Buying Cheap Condos

4 Replies

I live and invest in Orlando and I am seeing a lot of condos that seem like really good deals and I am wondering if I am missing something. The Orlando market has been really hot over the last 12-24 months but condos are still available at prices that are 1/3 to 1/2 of what they were selling for during the peak. I think buying 5-10 of these in average areas might be a good long term play. You can buy condos for $50,000 that rent for $799-$899 with $200/month HOA's.

Condos are the better deal in my market too.

Some investors don't like condos because of having to deal with HOA's. These boards are sometimes a law unto themselves. I make sure that my mother (who lives in the market where I invest) attends the annual HOA meetings to be on top of what they're planning. I also give her a proxy form to make sure she votes on important issues. I would recommend that you stay active on the boards of the HOA's that you invest in.

Two pieces of advice when investing in condos:

1) know your state rules. But you want to be sure that HOA fees are paid up to date by the seller and that the seller has also paid any special assessments at time of closing. You have to consider "CapEx" with condos too. If they have to replace a major system in the building or do a major improvement to a common area, they will assess additional HOA fees (where I'm from they call them "special levies"). Sometimes this can be a big bill and an owner can be expected to cough up a big chunk of cash in a short time. Sometimes an owner who hasn't planned for this will be trying to sell rather than paying. And if they don't tell you about upcoming projects, you may have an unexpected expense. I always put a condition in my offer that the HOA is paid up to date and special assessments are paid.

2) Some HOA's do not allow renting, i.e. owner must be the occupant. You need to check their rules and make sure that you'll be able to rent out the units you want to buy. Others will have a rule saying that an owner can only rent the unit out if they have lived there at least a year. Just something to check on. Do your due diligence on the HOA.

Wendy is right. 

However, you're not missing anything. There is a tremendous opportunity in Condo's in Orlando. This was one of the hardest hit areas in the nation, and it's bottomed out. I currently rent, my owner paid $39,000 for my 1/1 condo in 2011 and we pay $750/mo for example. Just in my neighborhood, there are several condos for sale, all 1 and 2 bedrooms renting for $750-950/mo, and none of them more than $90k. 

HOA's are a big deal, but if you can find some steals.. I would say get it in while the gettin' is good.

@Zach Evanish

i have 2 condos, and don't see myself buying any more. I got them at a steep discount, so I can live with being at the mercy of the HOA.
Wendy gave some solid advice, attend all the meetings you can prior to purchase, make sure that it is "investor friendly".

Also make sure that these condos don't have a lot of vacancies; I looked at a real "bargain" only to find that there were another 7-8 for sale/rent in that small community. That was all I needed to see to pass on the purchase.

Sebastian

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