Investor · Belmont, MI · Member since 2015 · 53 posts · 20 votes
Currently own 11 condos in South Chicago in a 35 unit complex. Am only allowed to rent 7 of my 11 units.(HOA restriction) Have 4 units that need rehab but I'm hesitate to do so as I can't rent nor easily sell anymore units. HOA has lots of delinquencies and lost FHA financing option. Have to keep my HOA assessments current or lose the right to rent the 7 units. So is there anyway to get rid of the 4 non-performing units as the taxes and assessments are burdensome?
Real Estate Broker · Chicago, IL · Member since 2015 · 531 posts · 266 votes
10y
Yikes! What made you think it would be a good idea to buy up 11 units in one building? At this point a multi family would be much better for you to manage with no HOA restrictions.
I suggest contacting the neighboring units to those 4 units to see if anyone might want to purchase to expand/combine the 2 units.
Investor · Belmont, MI · Member since 2015 · 53 posts · 20 votes
10y
@Mike Arias Thought about that but can't lease anymore units. Since title doesn't transfer wouldn't a lease option be considered a rental from the HOA standpoint?
Real Estate Broker · Chicago, IL · Member since 2015 · 531 posts · 266 votes
10y
No rentals means no lease option, because that is a lease... with an option to purchase.
You could go the seller financing route, but in that market it may be tricky. You might want to see if you can attract students, I have a few contacts at housing for the University of Chicago, but depending on location it may be too far.
The other thing I would check is if there is a broker who does a lot of business in the building, contact them to see if they have any ideas.
I think your best bet is going to try to sell the units to other residents who already live in the building.
Investor · Belmont, MI · Member since 2015 · 53 posts · 20 votes
10y
@Sarah Ziehr Doubt any of the other owners would want to buy. Can you give them away? Would still do just fine on this deal if I could just keep the 7 performing units.
Investor · Juneau, AK · Member since 2015 · 980 posts · 741 votes
10y
Skip, you highlight an interesting problem. I like the notion of owner financing (if paid for and Wayne's Dodd Frank comment) and I have had some success owner financing a condo before, and it gets an owner occupant in there to help ratio and gets title out of your name; also, you could (again more likely if paid for) explore donating four units to a nonprofit somehow and getting a tax break, perhaps one involved with affordable housing or an agency that may need to house workers; finally, a long shot, but the swing for the fences stretch would be to just buy 24 more and convert them back to apartments or renovate/redevelop the place as more successful condos--study that one alot first, though (a long shot, but owning 11 is pretty extreme already, almost 1/3 there now!)...Best of luck...
Investor · Juneau, AK · Member since 2015 · 980 posts · 741 votes
10y
Skip, you highlight an interesting problem. I like the notion of owner financing (if paid for and Wayne's Dodd Frank comment) and I have had some success owner financing a condo before, and it gets an owner occupant in there to help ratio and gets title out of your name; also, you could (again more likely if paid for) explore donating four units to a nonprofit somehow and getting a tax break, perhaps one involved with affordable housing or an agency that may need to house workers; finally, a long shot, but the swing for the fences stretch would be to just buy 24 more and convert them back to apartments or renovate/redevelop the place as more successful condos--study that one alot first, though (a long shot, but owning 11 is pretty extreme already, almost 1/3 there now!)...Best of luck...
Real Estate Investor · Greenville, SC · Member since 2013 · 47 posts · 24 votes
10y
"Give them away" b/c you have plenty of equity between the 11? Don't know the numbers but:
a 30 day listing agreement at your rock bottom to test the market or a reserve auction for the absolute bottom price - @charlesparrish deals in that world.
Needing to sell 4 in the same building is competing against yourself for consistent prices until free. One approach may not work to clear all four.
-eBay Real Eatate
-JV with a local church -sell raffle tickets
-Habitat for Humanity
-Homes for Vets (NGO)
-Stop in the Aldermans office and tell them what you have.
-Barter or post on Craigslist a swap. Remember the red paper clip swapped up to a house in one year story a few years ago
Investor · Belmont, MI · Member since 2015 · 53 posts · 20 votes
10y
@Gregg Gannett Would take $40k to rehab a unit and there is one for sale (bank owned) right now for $25k in the same complex. So my concern is I would have to sell for 90k or less and owner finance. If my buyer defaults would then need to foreclose which takes forever in Chicagoland and involves more costs. (attorney fees, repair damage to unit etc). Not sure I want to put the time and effort into that. But will check out some of your suggestions. Thanks for your advice.
Real Estate Broker · Chicago, IL · Member since 2015 · 147 posts · 73 votes
10y
I like WI Eric 's idea. I know when the market fell in 2007, 8, and 9, that a lot of HOA's changed their rules on how many units could be rented out. So many owners were getting crushed and needed to get out, but couldn't sell. I'd try to sell it as, it's what's best for the health of the building. HOA's have that rule cause they think renters won't treat the building as nice as owners. But if the building/owners are having such a hard time, what's best for the building is to get units filled and help out the owners. Good luck
Investor · Belmont, MI · Member since 2015 · 53 posts · 20 votes
10y
@Zoran StanoevIn order to serve on the HOA board you must live in the complex. So as an out of state investor that's not possible. May just have to be patient and wait for the delinquency issue to get cleared up so as to get the FHA approval back so I can sell the 4 units I can't rent or possibly go the owner financing route which I'm not thrilled about. Thanks for your input....
Real Estate Broker · Chicago, IL · Member since 2015 · 147 posts · 73 votes
10y
You don't personally have to be on the board to change the rule. I know HOA can be crazy, but have you reached out to the current board? Maybe they have other ideas too.
Investor · Belmont, MI · Member since 2015 · 53 posts · 20 votes
10y
The current board wants to limit the rentals to keep the current ratio. There are a few other investors in the complex but not enough to control the HOA.