Help! Buying Non-Warrantable Condo

Dallas, Texas
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Help! Buying Non-Warrantable Condo

Mike L.
Dallas, TX · Member since 2014 · 31 posts · 19 votes

Hi! I am buying a non warrantable condo in TX. This will be a rental property. The complex is non warrantable because more than 50% of the complex is investor owned. Would love to connect with someone. 

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Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
1y
Quote from @Mike L.:

Hi! I am buying a non warrantable condo in TX. This will be a rental property. The complex is non warrantable because more than 50% of the complex is investor owned. Would love to connect with someone. 


 Make sure investor concentration is the ONLY reason the project is non-warrantable.  Often, but not always, in non condo markets like Texas these heavily investor owned projects have other issues as well. They look great on paper becaue they are often very cheap, but sometimes things are cheap for a reason. Also, if most lenders will not lend on a property that is often a sign it is not worth buying either. 

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1y
    Quote from @Mike L.:

    Hi! I am buying a non warrantable condo in TX. This will be a rental property. The complex is non warrantable because more than 50% of the complex is investor owned. Would love to connect with someone. 

    You should be able to do this on a DSCR loan. Besides it being majority investor owned, is there anything else that is making the property considered non-warrantable? Do you have an HOA Questionnaire to share?  
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Mike L.:

    Hi! I am buying a non warrantable condo in TX. This will be a rental property. The complex is non warrantable because more than 50% of the complex is investor owned. Would love to connect with someone. 


    As mentioned by Eric, you could do this as a DSCR loan just recognize it will have a higher rate.

    you also did not mention loan amount or down payments as that will also come into play with a NW condo. 

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  • Joel Weiser
    Lender · NY · Member since 2024 · 32 posts · 11 votes
    1y

    I can definitely help you with that. Feel free to reach out anytime 

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  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    1y
    Quote from @Mike L.:

    Hi! I am buying a non warrantable condo in TX. This will be a rental property. The complex is non warrantable because more than 50% of the complex is investor owned. Would love to connect with someone. 


     Make sure investor concentration is the ONLY reason the project is non-warrantable.  Often, but not always, in non condo markets like Texas these heavily investor owned projects have other issues as well. They look great on paper becaue they are often very cheap, but sometimes things are cheap for a reason. Also, if most lenders will not lend on a property that is often a sign it is not worth buying either. 

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  • Derek BrickleyBusiness Member
    Lender · Ann Arbor, MI · Member since 2021 · 672 posts · 228 votes
    1y

    Hey Mike!

    That's really common, a lot of investment condos become non-warrantable because of that. You could go the cashflow based DSCR or even full documentation route if you'd like. Hard to say which would have better terms but that just depends on the full situation. Happy to look at both of those if that's helpful though

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  • Nick BelskyBusiness Member
    Lender · Orlando, FL · Member since 2021 · 1k+ posts · 704 votes
    1y

    @Mike L.

    We can do NW Condos up to 80LTV.  Happy to discuss to see how the shoe fits.

    Cheers!

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  • Diego AlvaradoBusiness Member
    Real Estate Agent · Flower Mound, TX · Member since 2016 · 298 posts · 140 votes
    1y

    Hi @Mike L.

    DSCR loans may work in this case but none warrantable could mean other things too. Texas has a lot of condo complex that not even a DSCR loan will be accepted because of the state of all the buildings.

    Make sure you walk the property and you won't have other issues on the condo.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1y

    Did you end up closing on this?

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    1y

    Hopefully you’re getting 25-50% off a comparable condo an owner occupant could buy? Don’t forget. 1). When you got to sell, 90% of the buyers can’t buy your property. 2) The only people who can are investors who want a great deal. 3) The current investors haven’t already bought it. 

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  • Tracy On
    Lender · Honolulu, HI · Member since 2025 · 6 posts · 0 votes
    1y

    We can review this specific property. I’ve got solid lenders that can handle complex non warrantable condos in Dallas. 

    Happy to chat 🤲🏼

    Tracy On

    NMLS 2286149

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    1y

    I would caution you about buying a condo in the Dallas area, especially for a rental with the exception of maybe a couple of specific condo developments. Think about your exit strategy #1. While tough to buy, also tough to resale and chances you will need to resale to another investor. There is a reason many lenders don't want to lend on these. Many of the complexes have major deferred maintenance and at some point you may be "special assessed" for that maintenance. Thousands sometimes. HOA dues have been going up significantly the past few years. I've seen some that have doubled. HOA dues normally kill your cash flow, but when they double, really kill your cash flow and make them hard to resale. Rules that your tenants don't follow, may get you fined, but tougher for you to enforce...noise, trash, pets, etc. Many of these places that look like good deals are full of trouble tenants. KNOW 100% what you are getting into....it's rarely as good as it looks on paper.
    If you are dead set full steam ahead with the purchase I do have specific lenders that are condo specialist and can lend on most condos in DFW area.

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