should I sell condo because HOA has no money to do repairs?

Question

My first rental is a condo. It is in a great area and cash flows well, for now. My concern is the HOA and state of the building. The HOA funds are limited and if something happens, there will likely be a special assessment; roof and/or exterior paint are the big ticket items that are near end of life according to building assessment. And HOA insurance coverage is very minimal so if something does happen, HOA likely won't be able to pay for much.

Trying to figure out what to do with it. Should I continue renting or sell and get a different property since I think the condo is a ticking time bomb for a big project in the future.

Let me know what info you need to help me figure this out.

Thanks!

Trying to figure out what to do with it.  Should I continue renting or sell and get a different property since I think the condo is a ticking time bomb for a big project in the future.

Let me know what info you need to help me figure this out.

Thanks!

Shervin Golgiri · Answer

Hey James, you need to look at it in a simpler way. First what's you net cash-flow after HOA fee and other expenses. Location plays a major role in decision making. How often does a property is being listed withing same HOA and price trend.

Condos come with less responsibilities and more convenient to own and use as rental, but history and market trend has shown Single family residential, comes with more equity appreciation and higher Cash flow.

The Idea of maybe you should sell this condo and move on to something Better for the longer run! is really good, but make sure you consult with an investor friendly agent, and you could make the better decision with more clarity.

shervinrealtor.com

Gustavo Delgado · Answer

The the HOA does not have enough funds, a lender may not lend on it. You may have to sell it cash. Whoever is the HOA board members need to square away the finances before the hole gets too big

Andrew B. · Answer

Your best option may be to push the board to get a reserve study done. This will ensure you can start saving at appropriate levels. Once you know what the actual costs are, you can determine profitability.

Mike D. · Answer

It costs so much to sell a property and buy another one, and is such a hassle, that if I were in this situation I'd strongly consider just paying the special assessment and keeping a property that's otherwise great.

James V. · Answer

@Chris Seveney

Thanks Chris! The questions, helps me understand what is important.

The building is a 10unit condo building, of which I own 1 unit.  There are individual a/c,heating, gas/electric, shared water, units and each unit is individually privately owned.  2 stories, no elevator.   Building is 40 years old.

Chris Seveney · Answer

@James Van

What type building? Is it a condo or townhomes ? Is there central heating or individual units? Their elevators ?

How many units?

Not enough info to provide any Legit response as a 6 unit hoa is different than 600