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I believe we are getting a great deal on the condo, worthy of paying the purchase price as compared to others in the complex and in the area. We are planning to move to the BI, we don't have a set date yet. It was not our intention to buy a place this soon, but it may be just what we want and the market is great right now for buyers. We'll have to work out the details of getting it renovated and depending on what happens we may end up trying to rent it out, but if we have to pay 2 mortgages for a bit we can.
By "financial condition of the Association" what I mean is: One of your conditions in your purchase contract should be a review of the condo association documents to your satisfaction. Part of that information should be financial information showing existing revenues & expenditures as well as current balances for for future liabilities and what the major projected lifespan is for certain elements of the condo association.
Think of it like the Association is a business. Some Condo Associations are broke. For example, the HOA dues they've collected over the years have been spent on thing or the other and they do not sufficient reserves to handle upcoming maintenance/repair items. So if something comes up, they will need to levy a special assessment on the unit owners to pay for it (or take a loan and then increase HOA does to pay for the loan cost).
So looking at the financial statements of the existing association and the projected annual shortfalls or surpluses generated by the HOA fees and the cash balances on hand and the projected liabilities is an important review of the financial condition of the association. So that's what I meant.
Sometimes you can get a great deal on a purchase but get hosed in the end because the Association is in shambles and broke. Costs for new roofing, plumbing, lanai railings, etc can be very expensive in a large complex.
Anyway, that's what I meant by make sure to check into the financial condition. But you most likely won't be able to get that info until after you offer is accepted.
I'm sure you're realtor will know all about it be able to steer you the right way. That's one reason a good realtor is important.
Good luck, it may work out and be a great place for you.
I've bought several Honolulu units while on the mainland. My Realtor uses Docusign which allows me to sign papers over the internet. I wire money from the mainland and have local accounts. Might have to overnite a thing or two. My Realtor does all the walk thru's etc. She does alot of work!
Waikikiboy is correct about checking the funding for the reserves study. Also read through the minutes of the last 3-6 months of association meetings.
GREAT information! Thank you so much for taking the time to explain in such detail. Anything at this point is helpful, especially buying a condo, which we have never done, only single family homes.
My husband has thought it over more and decided to schedule an inspection and then he will fly out to the BI and be there for it and of course to make sure this is really what we want. I trust him to go alone, we have a small child and would rather not all go.
And besides all of this stress and confusion we are SO excited that we might actually be buying our future home in Hawaii!!!
As a Realtor myself, I have been involved with persons buying (or selling) from the mainland. The paperwork is no big deal most of it can be done via email or fax, with the final packet FedEx'd to you from the title company.
It would be out of line for any of us who live here to advise you since you are represented by a realtor. They are your source of where to find all the information you need. I do however agree that buying sight unseen is not something that I'm crazy about. If you can afford to buy a condo here, you should not have any problem getting out here for a few days to look at the property in person.
I just returned from a 3 day trip on the BI, Konaside, looking at condo's/houses. There is a HUGE difference between complexes, HOA fees, restrictions, noise etc.. Several were awesome deals, a couple absolute holes! Or in between=great condo, backs up to Ali'i Drive. Super noisy.
I also found a big difference in quality on construction. At similarly priced condos, similar HOA fees. One had pressed wood cabinets in the kitchen that were pealing and rusted Stainless steel appliances. The other, hard wood cabinets and as-new appliances.
And speaking of HOA fees. Spend some real time studying up on these. You can find a condo for >200K, but the HOA fees can exceed $1000 per month and you can count that they will only go up in the future.
If you buy, you usually have a 10 day walk through period to correct defects. I'd make sure I was on island for that!
Just curious, Joliefille -- what condo complexes impressed you the most, in terms of overall value? And are you leaning toward a condo or a house? My wife and I hope to move to the Big Island in a few years, so my question is academic at this point. Last summer, we accompanied a BI friend who was condo-shopping on the Kona side, as she and her husband were planning on downsizing from the large house they owned. My wife and I had always assumed we'd buy a house in her native Hilo, but we liked the Kona vibe, we saw a couple of very nice condos, and we started thinking that the condo lifestyle might be nice in our retirement. However, a realtor friend in Hilo advised us that a small house would be a better choice, due to condo HOA dues that can increase significantly and unexpected assessment fees. We go back and forth, and currently are leaning toward a house, which is what we have now in Oregon -- but we still have a few years to plan.
HOA dues will be the biggest variable, as they can increase considerably. Ask your realtor to get a copy of dues over past 5-7 years. As another person stated, they can levy an assessment on everyone if they don't have enough money in reserve.
I purchased a Homepath property on the mainland earlier in the year, and my comments are only about buying from Fannie.
You are buying a foreclosure in complete and 100% as-is condition.
You need to really go through the place with an excellent inspector. The standard real estate contract that you may have used in the past will not be used for this transaction. You will need to use the Fannie contract, which is really one of the most (if not the most) seller-favorable contracts I have ever seen (I invest in real estate and practiced land use law in the past).
What could seem a bargain today may end up being much less so when you add in any and all repairs/remediation costs. These will fall 100% on you under the Fannie contract. If I were teaching real estate law I would use that contract as an example of what never to sign as a buyer, unless you have factored in all future costs as well as a pretty hefty risk premium. If after all that the place is still a good deal, go for it.
Just curious, Joliefille -- what condo complexes impressed you the most, in terms of overall value? And are you leaning toward a condo or a house? My wife and I hope to move to the Big Island in a few years, so my question is academic at this point. Last summer, we accompanied a BI friend who was condo-shopping on the Kona side, as she and her husband were planning on downsizing from the large house they owned. My wife and I had always assumed we'd buy a house in her native Hilo, but we liked the Kona vibe, we saw a couple of very nice condos, and we started thinking that the condo lifestyle might be nice in our retirement. However, a realtor friend in Hilo advised us that a small house would be a better choice, due to condo HOA dues that can increase significantly and unexpected assessment fees. We go back and forth, and currently are leaning toward a house, which is what we have now in Oregon -- but we still have a few years to plan.
We asked our realtor to eliminate anything with an HOA in excess of $800 per month. We also skipped a couple complexes that were half time share/half homeowners. After that, we wanted something with at least a one car garage, 2 bedrooms, 2 full baths and a good size kitchen.
We looked at 3 complexes in Kailua-Kona and all 5 in Waikaloa Beach resort (we excluded Waikaloa Village just as a personal preference.)
All told, we thought the best floor plans, best common areas and most reasonable HOA fees were in Waikaloa Beach Villas and Colony Villas. The only negative is that Waikaloa does not allow pets.
We did look at some single family homes, but felt that since we are planning to rent it for the next couple years until we retire, a condo was more feasible.
Let me know if you need additional info! You can also check out www.alohaliving.com to view properties.
Last edited by Joliefille; 09-27-2011 at 10:14 PM..
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