Condo buying question

12 Replies

Hello,

I want to bid on a Fannie Mae REO located in MA. I asked a buyer's agent for a copy of condominium bylaws and a statement of financial condition. She responded "These docs are usually passed along after your offer is accepted:)". Is this a common practice to bid on a condo without knowing if it can be rented out and what kind of reservers the HOA might have?

Thanks,
Alex

Not for me, it's not. I'm not making an offer without knowing what it is I'm buying.

For a regular purchase, I'd make the offer contingient upon my approval of the HOAs. But on REOs it's better to not fill your offer with contingiencies.

If the realtor won't provide copies and you want the condo, go by the building and ask for a copy of the HOA rules. Make friendly, tell them you want to buy. Smile. They'll help you if they think you are going to be a new neighbor.

Also, HOA should be recorded, so the county recorder should be able to get you a copy, Ditto, your favorite escrow company

Not at all. Although rare some HOAs dont allow rentals and different things that would make investors not want to purchase in such HOA's. Also make sure to know the accurate HOA fees and if the REO has back fees due.
-Scott

I have never seen a deal so good that we would put up with an HOA or Condo association. Way too many factors controlling your expenses that are completely out of your control.

Ad remember they can change rules, assessments, etc on a vote.

Run don't walk!

Though I bought into an hoa for my first investment property in 1994, Lucia is totally correct and I would never do it again. Because she is correct.

You have no control over your property, because IT ISN'T YOURS even if you have no mortgage on it. That property is a share of a corporation, and the rules are set to benefit the CORPORATION. You can't install different windows, better front door, whatever roof you want, patios, fences, awnings, etc, unless they fit the guidelines. You have a range of color choices, often about 5, to choose from when repainting.

The board can and does change the rules, and doesn't necessarily tell the shareholders. Assessments can change (increase) yearly, as much as about 20% of last years, without a vote. There can be emergency assessments, and you have little choice but to pay.
My own hoa has been pretty good. We have few amenities, are not planning any, AFAIK, and the dues are the lowest around. I do carry a "loss" policy ($40K) on my insurance, in case there is a problem.
I sold one house I had in an hoa, and will not buy into another.
FWIW, condo associations are worse.
Ofgift

After trying to make a number of condos in MA 'work' in calculations based on renting them out, I finally concluded that the only good investment condo is one that you have converted yourself - buy a non-condo mutlifamily property and convert to condos for a higher ultimate resale value.

I tried to make those numbers work because the units were in good areas and listing for about 1/3 the price they had previously sold for. Ended up amazed at what awful deals they must have been before the crash!

I'll also add my two cents, from the perspective of a renter, I've rented from two condo owners and the experience was problematic both times. The second time was a nightmare. As a renter, if you have an issue, you're stuck in a bureaucratic nightmare dealing with the managment co., the condo board, and the owner. Every one of these entities just passes the buck to the other. I don''t know if my experience was typical, but I would never rent a condo again.

Wow, doesn't anybody like HOAs? I was actually trying to find SFRs with HOAs that take care of the front landscaping. That seems like a way to ensure that a neighborhood does not go downhill.

I'm looking in Las Vegas and with all the houses turning into rentals I thought an HOA might give my house an extra edge in value preservation and/or appreciation.

Am I nuts, or does this make sense to others?

Wow, doesn't anybody like HOAs? I was actually trying to find SFRs with HOAs that take care of the front landscaping.


HOAs open you up to special assessments, runaway monthly dues, etc taking control and money out of your pockets .... much easier to hire a landscaper yourself (and more profitable)!

Let's talk about the difference between an HOA and a condo. I agree with most investors here to stay away from HOA's.

What I will absolutely say, is stay away from condos. There are new Fannie/Freddie financing rules that are going to make it a royal pain to get financing. Even if you pay cash and want to sell someday this issue will bite you in the butt.

Originally posted by Robert Mayo:
Wow, doesn't anybody like HOAs? I was actually trying to find SFRs with HOAs that take care of the front landscaping. That seems like a way to ensure that a neighborhood does not go downhill.

I'm looking in Las Vegas and with all the houses turning into rentals I thought an HOA might give my house an extra edge in value preservation and/or appreciation.

Am I nuts, or does this make sense to others?

It would seem to me that for SFRs it would depend on the HOA, since some of them don't do that much, and don't charge that much per month.

What I''ve heard is to stay away from gated communities, since the gate can be expensive to maintain.

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