Newbies -might have first deal!?? Need Advice! - Posted by Mike Tammi


#1

Posted by phil fernandez on October 12, 1998 at 10:56:24:

Mike,

What are the comps on 2 bedroom condos in your area. Based on the rent of $625 that you say you can get, it’s not a deal at $73,000. In fact with the condo fees, taxes and mortgage you will be running negative.

If this guy is " very motivated" as you say, my offer would be $30,000 assuming fair market value is $60,000. Again I don’t know your area.

With condos, monthly fees and special assessments can kill cash flow. You better check the books of the condo association to see if they have sufficient reserves for roof replacement, exterior painting, swimming pool repair and the like. You don’t want to get hit with a $3,000 bill for your share.


#2

Newbies -might have first deal!?? Need Advice! - Posted by Mike Tammi

Posted by Mike Tammi on October 12, 1998 at 09:38:08:

Hi, we purchased Carleton Sheets course a long time ago and have really been wanting to get into REI but haven’t done a thing yet. We went to an open house for a condo right down the street from one we live in/own. The condo is 686 sq. ft. 2 bedrooms, (one is really tiny) 1983 construction, second floor with balcony, good condition, great neighborhood, the owner has a real estate agent listing for him and is “very motivated” to sell. It was listed at $75K and was just reduced to $73K. Rents in this area for a comparable unit are between $625-$725/month. Does this sound like we could get a good deal? Should we try something creative? Mike has $27K in equity in our condo and my name is not on the title so that I can buy as owner-occupied if need be…my credit is so-so. Should we just get a home equity loan for a down and purchase in my name or is there room to do something creative here. Again, the owner is supposedly motivated and wanting a quick close. I hope this is enough information for someone to give me some input/advice. Thanks.


#3

Re: Newbies -might have first deal!?? Need Advice! - Posted by Jim(MA)

Posted by Jim(MA) on October 12, 1998 at 18:11:56:

Investing in Condominiums

As an experienced condominium investor I will share you the methodology that for us has been successful. I presently own 12 condominiums, 2 town house style and 10 garden style. One townhouse is owner-occupied. When investing in condominiums there are several important factors to consider in addition to the purchase price. Should any of these factors be unacceptable walk away its not worth the trouble.

  1. How is the area market for sales of condos?
  2. How is the area market for rental of condos?
  3. Do you want to be a landlord? Think carefully condos are not apartments and therefore more difficult to manage.
  4. How is this association managed?
  5. What is the financial condition of the association?
  6. What is the condition of the community and the structure(s)?
  7. What percentage of the units are owner occupied?
  8. What is the make up of the board?
  9. Does the association have a realistic budget that includes longer term maintenance issues?
  10. Does this association have a history of special assessments?
  11. Does the association suffer from apathetic owners?
  12. Does the condo fee seem realistic for the services provided?

When I am satisfied that all of the above issues are satisfactory then the issue becomes price.

You really have not given enough information for an accurate assessment of, is this a deal. But with the limited inforamtion given I agree the price should be in the 30-35K range for the rental income given and hopefully the unit is in a fannie/freddie conforming community so that you could do 90% financing although below 40K even that can be difficult in a non-conforming community your looking at 70% financing maximum.

Feel free to email me if you would like more information


#4

Re: Newbies -might have first deal!?? Need Advice! - Posted by Bud Branstetter

Posted by Bud Branstetter on October 12, 1998 at 12:06:16:

As Phil said-Not likely a good deal. What you can do is find out what type and amount is the loan on the property. A motivated seller would just let you take over the existing loan for the payment. If he needed cash he would wait until you sold it. An investor wants a positive cash flow and 10-15K of profit going in. Don’t believe the hype that a realtor tells you about being motivated unless the numbers are there to back it up.