I'm looking into buying a group of condo's for sale in a complex where there is an HOA. Normally I wouldn't think about working with an HOA but all of the condo's are owned by investors so the HOA board is made of of investors rather than tenants.
Depending on cost of HOA dues could this be something that is ok to get into or should HOA's be avoided all together regardless of who makes up the board? thanks.
You mean it's composed of Investor owners, rather than Owner Occupant owners. Many investors just look at monthly cash flow returns today, as opposed to long term values. Many smaller condo complexes here with heavy Foreclosures got bought up by investors, filled up with section 8, and became police enforcement nightmares. Depends on what you want I guess. I'd rather have a condo where the majority are owner occupants.
Sorry, yes, I do mean Investor Owners rather than Owner Occupants in the HOA. Thanks for your thoughts.
I have a few condos in Fresno with HOA's... they are located in La Hacienda and Peachwood Village. If the HOA is ran down with a bunch of vacancy you can expect to pay or eventually pay higher HOA fees from the lack of owners paying into the pot. I've been happy with my returns. I probably wouldn't keep more than a 1/4 of your portfolio in HOA properties. But if you own a couple dozen properties and own a few with HOA that seems pretty conservative.
If you get into condos I have a good lender that will finance a 1st position line of credit. That is what I did for my condos.
thanks Frank. the condo's i'm looking into is a group of 11 in the ranch wood complex near Fresno pacific University, not far from LA Hacienda. they look like they would have a great return but unfortunatly that would put 100% of my real estate portfolio in HOA's. I have my realtor running comps today to see if it can generate enough cash to make it worth it.
How has your experience been at LA Hacienda with tenants?
Frank, You made a comment about vacant units not paying into the HOA, in a typical HOA do vacant units not pay into the pot?
Also, in your HOA, what is the front office responsible for? Do they collect rent like an apartment complex or are they simply a contact point for residents?
Being a condo investor is perfectly fine. I am 100% condo investor at the moment. Be cautious about investing not only 100% of your portfolio in condos, but also in the same building/complex. If the roof were to need a replacement and the building didn't have enough reserves to cover immediate repairs, you would need to come up with the assessment fee x 11 units to pay for those unfunded repairs. It might be easy for a single unit owner to pay, but you'll have a much greater percentage of that repair cost to bear... This is why it is important to look into the reserve budget and reserve account to make sure the finances are able to cover future expected/ and unexpected repairs and replacements. You might just have to ask them this to see how the budget is doing and ask specific questions or else you might not get much clarity... i.e. can you pay all of your bills this year. how much is reserve fund? Can it fund the items in the reserve study? any major replacements planned soon?
Front office/back office property manager will handle common area repairs/ HOA fee collection/ building finances/ normal maintenance contracts for building. They won't be collecting any rent for you unless you negotiate a contract with them separately, and will certainly charge you 10% or standard rate. They are paid by condo fees to run building and respond to owner issues. Any renter issues not pertaining to common areas will need to be directed to the landlord. They are a good asset to give you an idea of the state of building finances and other issues but wont be serving as customer service for your renter. That will remain your responsibility...
Jeff buying 11 units in Ranchwood is crazy talk. That place has had some violent activity and you are going to have a difficult time managing tenancy. The price per unit has to be cheap.... Under 40k. I'm just throwing that number out there. La hacienda has been real good. I've had two unit in there for about 2 years. That hoa is in good shape and the tenant base is good for now. I think communities have cycles of good and bad times. Who knows maybe Ranchwood will turn around for the good.
Vacant units Not paying into the hoa are the ones that owners are in default with there lender.
Watch out for agents selling you garbage. How many properties does your agent personally own and manage? 1, 5. 50?...0? If you had small children would you trust someone more to watch then that has never had kids...? Or would you feel better leaving them with another parent?
Let me know if you need help. I would be more than happy to talk shop.
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