Upper Marlboro, MD · Member since 2012 · 13 posts · 0 votes
Hello all,
I'm curious to know some of the pros and cons of investing in a condo. I dont have a strong understanding on "delinquent condo fees" and how that plays a factor in investing in a condo. I understand that FHA will not finance with delinquent condo fees, however, if the investor pays to update the delinquency wouldn't that make for a great deal?
Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
14y
Another BIG negative - FHA approval. You have to check FHA's database to make sure that the development itself has been approved by the FHA or else no FHA financing which (obviously) negatively affects the market value of the condos within the development. Even if its is FHA approved you will want to know when it expires and whether or not they will be seeking 're-certification' before it expires.
Investor · Virginia Beach, VA · Member since 2011 · 68 posts · 12 votes
14y
Hi Bienes
That's a good question. From what I've seen, condo complexes sometimes put a limit to the number of rentals they can have. So, before you buy, you must make sure that you can even start to rent it out.
As far as the grandfathering, it's a good question and one that I don't know the answer to. (I will investigate) But, I suspect that they can't just turn around and lower the number of investors allowed. If they did, which ones would they target? I suspect they'd have some sort of fight on their hands if that were to happen.
The financials for the board need to be disclosed to you before you buy, but you may need to ask for it. As for a lawyer, I'm not sure what kind of help they would be. They could interpret the CC&Rs a little better, but they wouldn't be able to do anything official with the financial data. It may be better to talk with an accountant, though in my case, my realtor was knowledgeable enough to make the assessment and I was ok with the numbers as well.
My biggest worry these days is special assessments. I've been to the board meetings and I think they do a good job of doing the maintenance, but for large emergencies, they could ask for thousands of dollars, due immediately.
SFR Investor · Virginia Beach, VA · Member since 2010 · 150 posts · 36 votes
14y
I recently purchased a condo foreclosure and had difficulty receiving the HOA records. The condo association will issue you a resale package that will disclose rules, financials, etc. In my case they would not provide this information until I had a contract. I made sure my buyers contract included a way out if I did not agree to the HOA, since I could not review this information until I placed a contract on the condo.
As I stated previously, I prefer HOA's on my out of state properties. I feel it adds an extra layer of protection to ensure the area remains in decent shape. I regularly receive $50 fines on one of my properties. For some reason the tenant never remembers to put the trash bin in the back yard after pickup day, but I just add the fine to tenants account and he always pays. This has been going on every few months for years.
Real Estate Investor · Philadelphia, PA · Member since 2011 · 16 posts · 0 votes
14y
I have owned one condo prior to the boom I bought in 2003 and sold it in 2006 for Double what I paid for it. I made over $125K + after all taxes and fees and thought wow this is awesome!
That was a "once in a lifetime situation" that I don't see repeating any time soon, at least not in my lifetime.
I have another one I bought pre construction in NC in 2004 and it rents well and does cash flow positive, but the HOA fees keep going up and I later found out the whole complex was built with a cheap roof, siding, and windows and even though its only 8 years old I am starting to get assessments (extra money I have to pay for repairs as a group) on items that should still be good for years.
I want to sell it but I have a tenant with a year lease in it, and plus I am pretty sure I would not be able to get more than maybe 20% more than I paid for it in 2004. I only owe about $70K on it so I may keep it for a while.
If you get the right price and the building is very solid, you may be OK.
It takes a lot of looking to do it. Maybe a 4 unit apartment complex may work out better if you find the right one?
With the down housing market I hear rentals are up in a lot of places.
Real estate is local. Location is very important also.
Anyway, that is my 2 cents from my own experience with 2 condos over the last 8 years....
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
14y
The "desireability" of a condo is definitely a regional thing. In some areas condos are seen as less desireable than a SFH but in others there is no "stigma".
All the complaints here are real but in my experience, those issues are all baked into the price. If condos have lower value or higher fees in your area, then you will pay less for it.
One thing that hasn't been mentioned that was most annoying for me is rehabbing and having to deal with elevators and very close neighbors and common dumpsters etc. A REAL pain in the rear.