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Think about it whtviper. NOI/purchase price equals cap rate. $700,000 at a 7% cap rate equals a NOI of $49,000. At 3% the NOI would be $21,000. Obviously these two Waikiki condos are NOT comparable. The market is not going to pay $700,000 for $21,000 of NOI when you can get $49,000 for $700,000! See how you are not comparing apples to apples?
No.
Just no.
You are making an assumption that all $700K properties are created equally in Waikiki.
Some properties yield much more in rent than similar properties at the same price.
Actually no I'm not. I'm talking about maintenance fees/HOA dues - same thing as you. I guess the owners of Yacht Harbor Towers live paycheck to paycheck, right? Yacht Harbor Towers owners had to pay $40-$80K in a one time special assessment to fix their failing building. And 2bdrm owners are still paying $1,200/mo for maintenance fees ON TOP of that nearly 6-figure special assessment.
Even owners of luxury buildings get whacked with crazy special assessments. Here is one in Boston I'm sure you'll appreciate -
You said AOAO's have minimum reserve accounts! That is not the same as having a well funded reserve account. YHT? I don't know who lives there but I looked at their listings and they are selling for about half per square foot of my fully funded reserve building on the water. I also didn't see any mention of special assessments. About $700 maintenance for a 700+ sf condo that provides A/C hot water and electricity doesn't seem excessive.
Read your article. It talks about proper budgeting. That's a big secret?? to avoiding special assessments.
You said AOAO's have minimum reserve accounts! That is not the same as having a well funded reserve account. YHT? I don't know who lives there but I looked at their listings and they are selling for about half per square foot of my fully funded reserve building on the water. I also didn't see any mention of special assessments. About $700 maintenance for a 700+ sf condo that provides A/C hot water and electricity doesn't seem excessive.
Read your article. It talks about proper budgeting. That's a big secret?? to avoiding special assessments.
Minimum as in it meets the reserve study's requirement. I was not referring to "minimum" as one cent above the minimum required by state law. Big difference.
$700/mo for a 700 SF apartment is high especially if the unit doesn't rely on a/c to be comfortable. On a long term rental basis, that would eat into 1/3 of the rental income (assuming $2,100 would be fair for a 700 SF condo but with you, who knows... you may be renting it out for $5,000). One third of gross rent going to a maintenance fee is scary. But that's just me.
You clearly live in a predictable world - congratulations. Unfortunately for myself and every other person on the planet (except you) we live in an UNpredictable world. The fact that you think any owner of a condo that gets hit with a special assessment is living in a building that is run by morons (wait, not just morons - poor morons), is ridiculously presumptuous and obnoxious. Special assessments are not avoidable by good management alone. It's appalling some of the things you say. Seriously.
You can't expect every property priced at exactly the same price to be comparable.
Property 1 - price $700K, maintenance fees are $500
Property 2- price $700K, maintenance fees are $1,000
Rent for both is $3,000 - far different ROI.
You are just parroting what I said. They are not comparable properties. Duh. Same market value and same rents DO NOT guarantee comparability. AND now you've changed to talking about ROI instead of cap rates. COMPARABLE properties will sell at the same general market cap rate.
Minimum as in it meets the reserve study's requirement. I was not referring to "minimum" as one cent above the minimum required by state law. Big difference.
$700/mo for a 700 SF apartment is high especially if the unit doesn't rely on a/c to be comfortable. On a long term rental basis, that would eat into 1/3 of the rental income (assuming $2,100 would be fair for a 700 SF condo but with you, who knows... you may be renting it out for $5,000). One third of gross rent going to a maintenance fee is scary. But that's just me.
You clearly live in a predictable world - congratulations. Unfortunately for myself and every other person on the planet (except you) we live in an UNpredictable world. The fact that you think any owner of a condo that gets hit with a special assessment is living in a building that is run by morons (wait, not just morons - poor morons), is ridiculously presumptuous and obnoxious. Special assessments are not avoidable by good management alone. It's appalling some of the things you say. Seriously.
Appalling, maybe. Factual? Yeah. The $700 maintenance is from YOUR YHT that YOU claim has mega special assessments and double maintenance cost. I looked at Oahure.com and they make no mention of the assessment and I pointed out that less than a dollar per sf on a property that provides all utilities including A/C is not that high.
So what is Oahure.com missing from the financials on YHT?
Appalling, maybe. Factual? Yeah. The $700 maintenance is from YOUR YHT that YOUU claim has mega special assessments and double maintenance cost. I looked at Oahure.com and they make no mention of the assessment and I pointed out that less than a dollar per sf on a property that provides all utilities including A/C is not that high.
So what is Oahure.com missing from the financials on YHT?
Exactly, so I proved my point. The fees are too high for what it is AND they got whacked by an insanely high special assessment.
YHT financials on Oahure? Huh? It's probably not on current MLS listings because this was handled years ago. You can see the description from a few units "special assessment paid in full", etc in older listings from years back.
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