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Old 12-14-2011, 07:59 AM
 
Location: Lexington, SC
4,281 posts, read 12,640,038 times
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You should be able to get a copy of the HOA Budget to review. The budget should show an amount set aside each month from dues collected and usually called Capital Improvements. This is money set aside for long range projects such as elevator repair, parking lot paving, roofing, common area carpeting/painting, clubhouse repairs, pool repairs, etc. Repairs/replacement that typical usage, age, etc. will require to be made eventually such as roofing a house.

This money should not be used for montly expenses like electicity, lawn service, insurance, taxes, etc. These type expenses are ongoing monthly expeneses and would be paid out of an Operating Expense Budget. Capital Improvements are long term issues that will happen later so you have time to build the Captal Improvemnet Fund up to meet those needs when they arise.

Now when a major expense issue arises and there is not enough money in Capital Improvements then typically the BOD would split the cost among the homeowners in form of a Homeowner Assesment. They might also borrow money and pay it back over time by increasing the homeowners dues to cover it like a term loan.

There can be two problems with HOA's and dues. One is they did not charge enough to cover things and the place starts to deteriorate This is quite common when the residents are seniors living on fixed incomes and/or there are many part-time residents and/or many renters. Not as common an issue with full time living/working residents.

The 2nd issue is the assessment issue. I know one upscale town house development ($400K) that had to redo all the siding and garage doors at about the 25 year mark. No doubt it needed to be done. The HOA voted a $35K per unit assessment with some various payment options.

With all that said, most HOA Covenants do not allow the BOD to willy nilly raise dues or place an assessment nor go into debt. There are controls/limits that ultimately come back to the homeowners control. You should be able to get a hold of a copy of the HOA Covenants to read.

Living under an HOA is different and not for all. If you believe you should be allowed to pretty much do as you like with no regard for your neighbors, then you do not want to live in an HOA. This can range from hang a flag to where you park to what type Xmas decorations you can have outside your house/unit. These type things will/can/might be controlled.

There can also be major and/or legal differences between various style HOA's (multi unit buildings like an apartment building to stand alone homes) and various state laws. I know of one state where as soon as the units/homes are 51% sold, the HOA must be turned over to homeowner control. In other states it does not have to be turned over until that last unit is sold.

I have lived under HOA's ranging from apartment building types, to townhouses, to $400K stand alone homes. I like the living style. I have paid from from $50.00 per month to $500.00 per month dues and each was fair for what I got.

Hope this info helps
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Old 12-14-2011, 08:18 AM
 
Location: Tempe, Arizona
4,511 posts, read 13,551,250 times
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Quote:
Originally Posted by civic94 View Post
...they are all the same sq footage, just different units at the same complex being sold at the low prices and still a few thats on sale and not sold yet, for a low low price of 35k .
Another factor that could impact prices is the ability to get mortgage financing. Many condo complexes won't qualify for loans if they exceed certain guidelines such as too many rental units (or too few owner-occupied), underfunded reserve fund, etc. They may need to price low enough to attract cash buyers.
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Old 12-14-2011, 08:32 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 19 days ago)
 
Location: Cary, NC
43,171 posts, read 76,782,186 times
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Quote:
Originally Posted by rjrcm View Post
Another factor that could impact prices is the ability to get mortgage financing. Many condo complexes won't qualify for loans if they exceed certain guidelines such as too many rental units (or too few owner-occupied), underfunded reserve fund, etc. They may need to price low enough to attract cash buyers.
Right.
In a non-warrantable complex, there are commonly a lot of foreclosures due to inability to finance to sell.
Here, MetLife has been funding purchases in the non-warrantable complexes. They are selling their home loan business, and that may mean one less source of funding.

Buying at $35000 probably means putting in some money for updates and repairs. And the possibility of "You can check in, but you can't check out."
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Old 12-14-2011, 11:18 AM
 
13,194 posts, read 28,201,027 times
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Quote:
Originally Posted by rational1 View Post
Again, to keep this in perspective (when we are talking about owning properties, not renting)

>The biggest downfall to condos is the potential for mandatory assessments.

SAME STORY if you own a house. It's pretty much mandatory if the roof needs to be replaced, or the furnace,...
It's similar, but different. As a homeowner, YOU can decide when to fix many things (unless your roof collapses....). You know you're 27 years into a 30 year roof and can budget accordingly.

As a condo owner, you're at the mercy of the HOA board, especially because laws in many states allow them to push through assessments deemed "crucial" without the majority of homeowners voting in approval. So, some repairs that an individual homeowner may defer for 6 months to save up for it are due "ASAP" and "in full" with an HOA board.
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Old 12-14-2011, 02:14 PM
 
Location: Barrington
63,919 posts, read 46,589,146 times
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Possibilities include:
The units are bank-owned and priced to sell, or

Units are cash sales, or

There is an unpaid special assessment that will need to be satisfied, or

All of the above.


Rather than speculate, why not ask a local and knowing real estate agent for the story.
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Old 12-14-2011, 02:18 PM
 
Location: Barrington
63,919 posts, read 46,589,146 times
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Quote:
Originally Posted by TurtleCreek80 View Post
It's similar, but different. As a homeowner, YOU can decide when to fix many things (unless your roof collapses....). You know you're 27 years into a 30 year roof and can budget accordingly.

As a condo owner, you're at the mercy of the HOA board, especially because laws in many states allow them to push through assessments deemed "crucial" without the majority of homeowners voting in approval. So, some repairs that an individual homeowner may defer for 6 months to save up for it are due "ASAP" and "in full" with an HOA board.
It's a tall order to get a super majoority of owners to agree on anything. The folk who live on the top floor care about the roof. Those on other floors do not. The board is obligated to act in the best interest of the association which often puts them at odds with many owners who are only concerned with their own interests.
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Old 12-14-2011, 02:32 PM
 
Location: Barrington
63,919 posts, read 46,589,146 times
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Everything eventually wears out and must be replaced. Most special assessments are predictable.

The #1 reason for the imposition of special assessments is that the association had not been reserving enough funds to take care of replacements/restorations when it becomes necessary to do so.

This often happens when homeowners and the board focus on cheap dues instead of sound long term financial planning for the inevitable replacements/restorations/ major repairs. It's very common for boards to take a bow to the applause of homeowners at Annual Meetings when they " hold the line" on dues.

Some states require associations to have independent reserve studies and fund them. Some states require the association to disclose the percentage funded. Most states do not require anything.

It is impossible to compare assessments in one association to another. Assets, condition of assets and allocation of assessments , operations versus reserves differ. It is impossible to know the adequacy of a given reserve without knowing the inventory of assets and projection of remaining useful life and replacement cost.
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Old 12-14-2011, 03:04 PM
 
4,463 posts, read 6,214,893 times
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Quote:
Originally Posted by MikeJaquish View Post
Right.
In a non-warrantable complex, there are commonly a lot of foreclosures due to inability to finance to sell.
Here, MetLife has been funding purchases in the non-warrantable complexes. They are selling their home loan business, and that may mean one less source of funding.

Buying at $35000 probably means putting in some money for updates and repairs. And the possibility of "You can check in, but you can't check out."
I am dealing with this right now, its a nightmare to deal with a condo, at least my HOA is working to build reserves to get back on the FHA list. Once you get in the odds of being able to sell are slim, count on having your property on the market for over a year and having to eat all kinds of fees in that time period until you can sell.
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Old 12-14-2011, 04:09 PM
 
1,018 posts, read 3,373,003 times
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Quote:
Originally Posted by highlife2 View Post
I am dealing with this right now, its a nightmare to deal with a condo, at least my HOA is working to build reserves to get back on the FHA list. Once you get in the odds of being able to sell are slim, count on having your property on the market for over a year and having to eat all kinds of fees in that time period until you can sell.

whats your situation right now? I dont want to seem like in your business but it seems awful if your stuck in a position where you have the condo and its a nightmare to deal with. The condo im seeing online seems too good to be true.
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Old 12-14-2011, 04:51 PM
 
4,463 posts, read 6,214,893 times
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Quote:
Originally Posted by civic94 View Post
whats your situation right now? I dont want to seem like in your business but it seems awful if your stuck in a position where you have the condo and its a nightmare to deal with. The condo im seeing online seems too good to be true.
Other than the the HOA not being on the FHA approved list the association does their job, we got a new roof and addic insulation, new back deck and the owner occupancy is well above 51% but they are low on reserves because of the capital projects. Because most americans cant save their way out of a wet paper bag for a proper down payment under a conventional loan not being an FHA apporved condo drasticly lowers your buyer pool and makes it a head ach to sell.

My condo is really nice where I have both upstairs and down stairs and an over sized one car garage, of course I am selling mine for MUCH more than the condo you are looking at but its also in a healthy housing area relativly unaffected by all the sky is falling buisness of most states.

No one saves for a down payment anymore so unless your FHA apporved, good luck finding a buyer.
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