Advice on Rental unit with HOA issues
INFO:
Wilmington, NC
Offer accepted: $39,900 2br/2bath about 890sf
82 units in complex HOA: $150 no amenities
Rent in area: $600-650
Build in 1984
We have a contract but further investigating the HOA they have no reserve, about 30% of units in default, and they have a budget for 2011 that shows expenses higher than income for $14K, without virtually any reserve.
Lots of foreclosure units and HOA does not get the past dues fees in those cases. HOA had a special assessment last year (~$600/unit) just to have working funds.
9 units sold last year for avg price of $37.3K.
Last unit closed yesterday for $53.5K - unusually higher than all others closed last year and my offer.
My due diligence period expires tomorrow.
Should I terminate and move on? Am I missing anything? It is my second deal and I can use some good advice.
I tend to think my risks are bigger than reasonably expected in this case. Any thoughts?
Thanks!
Originally posted by Sofia A:
INFO:
Wilmington, NC
Offer accepted: $39,900 2br/2bath about 890sf
82 units in complex HOA: $150 no amenities
Rent in area: $600-650
Build in 1984We have a contract but further investigating the HOA they have no reserve, about 30% of units in default, and they have a budget for 2011 that shows expenses higher than income for $14K, without virtually any reserve.
Lots of foreclosure units and HOA does not get the past dues fees in those cases. HOA had a special assessment last year (~$600/unit) just to have working funds.
9 units sold last year for avg price of $37.3K.
Last unit closed yesterday for $53.5K - unusually higher than all others closed last year and my offer.
My due diligence period expires tomorrow.
Should I terminate and move on? Am I missing anything? It is my second deal and I can use some good advice.
I tend to think my risks are bigger than reasonably expected in this case. Any thoughts?Thanks!
I'd strongly suggest not just moving on, but RUNNING as fast as you can.
You didn't say whether this is a condo *** or a sfr association. Where do you think they will get the money for repair and maintenance since there is no reserve fund, those units in default, and a higher operating budget? The funds come out of the pockets of those willing to pay ever growing amounts, or not at all. The person who bought that unit at 53K did not do his homework, and will most likely be unpleasantly surprised.
So besides the standard dues, there is now a special assessment, and next year another probably. Your risks are WAY bigger than reasonably expected in this case. RUN!
Thanks Ofgift Gift for your quick reply!
And btw, it is a condo assoc.
That makes it even more imperative that you let it go. If there's no money for repairs, that means roof problems, other exterior problems, and mechanicals of every kind probably, plumbing in particular, which grows into other problems. And there's no money to fix them...