Monmouth County, NJ · Member since 2015 · 37 posts · 13 votes
Hello- I'm considering putting a offer on a condo on the outskirts of Jersey city. The property will cash flow positive and is for a buy and hold. What should I look for when buying a condo vs a single family home? Any tips? Are there any laws against buying a condo in a LLC? Thanks in advance.
Newark, NJ · Member since 2015 · 162 posts · 102 votes
10y
1. Make sure the HOA has healthy reserves, and the some of those funds are ear marked for CapEx.
2. Look into any deferred maintenance or any upcoming repairs the might trigger assessments. New roof anyone?
3. Look at the history of Maintenance fee increases. Are you up for a hike? Do they increase in a predictable manner?
4. Check to see how long the HOA has been with the same management. The more stable the better.
5. Talk to HOA leadership and ask if there are any potential law suits lurking in the future. That could get in the way of refinancing or selling later on.
6. Be sure the HOA/bylaws allow you to rent the unit from day one.
7. Be sure to check for noise transmission between shared walls! I spent two years of my life hearing my upstairs neighbor snore every night. If I had been renting, I'd have moved at the first chance. Instead I invested in soundproofing. If you have to soundproof at some point, factor some $10-12k (not including floors).
8. Depending on the size of the HOA, you may be hearing lots from them if your tenant is short of stellar. Remember that condo owners are invested in the building in way tenants don't care about.
As you know development in JC is very uneven. I'm not sure what you meant by the "outskirts of JC" but location matters a lot. If I had a choice between a condo and a modest house in the outskirts of JC, I'd go for the house anytime.
Newark, NJ · Member since 2015 · 162 posts · 102 votes
10y
1. Make sure the HOA has healthy reserves, and the some of those funds are ear marked for CapEx.
2. Look into any deferred maintenance or any upcoming repairs the might trigger assessments. New roof anyone?
3. Look at the history of Maintenance fee increases. Are you up for a hike? Do they increase in a predictable manner?
4. Check to see how long the HOA has been with the same management. The more stable the better.
5. Talk to HOA leadership and ask if there are any potential law suits lurking in the future. That could get in the way of refinancing or selling later on.
6. Be sure the HOA/bylaws allow you to rent the unit from day one.
7. Be sure to check for noise transmission between shared walls! I spent two years of my life hearing my upstairs neighbor snore every night. If I had been renting, I'd have moved at the first chance. Instead I invested in soundproofing. If you have to soundproof at some point, factor some $10-12k (not including floors).
8. Depending on the size of the HOA, you may be hearing lots from them if your tenant is short of stellar. Remember that condo owners are invested in the building in way tenants don't care about.
As you know development in JC is very uneven. I'm not sure what you meant by the "outskirts of JC" but location matters a lot. If I had a choice between a condo and a modest house in the outskirts of JC, I'd go for the house anytime.
Monmouth County, NJ · Member since 2015 · 37 posts · 13 votes
10y
Hi Rob,
Thank you for the great information. The property (s) are in the journal square neighborhood. I may buy the property and then transfer into a LLC. I have to see if that is allowed as well.
Banker · Philadelphia · Member since 2009 · 2k+ posts · 633 votes
10y
Hi @Vincent P.
Welcome to BP!
Condos are great and could be bad real quick. Take a look at a couple of the following if you can get your hands on the Condo Questionnaire from the Condo Association always.
* Delinquencies of the HOA Payments
* Any Pending or Current Law Suits
* Investor Concentration of the Complex
Only specific bank finance non-warrantable condos and these are first couple items we look at.
Flipper/Rehabber · Jersey City, NJ · Member since 2012 · 204 posts · 109 votes
10y
@Vincent P. -- I'd echo the points offered up by @Ro Maga. All things worth considering.
In addition, with respect to buying in an LLC, you'll want to discuss everything with your lender beforehand. Many loans geared toward investment properties will allow you to purchase in an LLC.
Many conventional financing options will not finance condos in a building with high investor concentration (i.e., < 50% of the units owner-occupied). If you run into this, you may need to find a lender with portfolio loan options, which may be subject to different terms.
Real Estate Investor · Philadelphia, PA · Member since 2010 · 283 posts · 81 votes
10y
All the comments listed above are excellent. The only other thing I would check is seeing how much of an HOA increase has occurred over the last 5 years. Some HOA don't change the fee, while others change it every year. This could eat into your cash flow.