As real estate prices continue to slide investors are eager to find the next best deal. Usually when determining which property they should buy price and rental income become a big factor. Price and rental income usually translate to cash flow and this is the foundation of long term real estate investing.

Let’s look at the condo market and the pro and cons of buying them over other real estate options. The price point of a condo can be very low and investors can usually cash flow on them, but one area that needs consideration is the short term exit strategy. If an investor wants to sell their investment condo they should think about who is going to buy it and what loans are available to buyer to finance them.

Loans on condos are still available, but guidelines have changed that make it more difficult to finance condos with little or no money down. Condos as an affordable housing option for low and middle income brackets are great because of the low price, but a large group of these borrowers need low to no money down on their purchases. Many loans require 10% or more depending on the geographic region, borrower and the type of condo that is being financed.

Here are a few key questions to ask your mortgage professional in helping you with your exit strategy:

1. Is this condo FHA eligible?
2. Is this a warrantable condo?
3. Is this a non-warrantable condo?
4. Is this an ineligible condo?
5. Does one investor own more than 10% of the complex?

All of these questions relate to whether or not a bank will actually be able to finance your property and some have a higher down payment requirement.

Investors do you home work up front, have a well formulated exit strategy and anticipate the hurdles that your potential future buyer may have to over come.

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Tags: condo, condominium, FHA, HOA, loan, mortgage, real estate, real estate investor

Purchasing a condominium is a popular choice for homebuyers of all ages who wish to dispense with the expensive and seemingly endless responsibility of maintaining a home. Although living in a condominium may allow for some to enjoy a more relaxed lifestyle, there are potential legal hassles involved in buying a condominium that can often make the transaction more complex than buying a home.

Know the Laws Regarding Condo Ownership

In Pennsylvania, as in most states, there is a statute that addresses specific requirements of condominium ownership—i.e., The Pennsylvania Uniform Condominium Act. The essential purpose of the law is to require the original seller of condominium units (often the builder or entity associated with the builder) to fully and accurately disclose the characteristics of the condominium units being offered for sale. This is accomplished by providing the prospective purchaser with a Public Offering Statement. The Public Offering Statement typically discloses a description of the condominium, number of buildings/units, a description of the common elements, list of common expenses and maintenance, the purpose and manner of operation of the condominium association, a description of the declaration, taxes, title and a host of other issues surrounding the creation and maintenance of the condominium.

ALWAYS Review Bylaws & CC&Rs of the HOA

In addition to the Public Offering Statement, a condo purchaser, upon giving a deposit, usually receives the Agreement of Sale, Declaration of Condominium, By-Laws of Association, and Rules/Regulations of the Condominium Association. It is imperative that these documents be reviewed prior to executing the Agreement of Sale (or within the time-frame allowed for canceling the Agreement of Sale if permitted by the purchaser’s particular state statute). Why? They provide significant detail about a variety of issues such as: permissible use of the property, calculation of condo fees and assessments, the cost of certain options and upgrades to a particular unit, calculation of taxes, environmental concerns, etc.

Often times, there are specific restrictions regarding re-sale of a unit and rules concerning home improvements. I currently represent one client who was told by the builder that she could not re-sell her unit because only 50% of all units have been sold at this time. Another client is being threatened with fines by the condo association because he installed hard wood floors in violation of a rule that requires all units to be 80% carpeted. Unfortunately, these clients failed to thoroughly read or have an attorney read all of the pertinent documents previously mentioned.

If you do not read these documents and subsequently violate the rules and regulations of the Condominium Association, you can bet that swift action will be taken in the form of fines, penalties and potential litigation. Most, if not all, Condominium Associations will even secure a lien against your property if the dispute lingers and you fail to pay your fines and assessments.

Suddenly, your comfortable life-style of condo-ownership will have quickly lost its appeal.

Tags: board of directors, CCR, condo, condominium, HOA, home-owners-association

Hello Everyone. We wanted to give you an update on a few exciting new things going on here at BiggerPockets®!

New Website Features

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Changes at the Forums

Now With 6,000 Members and Counting!!!
We’ve been adding some new areas to the forums to help organize things a bit. Stop by and check out these new areas:

1. Wholesaling Forum
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   Not sure why we never had one before, but we do now!

2. Ask About a Real Estate Company
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   Ask about any company doing business in real estate. Discussion topics include: Nouveau Riche, Club Freedom, Pinnacle Development Partners, etc.

3. Home Owner Association (HOA) Issues & Problems Forum
   This area of the site is for the discussion of any questions, issues, or problems that arise with condo or community Home Owner Associations. With little State or Federal governance, these bodies have been a headache for countless investors, realtors, homeowners!

Another small change we recently made on the forums is the addition of birthdays. If you scroll to the bottom of the main forum page, you’ll see members having a birthday (editable on your profile page). Make someone’s day and send them good wishes on their big day!

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Tags: assessor, bigger pockets, biggerpockets, county-records, HOA, home-owners-association, real estate forums, real estate investing, real estate investing forums, real-estate-scam, recorder, wholesaling