Possible condo deal. Need opinions.
#1 All Forums Contributor
- Investor
- Virginia
If your buying a property that is $20-$25k below market value and is an auction property I would damn well want to do an inspection as you can spend that pretty quickly.
Also for a condo, make sure to get a copy of the condo documents as well as the last budget the association did.
Also ask for information on the condo board and contact them and see if there are any special assessments planned or large capital purchases/improvements in the next five years.
Also ask what the HOA fees were for the last five years (to see a pattern if they are rising)
I had a condo under agreement and the seller "forgot" to tell me there was a $7,000 special assessment (condos were selling for $40k) - when I went back to the seller they noted the price was based on the assessment. Needless to say the deal fell through.
@Carlos Rovira Make sure the HOA fees are up to date. I believe some states you are liable for the past 6 months.
First do not leap. Condo ownership and renting your condo is something you should really research and be prepared for. Get to know the HOA and the CC&Rs if you do not know what CC&Rs then you should not purchase any condo at this time.
Some HOA restrict an owner from renting out their units until such time as they have actually lived in them for a extended period of time maybe between one and two years.
You need to check with your insurance agent and review your policy to make sure you are adequately covered for renting our your unit.
Before I would buy a condo I would interview several condo owners and learn from them about their experience, ask questions.
How would you know what condition the place is in if you cannot do an inspection? How do you really know what you are buying?
You said potential rents does the mean the unit is currently empty?
Make sure. There really is allot to know and learn about owning and renting condos that can be very different than owning and renting single family units.
As others have said, do your due diligence on the HOA. Is there a history of special assessments? What is the delinquency with dues? What are there reserves? Also, talk to some of the owners. Some condo complexes are passive aggressive towards rents, making their lives and yours difficult. Are the neighbors pleased with the operation of the HOA?
@Chris Seveney@Carolina E.@Gilbert Dominguez@Steve Combs
Thanks to all!
A quick update here. I will be getting an Estoppel Letter from the HOA on Monday (supposedly). I've been told by the wholesaler that, while they can't provide an inspection period, I can come in and out of the place prior to even submitting an offer, and I'd get "first dibs" should I decide to buy it (assume within a reasonable amount of time).
In the mean time, I am compiling a list of things I'd like to check with the HOA as part of my due diligence with them. Most of this is based on your comments above, but any additional questions / concerns are welcome.
1) Were there any special assessments in the past (if not stated in the estoppel letter) or any imminent in the near future?
2) What is their policy on owners renting their units?
3) Is there a specific process I need to follow to get renters approved?
4) Acquire a copy of the condo documents (CC&R) and previous budget
5) What are their reserves?
6) Find out what the HOA fees have been in the last 5 years
I am going today to check it out (it's on lockbox) and I will knock on some doors and speak with some of the neighbors.
Thanks again, everyone!
In addition to all of the above, I would ask for the minutes from the last year. Sometimes there is discussion about upcoming projects (new roof, paving parking lot, etc), that could indicate a large special assessment is about to happen.
Carlos, I can assist you with all of this and any further questions during our meeting as I own several condo properties and I have experience in dealing with the associations.