My wife @Monica Corbett and I have a buy and hold deal under contract that we are looking for some feedback on. We plan to purchase the deal with a combination of saved cash and a HELOC on our primary residence. The house which was built in 1986 is in a B class neighborhood with the possibility of a large development going in nearby which may increase values. It's a condo building with about 10 units. The association fee of $100 covers lawn care, snow removal, and exterior hazard insurance. Many of the residence in the area are retired and its not unusual to find long term tenants. The condition of the property is decent with repairs needed are paint, carpet clean, new appliances. After repairs are complete and the house is rented, we plan to refinance the deal and pay off the HELOC, then do it all over again. I have analyzed the deal with both the actual purchase numbers as well as the numbers after refinance. Let me know what you think.
Several things come to mind. First I do not invest in Condo's personally. My first owner occupied was a condo and I had no "control" over many things inc. ability to have my neighbors be ppl that I like and trust.
Do they allow rentals? What are the terms? What if your tenant dies,moves,gets evicted can you rent to another tenant in the same year? What are the bylaws in regards to the property and the maintenance on the property? Who is responsible for common areas?
Sometimes a small bldg. creates more problems and sometimes it is less. Politics if you will. Just some things to think about.
P.S. I do not see anything about taxes. Who covers those? Also water and electric where is that covered for common areas?
The property taxes are in there...sorry i'm working on the other PDF right now for the after refinancing.
I just got this unit under contract and am in the due diligence stage, and have to check out the condo association. I plan to meet with the president of the association and get a better feel for whats going on. My realtor has said that there is no restrictions on rentals but i will be sure to verify that. The tenant should cover water the unit has its own meter. I'm not too sure about common electric..but i would think the association fee would cover that. Thank you for the help.
@Laurie Johnson the taxes are in the analysis, but they are based on a $78,000 value..thats where i got the ARV, this is probably too high..
Please do NOT ever depend on the realtor for stuff like that. They only know what they are told most do not KNOW the property. I am a broker so this is not putting realtors down it is just CYA. Also for the water and electric (common areas) it is not listed in your association fee so that makes me concerned especially since there are only 10 units. That could mean a "surprise" quarterly bill. Also what are the Pet requirements?
I will verify that rentals are allowed, i'm going to get a copy of the bylaws and also personally meet with the association president to ask him/her this question in person. What a bad deal it would be if they did not allow rentals. I know for sure it has its own water meter as i saw that my self. I cant really think of any reason why the building would need its own water/electric..but I will make sure to check into that. Any other things to check into?
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