive or 9% cap). Still, $240 makes me want to run.

Not trying to make the deal work necessarily, but for learning purposes, at what numbers, if any, does this make sense?

Taylor- run the other way-----fast. Condos are a very bad investment. Never can be free and clear due to hoa fees.
You didn't give enough info actually to make a decision. I would NOT be a buyer for this property at any more than 30K, and I've owned over a thousand sfrs etc. Also, what state and area? Conversion? fFractured project? Last special assessment? Age? If you don't know the answers to these questions, or what they even mean, you have no reason to even consider a condo. Rich

Hi all--thanks!

Forrest did in fact "run away" and is busy working on other deals :)

Rich, I will have to learn what some of those terms mean