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I posted several days ago and one respondent recommended that I post some additional questions with a thread title about condo financing, so here it goes...
I am considering buying a condo (for my primary residence). My price range is in the $120-$170K range. Some examples would be Trailwood in Raleigh or Cheasapeake Pointe in Cary.
However, I am worried that a condo would be very difficult to resell. I understand that once condos get older and more units become rentals (non-owner-occupied), it is very difficult for buyers to obtain mortgages. I might be limited to cash buyers. Are the lending policies about limits on non-owner-occupied enforced strictly in North Carolina?
If I am considering a particular condo complex, is there a way for a buyer (or her realtor) to find out how close the complex is to reaching the non-owner-occupied limit?
Are the interest rates on condo loans higher in general? If so, by how much?
I posted several days ago and one respondent recommended that I post some additional questions with a thread title about condo financing, so here it goes...
I am considering buying a condo (for my primary residence). My price range is in the $120-$170K range. Some examples would be Trailwood in Raleigh or Cheasapeake Pointe in Cary.
However, I am worried that a condo would be very difficult to resell. I understand that once condos get older and more units become rentals (non-owner-occupied), it is very difficult for buyers to obtain mortgages. I might be limited to cash buyers. Are the lending policies about limits on non-owner-occupied enforced strictly in North Carolina?
If I am considering a particular condo complex, is there a way for a buyer (or her realtor) to find out how close the complex is to reaching the non-owner-occupied limit?
Are the interest rates on condo loans higher in general? If so, by how much?
1. It is not a North Carolina situation. It is a Fannie Mae situation, enforced by lenders at slightly varying limits. For some lenders, the cutoff is 50% NOO, where others may go to 70% NOO. I know a lender who specializes in high NOO condos, so if you want to, PM me for contact information. Note: I haven't used him yet, but have spoken at length with him about his program.
2. It is difficult to determine how many units are NOO. You might call the property management company and ask. And you might be told that they don't keep those records. Sometimes it falls to the appraiser, which means you are into a transaction before you know. You might scroll through the tax records for the complex to determine how many owners' tax bill mailing addresses are the same as the condo address.
3. Interest rates shouldn't be hugely greater. Your lender can answer that.
Most banks have an approved condo list-don't know how often it's updated as to "non-owner occupied". When I was a loan officer it was 75% OO. Good luck.
Most banks have an approved condo list-don't know how often it's updated as to "non-owner occupied". When I was a loan officer it was 75% OO. Good luck.
The condo should, if good, have restrictions on the length of time an owner can lease the unit out.
If not, pass the condo by.
Many condos with too much investor ownership deteriorate rapidly from bad tenant selection and owner reluctance to spend cash on keeping the condo in shape (condo fees).
I don't live in Raleigh, just so you know. I would be very cautious about buying a condo anywhere. Others have discussed the possible problems with resale when more units are renter-occupied. Also, condos can depreciate if not maintained, and as an individual you will not have that much control over the level of maintenance. Even if condos are well maintained, the condo fees are almost certain to go up over time as repairs and replacements are needed. Finally, land is a limited commodity so there is some protection for your single family home -- even if your house needs repairs you could find a person who wants to buy it. But condos are easy to build, anywhere, and whenever you decide to sell you may find yourself competing against new units. It is difficult for an individual seller to compete against developers. Speaking from experience here.
A good condo organization will collect enough to have money on hand for foreseeable repairs based on expected lifetime of the item.
A bad condo organization will have to levy heavy assessments or let the place deteriorate.
All depends on who's on the board.
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