Rental Property Investor · Chandler, AZ · Member since 2019 · 39 posts · 21 votes
BP,
Does anyone have experience buying an non-warrantable condo as a buy and hold investment? I've been looking for another property in the Phoenix area, and it seems everything at my price point comes up as non-warrantable condos. I have found a lender that offers loans on these properties. Aside from resale which I don't plan on doing for many years, what other aspects am I missing?
Realtor · Denver, CO · Member since 2020 · 259 posts · 153 votes
5y
Hey @Josh Darley! I'd recommend finding out why the units you're interested in are non-warrantable, some reasonings seem to be a bigger deal than others but come down to your preference. They'll typically also require a larger down payment, which you're probably aware of after finding a lender willing to lend on them :) best of luck!
My first primary purchase was a Condo (within a non-warrantable community) located in DTPHX on Roosevelt Row in 2016. I lived there for a few years and then moved on to my next primary, while keeping the condo as a long term hold. In my case, thoughts of resale being a concern are ZERO. My purchase price was 225k. Units are selling for 360k now. As a buy and hold investment - it has been pretty great.
My community was non-warrantable because is a small complex (only 11 units) and one individual owned a few of the units and many others were not used as primary residences.
Things to lookout for:
- Cash reserves of the HOA. See about getting a copy of the "Reserve Study".
- Any upcoming Special Assessments.
- Use restrictions (as with any HOA).
The cash reserves with my community haven't been enough to keep up with the maintenance prescribes within the communities reserve study. Those cost haven't been outrageous.. maybe $1,100 over the course oy my ownership, and all of the improvement have added to the quality of the community and increased property values. So not a bad deal. BUT, it's still VERY important to know what major expenses are coming up and if there is cash in reserves to cover them.
Any thing else have you concerned?
Best of luck!!
I'm here if you've got any other questions or need insight into the current market.