Condo flip?

[Will Gaylord]

I see a lot of people talking about buying and holding condos and all the issues with it but I don't believe I have seen anything about flipping a condo? I have recently found one in foreclosure and all other units of same size have sold for significantly high compared to the lowest bid. Seems worthwhile...

[Marie Haydock]

Hi Will.  Condos as a category can be a perfectly viable flip opportunity.  Like all potential investments, do the best you can crunching the numbers to see if it makes sense.  From the prospective of a Real Estate Broker and an Investor, there are a few cautionary points I want to bring up.

Condo Flips - things to consider:

1. The HOA is critical to the success of a flip. You'll need to check with the Home Owners Association and see if there are issues and/or expenses with short-term ownership. Some HOA's will have move-in/move-out fees that can run into the hundreds (at least) and possibly thousands of dollars. That needs to be factored into your calculations.

2. Once you come up with the home improvement/repair list for the unit, check with the HOA to determine: a) which ones need their approval. b) which ones need neighbor's approval. c) what the timeline is for applying for approvals.

3. Get the Resale Certificate, and check HOA meeting minutes, where they compared to plan for their Reserve Study, and any possible projects in the short term. Read, reread, and ask questions about possible assessments for the complex. Even if there's no assessment TODAY, look through the recent minutes and ask people about projects coming down the line. Property managers may only be required to disclose documented assessments today, and not disclose what everyone at the complex knows will be coming in a couple months. If there is one, it's not necessarily a deal breaker, but needs to be factored in to your decision-making.

4. Does the HOA require owner occupancy? That may be a deal breaker for you, unless you can be creative. Or, sometimes an HOA may require owner occupancy for a fixed period of time (like 1 year) before it can be sold or rented. There are all kinds of weirdness that can be found in HOA rules, so you need to be aware and through when you check them out.

Hope this helps.  Good luck!