Help me analyze this deal

8 Replies

@Joy Funt what does the hoa cover. if the townhomes are 1000 sf, you have 4000 sf of flooring @ $6 sf = $24000 / 8 year life span / 12 months in a year = $250 per month capex for flooring. Still have the interior expenses like hot water,hvac,painting,appliances,etc. For $50 per month per unit I don't think the roof would be covered by the hoa. The more information we have the better we can help.

@Tim Herman , the HOA covers exterior - roof and maintenance. The owner agreed to replace the roof before we complete the purchase. I've asked the seller to disclose the HOA account balance and how old is the HVAC. Anything else I need to ask for to figure out if it's a good deal?

@Joy Funt sometime in the future there will be a special assessment. $50 per unit will not cover all exterior expenses. I can't tell if the parking is paved, if it is then there will be an expense for repaving. Do the hoa documents limit the number of rentals in the complex, some do. Have you seen the t-12(trailing 12 months of rent)and copies of the leases? Your true cash flow will be around $500 per month and will make your cash on cash less than 8%.

@ Tim Herman, yes the parking is paved and seems to be in good condition. Still waiting to get the T-12, 

Will share more info once I get it,

Thank you for taking the time and answering my questions,

Best regards,

Joy 

@Joy Funt I would not touch this with a 10 foot pole. I don't know how many units are in the complex but they are running a deficit. They are budgeting a $14 k loss and have already lost $25k in 6 months for non payment of dues. They will have to make an assessment to the active dues payers to get the property in the black. If you buy 4 of these then your share will be 4 divided by the number of paying owners. That is not even putting anything in reserves for capex for the future, which will be another special assessment. I like to control my own destiny rather than relying on a HOA. Look for a small multi where you can control the cost rather than a board where you can be outvoted.

@Joy Funt I just happened to look at the post. I was not notified. You are using the @ sign but as you type my name you have to double click it and it will populate the comment box in blue and notify me. I don't know if the app does it or not.

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