I'll try to keep this brief and to the point. In the process of purchasing my first investment property (2 br condo in Atlanta suburb). I get a call from the lender today (NFCU) telling me that underwriting cannot approve the deal because the HOA has an inadequate budget, high investor occupancy concentration, and high delinquency. I was scheduled to close on the 16th, and just got this call today. I'm apprehensive about starting the process with another lender, because I don't want to run into the same issue again. The mortgage processor said that this is a NavyFed thing, and others might not be as strict. Anyone know how I should proceed with this scenario? It's the only thing standing in my way. Thanks in advance for any guidance.
Rental Property Investor · Member since 2018 · 207 posts · 225 votes
7y
Shop elsewhere. Go to a local portfolio, if you have one. NFCU is great in certain areas, but I walked with my whole lending package over their silly rules and they have no flexibility.
Now on another note;
I'd be weary of an HOA with an inadequate budget...this is indicative of future "special assessments." I would be cautious and look at both the assessment history as well as the building age to determine what I might expect. At least it sounds like they're used to investors...I have encountered HOAs before that write into their docs that they have to approve a unit for rent and then approve tenants...no thanks!
Lender · Cleveland, OH · Member since 2011 · 587 posts · 435 votes
7y
@Courtney Cleveland You have a non-warrantable condo. Each of these reasons on their own are reason for denial. You will need to find a lender who will lend on a non-warrantable investment condo. Likely that rates will be higher than a conventional loan.
Rental Property Investor · Richardson, TX · Member since 2019 · 120 posts · 82 votes
7y
@Courtney Cleveland I would back out of that deal unless you are in it very cheap and look for a single family home instead. You have no control over the condo assessments and could be very costly down the road. There are plenty of good single family homes in ATL with much lower risk.
Real Estate Agent · Atlanta · Member since 2019 · 44 posts · 24 votes
7y
Hey Courtney,
We always refer investors we work with to Sherman Bridge lending if you are looking for hard money lending. Typically people don't use conventional loans on investment properties because of the restrictions they have and the long closing periods. Feel free to reach out with any questions you may have!