Flippers be careful about condo flips

[Shari Posey]

Maybe this is old news in this forum but I've been dealing with quite a few condo flippers that didn't realize that the potential buyers' lenders are going to put up a bunch of roadblocks and it's not going to be as easy as you think.
--FHA is the biggest road block to the majority of your buyers, especially in the lower price ranges. If the complex is not FHA approved, I wouldn't buy in it in hopes of a fast flip.
--I've run into buyers' lenders who don't want the seller to be an LLC.
--Be careful of delinquencies over or even near 15%.
--Be careful of too many rental units.
--Be careful of making too much money on your flip. If your profit is greater than 19.9% you can forget FHA and it will come under scrutiny for conventional.

Here in southern CA, if you need a quick flip and you plan on making a lot of money, I wouldn't invest in a condo.

These are just some helpful tips I have acquired, particularly working with buyers trying to buy condo flips--it's HARD!

[Jon Holdman]

Too often you don't "work with the HOA". You get worked over by the HOA.

HOAs can make rules limiting what investors can do. Could be a complete restriction on renting, limitations on access and limitations on advertising.

HOAs can make special assessments that cost an investor a lot of money. Badly run or defunct HOAs, like many in partially sold projects that got caught in the bubble bursting can have very serious money troubles.

HOAs can create seemingly minor rules, or rigorously enforce rules, making your or your tenants lives difficult.

Overall, an HOA is a silent partner in any investment in an HOA controlled property.