Investing in “non-warrantable” properties

[Travis Stafford]

There is a condo in Dallas that I would like to purchase and make a rental. All the numbers workout for this to be a cash flowing property for me. It previously had a contract on it from another buyer. That contract fell through because it is a non-warrantable property. The complex is non-warrantable because there are 13 units that are past due on their HOA fees. I believe there are more than 50 units in the complex total. Would this scenario be a deal breaker for you? Or would you use this as an opportunity to negotiate a better deal?

[Bart H.]

Originally posted by @Travis Stafford:

There is a condo in Dallas that I would like to purchase and make a rental. All the numbers workout for this to be a cash flowing property for me.

It previously had a contract on it from another buyer. That contract fell through because it is a non-warrantable property. The complex is non-warrantable because there are 13 units that are past due on their HOA fees. I believe there are more than 50 units in the complex total.

Would this scenario be a deal breaker for you? Or would you use this as an opportunity to negotiate a better deal?

 You are going to see a huge assessment, sounds like massive mismanagement.

Unless you know the core issue, and know that it is being addressed,  I would stay away.  

Its also doubtful you will be able to get financing.  Are there limits on how many units can be rented out