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High Rise Condo Investing and Special Assessment Risk
I am a new investor and am looking at a unit in a high rise condo building in Chicago. The unit was a foreclosure and will cash flow well but I do have some long term worries about special assessment that could potential kill the long term investment viability. I've heard on the street of nightmare special assessments at 12k-20 per unit! That can wipe out years of cash flow IMO. I've read on BP different opinions on condo investing. There are those that stay away from condos and those that think they offer more opportunity than other types of housing. I performed standard due diligence on the HOA/building looking at reserves, budget etc. Reserves are solid and building in great condition. That being said, HOA's change, budgets change and anything can happen in the building's future. I was wondering if there were any others out there that have more experience in long term full amenity high rise investing that can share their experiences on the potential long term risks that special assessments pose. It seems to me that High Rise condos are totally different animals than community/subdivision condos. My definition of full amenity type high rise are large building over 15 stories that offer 24 hour doorman, parking, fitness/pool center etc. Buildings you may find in Chicago, New York, Miami, beach front FL /East coast. Thanks for your help!
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I've had a few friends who have held condo investments in high rises in the west loop. A well managed HOA with solid reserves has kept all of them from having to pay any special assessments. Learning from the experiences of friends I wouldn't put special assessments at the top of the list for risk exposure in high rise condo investments. The biggest obstacle is complying with the restrictions of the rental bylaws of the HOA. For example, some buildings limit the number of rental units allowed in the building. If there are more owners wanting to rent than the building allows a priority list is created and you can't put the unit up for rent until your unit is approved for rental by the HOA. Make sure you know the bylaws regarding rentals in the building and understand that they can be changed at any time. Hope this helps. Good luck.