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I’m looking at any property within an association with a lot of scrutiny. I think there will still be some great deals but buyers need to make sure to be extra diligent.
Great presentation. Looks like a train wreck in the making. I believe the seller should have to pay any assessments that were presented for review during their ownership and voted down by the owners/ HOA. A very tricky time to purchase a condo. Thank you
Things will definitely get complicated at some associations for some condo owners. There are still a lot of well run and well maintained condos but it’s more important than ever now that buyers are well informed and working with a very proactive agent if they wish to buy a condo, especially a waterfront condo, and especially in certain markets.
I still think buying a condo is a great option in a lot of cases, but it requires extra research and due diligence in order to make sure that it is a good investment.
Condos aren't for everyone. It is apartment living. But for those to whom apartment living is attractive, I fail to see the grand differences. People who shriek at HOA fees act as if single family homes have no maintenance or utility costs, but of course they do and each owner is solely responsible. Many don't do maintenance and sell it as distressed to the next buyer. In tight inventory markets they might even get away with it. Deferred maintenance is deferred maintenance, and sooner or later you have to pay the piper and it doesn't matter whether it is a condo or single family home. There are no free lunches. I'd only buy a condo in a very small complex (max 42 or so units), without any unit above me, and with a maximum of 1 shared wall. In fact that is what we did a few years ago near the beach in CA and we love it. I joined the board and I've never seen any of the shenanigans I hear about on the internet. The costs of maintenance and services go up over time, but the same is true for single family residences.
@@5metoo I really agree with what you’re saying. We would still personally buy a condo but with proper due diligence and metrics like the ones you said (smaller association etc). I think it’s an excellent option in a lot of cases - but has to be approached carefully & researched thoroughly.
@@stephaniecheckleyrealestate Huntington Beach CA. In a hot housing market there is little time for research or you'll lose out. I could be wrong, but I'm not sure they'll give you HOA docs until an offer is made. But in a cooler market maybe that would work. I don't know. Your advice is dead on, but at least in smaller complexes I'm not as sanguine that these detailed studies will be available or that the meeting notes will reveal what you really want to know. I would hope a larger complex should be managed more professionally in terms of written records, but I'd never consider living in a large one. I think HOAs are defensive in nature and don't want to get sued, and also they don't want to do anything to dissuade buyers (buy, buy, buy!), so in my opinion you can't depend on the docs showing you all critical details. Budgets are pretty fungible. How do you know that a large item hasn't been added to the budget yet, but will be next year? You don't. HOAs and owners have a conflict of interest, so you can't depend on them. People say "look at the reserves. Are they high or low?" Compared to what? So my advice would be as follows. Step 1. If you don't have some experience with contractors or judging home maintenance needs on your own go get a friend who knows about home exterior infrastructure type maintenance things. I wasn't savvy, but after a few of my own renovations and dealing with board issues I am. If you want something done right, you've gotta take responsibility yourself. Walk the entire property and note the condition. If it is maintained in excellent condition that's great. If not, guesstimate the cost to do the repairs. Go high. The walkways are worn on a small complex. There's 300-500k at todays prices even on a small complex that's going to have to be spent soon. Stuff like that. Step 2. Lookup the Redfin or Zillow estimate for recent units sold and multiply your estimate of average price by the number of units. That would be a guesstimate of the value of the complex. Then find the reserve $$$ number and divide it by the complex value. If you found things like worn walkways that you can estimate will cost 300-500k and the reserves are .5% of the total value (and won't cover the cost of your guesstimates), what does that tell you? It is underfunded and I don't care what the HOA budget or notes say. If you had a $1,000,000 single family residence would it be reasonable to expect to spend only $5,000 a year on maintenance? No, not reasonable at all. So why would .5% be ok for an apartment complex worth 30 million? It isn't. Not even close. Now if everything looks maintained top notch, and the reserves are .5% and the monthly take (HOA fee x unit numbers) are sufficient that it will be replenished over the next few years to 1-2%, then it doesn't sound underfunded. Any homeowners should expect to spend a certain % of the value of the home for maintenance. Some say 3%. I don't know really, but it sure as hell ain't 1/2 of a percent. That is my napkin calculating method to do first, because you may be disappointed by the HOA docs and/or your agent's ability or willingness to do any of this for you, especially in a hot housing market since if you don't act fast you don't get anything. I'm a believer in doing napkin calculations first. Take the $1.7 million Hawaii foundation footing replacement example from the video. If it was a 44 unit complex, that is about 38k per owner for the work. Absolutely have to do due diligence since a layman can't see footers, and the board could be sued if they don't put this in their docs clearly. But if an extra 38k is going to break you, why did you think you could afford to live in Hawaii? People hyperventilate about % increases, as if some cosmic force entitles them to only small increases even in the most expensive places on earth.
If you need an agent referral in your area or if you would like me to help you with your real estate needs in Minnesota or Wisconsin, click here Stephaniecheckley.com/referral
Thank you so much,I was planning on buying into century village, but definitely not now,been disappointed for about a week
I’m looking at any property within an association with a lot of scrutiny. I think there will still be some great deals but buyers need to make sure to be extra diligent.
Thank you for the knowledge excellent information👍
Thank you for watching!
Great presentation. Looks like a train wreck in the making. I believe the seller should have to pay any assessments that were presented for review during their ownership and voted down by the owners/ HOA. A very tricky time to purchase a condo. Thank you
Things will definitely get complicated at some associations for some condo owners. There are still a lot of well run and well maintained condos but it’s more important than ever now that buyers are well informed and working with a very proactive agent if they wish to buy a condo, especially a waterfront condo, and especially in certain markets.
You got the title wrong should have been..Never buy a Condo..if you can’t afford something that includes the dirt..rent in my opinion.👍
I still think buying a condo is a great option in a lot of cases, but it requires extra research and due diligence in order to make sure that it is a good investment.
Condos aren't for everyone. It is apartment living. But for those to whom apartment living is attractive, I fail to see the grand differences. People who shriek at HOA fees act as if single family homes have no maintenance or utility costs, but of course they do and each owner is solely responsible. Many don't do maintenance and sell it as distressed to the next buyer. In tight inventory markets they might even get away with it. Deferred maintenance is deferred maintenance, and sooner or later you have to pay the piper and it doesn't matter whether it is a condo or single family home. There are no free lunches. I'd only buy a condo in a very small complex (max 42 or so units), without any unit above me, and with a maximum of 1 shared wall. In fact that is what we did a few years ago near the beach in CA and we love it. I joined the board and I've never seen any of the shenanigans I hear about on the internet. The costs of maintenance and services go up over time, but the same is true for single family residences.
@@5metoo I really agree with what you’re saying. We would still personally buy a condo but with proper due diligence and metrics like the ones you said (smaller association etc). I think it’s an excellent option in a lot of cases - but has to be approached carefully & researched thoroughly.
@@5metoo what town did you buy in?
@@stephaniecheckleyrealestate Huntington Beach CA. In a hot housing market there is little time for research or you'll lose out. I could be wrong, but I'm not sure they'll give you HOA docs until an offer is made. But in a cooler market maybe that would work. I don't know. Your advice is dead on, but at least in smaller complexes I'm not as sanguine that these detailed studies will be available or that the meeting notes will reveal what you really want to know. I would hope a larger complex should be managed more professionally in terms of written records, but I'd never consider living in a large one. I think HOAs are defensive in nature and don't want to get sued, and also they don't want to do anything to dissuade buyers (buy, buy, buy!), so in my opinion you can't depend on the docs showing you all critical details. Budgets are pretty fungible. How do you know that a large item hasn't been added to the budget yet, but will be next year? You don't. HOAs and owners have a conflict of interest, so you can't depend on them. People say "look at the reserves. Are they high or low?" Compared to what? So my advice would be as follows.
Step 1. If you don't have some experience with contractors or judging home maintenance needs on your own go get a friend who knows about home exterior infrastructure type maintenance things. I wasn't savvy, but after a few of my own renovations and dealing with board issues I am. If you want something done right, you've gotta take responsibility yourself. Walk the entire property and note the condition. If it is maintained in excellent condition that's great. If not, guesstimate the cost to do the repairs. Go high. The walkways are worn on a small complex. There's 300-500k at todays prices even on a small complex that's going to have to be spent soon. Stuff like that.
Step 2. Lookup the Redfin or Zillow estimate for recent units sold and multiply your estimate of average price by the number of units. That would be a guesstimate of the value of the complex. Then find the reserve $$$ number and divide it by the complex value.
If you found things like worn walkways that you can estimate will cost 300-500k and the reserves are .5% of the total value (and won't cover the cost of your guesstimates), what does that tell you? It is underfunded and I don't care what the HOA budget or notes say. If you had a $1,000,000 single family residence would it be reasonable to expect to spend only $5,000 a year on maintenance? No, not reasonable at all. So why would .5% be ok for an apartment complex worth 30 million? It isn't. Not even close. Now if everything looks maintained top notch, and the reserves are .5% and the monthly take (HOA fee x unit numbers) are sufficient that it will be replenished over the next few years to 1-2%, then it doesn't sound underfunded. Any homeowners should expect to spend a certain % of the value of the home for maintenance. Some say 3%. I don't know really, but it sure as hell ain't 1/2 of a percent.
That is my napkin calculating method to do first, because you may be disappointed by the HOA docs and/or your agent's ability or willingness to do any of this for you, especially in a hot housing market since if you don't act fast you don't get anything. I'm a believer in doing napkin calculations first. Take the $1.7 million Hawaii foundation footing replacement example from the video. If it was a 44 unit complex, that is about 38k per owner for the work. Absolutely have to do due diligence since a layman can't see footers, and the board could be sued if they don't put this in their docs clearly. But if an extra 38k is going to break you, why did you think you could afford to live in Hawaii? People hyperventilate about % increases, as if some cosmic force entitles them to only small increases even in the most expensive places on earth.