Unwarrantable condos in Naples Florida

5 Replies

Under what circumstances is purchasing an unwarrantable condo (one that does not qualify for conventional financing) a good investment? 

I have an opportunity to buy a nice condo in a good area (central/north Naples), for about $25K under FMV. It will be an investment property for which I believe I can get the same rent as for another similar condo. The HOA, however, has all the issues why a lender will not lend on this community (more than 50% investment properties, one owner owns 40% of the units and reserves are only 6.5%). And I know I'll have a hard time selling later since it will require a cash buyer or portfolio/private loans. Any thoughts? What would be an appropriate discount to compensate for these issues? And would you still buy? Thanks!

If you want to PM me the address I will look at it. Typically, I don't buy condos. They can be very restrictive and can change the rules. Even an HOA can be problematic for a landlord.

@Sandra Cressey , how hot is the market? $25k under FMV doesn't sound like such a hot deal. If you need to sell it quickly, you have shrunk your buyers pool considerably by having an unwarrantable condo.

What makes this complex unwarrantable? Is there a chance to turn it around to warrantable?

thanks Mindy. I don't think there's a chance to turn it around.  Biggest issue is one entity owns 40% of the units. Which makes this complex very vulnerable in my opinion, abd the worst risk with this investment. You agree? Because other than this I would take my chances it's in a great location and a great unit 

there a lot of lenders who will finance these condos with 25% down If you are getting a good deal it should not stop you if the location and demand is decent 

Steven, as an investor, would you be afraid that the entity that owns 40% of the complex may go bankrupt or decide to stop paying HOA fees, or a number of other issues, and that will affect the other owners? I see that as a potential disaster. Your thoughts? Thanks!