I am a newbie. I am working on a deal involving the purchase of a condo as a rental property. The property would yield a positive cashflow calculated using the rental property investment calculators provided by BP. During the condo docs review, it came to know that there is a shortfall of $200K in the reserve fund unexpected repairs due to water leakages (Risers are leaking). The building is only 4 year old and there are multiple incidents of water leakage as discovered from the Minutes of meetings of the board.
Would really appreciate for guidance of the experienced members of BP on the following:
- Whether to proceed with the deal? There is a shortfall of 200K, I expect there would be special assessments / condo fee increment in near future.
- Is water leakage (due to risers) in condo buildings a severe issue?
- What should be the strategy to negotiate with the seller in this scenario?
Your time and valuable advice is highly appreciated.