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So i just received more information on this particular building and the breakdown is out of 16 units 4 are owned by one investor and there are two others who own 2 units each vs one investor owning 8 units.
There are about 5 tenants who are senior citizens and rest is individually owned and some owner occupied.
Does it still appear as risky? I am finding your answers very helpful and appreciate any other advice/feedback. thank you.
Ok, you've confused me with numbers. In your first post you said that the building had 14 units.
If that's the same one you listed above you have 4+2+2+5, so 13 units. Plus 3(?) more owner occupied to get to the new number of 16. Are the senior citizens owner occupiers?
Having that many rentals can be problematic for getting financing to buy. The big thing is to have a strong Board but a building with that few units, unless it's part of a larger development, is very easy to have one owner control it. The investors with multiple units will likely get a vote for each unit owned.
yes, so it is confirmed that this particular building has 16 units and 8 of them are individually owned, the other eight: 4 are owned by one investor, 2 other investors own 2 each. Senior citizens are tenants who have been there since 1980's.
yes, so it is confirmed that this particular building has 16 units and 8 of them are individually owned, the other eight: 4 are owned by one investor, 2 other investors own 2 each. Senior citizens are tenants who have been there since 1980's.
Ok. How many units are owner occupied? You called the senior citizens "tenants" so their units are owned by one of the investors?
This is OT, but this is the ONE place that Co-ops > Condo, IMO. Co-Op could actually foreclose and evict a shareholder-tenant. I am not so sure that Condo's have the same legal options.
So i just received more information on this particular building and the breakdown is out of 16 units 4 are owned by one investor and there are two others who own 2 units each vs one investor owning 8 units.
There are about 5 tenants who are senior citizens and rest is individually owned and some owner occupied.
Does it still appear as risky? I am finding your answers very helpful and appreciate any other advice/feedback. thank you.
Less risky than only one investor owning half but still risky with three. Someone also brought up the mortgage issue also. Banks my not give you a mortgage with that many rentals in the building. I would ask your bank because if you can't get the financing it's a non starter. Might as well move on.
There is a reason you are paying all cash. No bank will lend to to the money to purchase this Condo. The condo that I lived in previously has a 20% default rate and they banks weren’t really willling to lend. We sold for cash. Also, it was super awkward with the tenants. Everyone knew the units that were in default. So 50% default. No way.
I viewed a unit like that last year in Journal Square area. Not sure if it's the same building you viewed, but when I saw the building financials I couldn't believe that anyone would want to buy into the building, we didn't even place an offer because the reserve fund was like 5K. And yet, there was a bidding war for the unit and it sold way over asking. There's always a sucker for any investment, not bad for a seller as long you can unload it in the future.
I viewed a unit like that last year in Journal Square area. Not sure if it's the same building you viewed, but when I saw the building financials I couldn't believe that anyone would want to buy into the building, we didn't even place an offer because the reserve fund was like 5K. And yet, there was a bidding war for the unit and it sold way over asking. There's always a sucker for any investment, not bad for a seller as long you can unload it in the future.
This was a building near the Lincoln Park. I loved the apartment but I also didn't make an offer because of the financials. The broker called to follow up and within a week they also had multiple offers and asked me if i still want to bid, i had to say no. I am sure the area is changing a lot and lots of people investing there like it is gold. My personal feeling was i would be living there and didn't have the money for unexpected assessments and legal feels which the building would accumulate to get their due maintenance back. It also meant that the HOA was so careless that they let the situation get to this level and these people would be my neighbours. If i lived abroad and just collected rent it could work but to be there day to day, it would be tough in such a small building. Also i thought if i wanted to sell and get out, i would still have to sell it for a cash buyer, possibly an investor and it would again be a low price tag (whether there is a bidding war or not) so my appreciation would be very little. There are other buildings in that area with more solid financials that would get conventional loans and similar units in those buildings sell for 50-60 k more.
Last edited by margharita23; 07-30-2018 at 09:16 AM..
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