I've found what looks to be an awesome deal in a great B- neighborhood. The property is in great condition, going to inspect it further next week and get some info on the roof and age of other items, but overall extremely well kept based on pictures. The only problem is that the condo will not qualify for conventional financing because the building is mismanaged and has no HOA. It's priced accordingly, well below market value and I'll be able to rent out this 3BR 1BA for about $2400 once I update some things, add washer/dryer, and new coat of paint.
Here's my question.. obviously I have to go through a portfolio lender to acquire, but then after that's all said and done.. how does one go about setting an HOA so that I can refinance out of that portfolio loan and pull out the cash from down payment? What if the other occupants are unwilling to contribute to the HOA? Has anyone had any experience with this sort of thing?
One problem I foresee is coming up with the initial premium for the building's new insurance policy (which clearly it does not have at the moment). It'll take some smooth talking to convince them to pony up a few hundred dollars right off the rip.
Do Not go into this thinking you will get the owner’s to firm an HOA.....if it doesn’t have one, the owner’s don’t want one.
It’s ust odd that there isn’t one. There IS common space, who’s been paying to have that kept up?
Just posting an update to this. Found out the other two units in this 3-family are owned by one other investor. He's open to establishing an HOA, however the other obvious problem is the fact that the building would then be 100% tenant occupied and not owner occupied. Will those cause a huge problem if I go to refinance after a 1 year seasoning period after establishing the HOA? Has anyone had banks or credit unions allow them to refi in this situation?