buying in a condo where 50% of the units are owned by one investor (tenant, conversion)
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Hi,
I am looking into buying in a small 12 unit condo in North Bergen where %50 percent of the units are owned by one investor. I am buying cash and i plan to live in it as my primary residence. The building seems kept well, clean and the taxes and common charges are very reasonable.
What are the disadvantages of such a situation? I know in coop's that means no bank financing but in condo's would there be any major downsides ?
Thank you!
Don't buy it. Even if the 12 units were owned by 12 different people I wouldn't buy it.
With so few units the majority can change ownership in a short amount of time. It could be a completely different place when that happens.
1. The investor can sell all of their units to another investor that may not care about who they rent to or the funding of reserves. The track record means nothing then.
2. The current investor only has to persuade one owner to go along to have the majority of the votes.
3. See post #2. In my state it is 80%.
I would look for a larger association. At least 24 units. For me personally, after almost 40 years of condo ownership, I would want a place with no rentals/owner occupied with no corporate ownership allowed.
To answer your main question, you cannot obtain regular financing on condos when 1 person owns more than 20% (just raised from 10%). You would always need to find a cash buyer or someone who could get hard money or a portfolio loan.
To answer your main question, you cannot obtain regular financing on condos when 1 person owns more than 20% (just raised from 10%). You would always need to find a cash buyer or someone who could get hard money or a portfolio loan.
Exactly. You may be able to pay cash, but if you need to sell, your pool of potential buyers who will also need to pay cash or get specialized (and usually expensive) financing is very low. I know someone who was in a similar situation and it was a huge, huge hassle when she needed to sell.
thank you for your replies, i didn't make an offer.. i was debating about it, so i didn't receive the financials yet but the management said they have some reserves and no major work is coming up. I spoke to a resident, a senior citizen, long time tenant, who lives there and she seemed very pleased with everything, said there are about five senior citizens who have been there since 1980's. So it is a tenant occupied majority building. The area is near Jersey City Heights in New Jersey. Very close to NYC and the area seems be getting gentrified quickly. The idea of a forced buyout is very scary but good to know about it, now i am very worried and leaning towards not buying
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