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Get a copy of the HOA reserve study. What you want to avoid are large special assessments.
A home inspection should be done by someone who is familiar with commercial construction, you aren't just buying a unit you are also buying an interest in the common areas. Typical big ticket items are building envelope and heating system.
Don't buy any residence unless you intend to live there 7 years because transaction costs are so high - you may need to pay a Realtor.
One thing to consider is whether or not your condo qualifies for a mortgage. Some lenders limit the % of renters to qualify for a residential (vs commercial property) loan. Talk to a mortgage broker (but don't tell them that you may pay cash) to learn what their standards are. If your building owners can't get mortgages that really depresses the market because sales are for all practical purposes seller financed or cash.
IMHO $250/mo including heat isn't enough to fund a decent reserve account. Here is how this often works: a lender looks at the value of the unit, calculates your payments and then adds HOAs to determine if the buyer qualifies. HOAs like to keep their charges low for that reason BUT that results in special assessments - which of course were not seen by the lender.
All good stuff. Thanks.
In a situation like this, where I already live in the apartment, do I ask my landlord to obtain the reserve study/building details? Ideally I'd love to find out the details of the building reserves, pending repairs, history of special assessments, how many not paying assessments/foreclosure, number of renters.... I have a list with some more... But do they have to show me this at this stage? If the building is a mess, I certainly don't want to waste $ on an inspection, appraisal etc..
1. Get an appraisal. The cost is under $400. You are about to spend a lot more on the purchase.
2. Get a thorough home inspection. The cost is under $400. If your unit has any part that is below grade level, then get a radon test. Be sure to have checks done for lead paint and asbestos.
3. Hire a real-estate lawyer. He/She should be able to help you estimate closing costs.
All good advice.... But is this really first? I'd rather find out if the building is in trouble and end it there if it is. Since I would pay cash, and the owners want to sell to me....
Sorry to revive my old thread. I appreciated your advice very much. I am getting a referral from a friend who used to be a realtor in my area for an appraiser/inspector/lawyer. Hoping you could help out with a couple more questions, as I think I will buy this condo unless something surprising comes out.
I would like to start with asking the landlord/building for the Reserves Study and other building details, before I spend $$ on all the other professionals. Can I do this? There have been multiple foreclosures in the past few years, and if there are more on the horizon or lawsuits going on I may drop the idea all together. I'd love to hear more about pending repairs/projects (there were a few last year....), history of special assessments, how many owners are not paying assessments/still under foreclosure, number of renters etc...... Or do they have the right to refuse me? Or do I have to put down $$ before they will reveal anything?
I am still living in the condo (renting) at the moment. The building is self run.
Also - am I right, that I really do not need a realtor in this setting? Just a lawyer, and I will hire an appraiser and inspector? So maybe all of these costs (in addition to the $75k condo cost) might be about 2k?
I'm trying to think about what to offer, as I may offer a lower price. There are some issues with their condo (needs updating and a few things need replacing/repair), there isn't a parking space (value at least $10 based on recent offer to sell a space), and two short sales within the last 16 months at 45k at 65k for similar apartments with parking. I have also paid 16k in rent already, if that makes any difference?
FYI - someone else is selling their condo in this building right now. They are advertising on Craig's list for $95K "price reduction". Their condo includes a parking space, but mine does not.
FYI - someone else is selling their condo in this building right now. They are advertising on Craig's list for $95K "price reduction". Their condo includes a parking space, but mine does not.
what they are listing it as means nothing. What it sells at means everything.
what they are listing it as means nothing. What it sells at means everything.
Absolutely... in my mind it just gives me a number to add to the equation as I am trying to figure out what to offer.
If I don't buy the condo, I would be happy renting here indefinitely. However, if I **** them off and totally low ball them they will likely put it on the market sooner. They already indicated that they will keep their 75K offer on the table for me until the end of the year.
You can ask your landlord for the condo board minutes but usually condos don't give them out until a contract has been made. They fee should be around 50-100 dollars. I would advise noting how the condo board works-what are owners responsible for and what to the COA fees cover? Low condo fees are not always a good thing, as it can meet special assessments for anything that breaks. Definitely look at the owner/renter ratio as mortgage lenders don't like to lend to high renter buildings. Also check if building is FHA approved as it allows a wider range of sellers to buy in your building.
Finally, I would check how well the other units are selling. Condos are notoriously difficult to sell esp. one bedrooms and condos in older buildings are harder to sell.
You can ask your landlord for the condo board minutes but usually condos don't give them out until a contract has been made. They fee should be around 50-100 dollars. I would advise noting how the condo board works-what are owners responsible for and what to the COA fees cover? Low condo fees are not always a good thing, as it can meet special assessments for anything that breaks. Definitely look at the owner/renter ratio as mortgage lenders don't like to lend to high renter buildings. Also check if building is FHA approved as it allows a wider range of sellers to buy in your building.
Finally, I would check how well the other units are selling. Condos are notoriously difficult to sell esp. one bedrooms and condos in older buildings are harder to sell.
Thanks for this.
So it sounds to me like I need to come up with a number for a cash offer first (so hire appraiser/inspector first?), negotiate/agree on a price, sign a "contract" and pay 50-100 dollars.... and then ask for all the nitty gritty? It seems like a odd order of events. Then of course, if things are discovered in the details of the building that make the initial price seem wrong/concerning, then the price can be re-negotiated? Or I back out at that point if what I learn is concerning.
Currently the assessments are about $250 per month for 35 units - almost all one bedrooms, 4 story building with 6 "wings" so only one other condo on each "floor" with you. Quiet. Older building, that was gut rehabbed in 2002. Whatever that truly means, I am hoping to find out...
Overall, the building is superficially well maintained with some elective improvements done within the last year while I have lived there (eg. improved the storage space in basement with construction of individual closed/sealed storage "closets" for each condo). It is mostly single professionals, who seem to move on once they marry and/or have their first kid, with a few older single women who live there longer term. It is FHA approved, and I believe at its 10% limit for number of units rented.
My condo 100% of our problems was caused by being FHA approved. Folks were able to put 10% down when condo values fell they defaulted and stopped paying maint.
Now we are unwarrantable meaning no mortgage cash only building. Last four sales have been cash around 100K off FHA prices.
Cash means folks have to pay maint or we can slap a lien and foreclose on unit and also means we file tax grievances and are winning.
Honestly, I dont ever want deadbeats with mortgages again in building.
So it sounds to me like I need to come up with a number for a cash offer first (so hire appraiser/inspector first?), negotiate/agree on a price, sign a "contract" and pay 50-100 dollars.... and then ask for all the nitty gritty? It seems like a odd order of events. Then of course, if things are discovered in the details of the building that make the initial price seem wrong/concerning, then the price can be re-negotiated? Or I back out at that point if what I learn is concerning.
Bump...
Just trying to find out the right order to do things if I am interested in a condo that I would purchase with cash, but I do not have all the necessary info yet.
I just don't want to start hiring a bunch of people when I am not even sure yet if I want to buy the condo until I get the details on the building, which could lead me to back out.
I would rather avoid hiring a realtor, as it will save me (and the seller) a significant amount of $$ by doing this without a realtor and then I may be able to negotiate a lower price. But maybe I should hire a realtor anyway since I don't know the order of things....
A condo just sold in this building for 75k... and it is better than mine (has parking, top floor, off the street). So I know that I should probably not pay 75k for mine.
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