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Let us talk about condominiums
Jasconius
sword criminalmad onlineRegistered User regular
sword criminalmad onlineRegistered User regular
Over the past year or so I've made a couple of threads probing about home buying, etc.
I'm getting closer to D-day now (current lease expires on the last day of September) so in about a month I'm going to need to start seriously looking at properties. I have always been strictly looking at single family homes. But I recently had a slight change of heart.
Before any discussion about the practicality of buying an apartment can be engaged, it must be first known that I am presently being raped in a 1/1 apartment for $1250 a month with zero utilities included that isn't even particularly nice, and my days of living in cheap apartments are over, even if I have to keep being raped.
In stark contrast to the $texas rates of nice-ish apartments around here, the condos are f'ing cheap, and why I am even thinking about it is because last year when I was planning to move into this place, I was also considering a privately owned condo rental in the downtown area of St. Pete for 1200...
Come to find out now that exact same property is on sale... for $75,000
It's a brand new building (2007), in the heart of downtown, two blocks from a major league baseball stadium... 2/2 a shade over 1100 sq ft. This seems like a really good deal. It's 7 stories, 4 units per floor, so not particularly crowded... the unit in question sold in 2007 for $240k in the heart of the bubble.
I was already approved for an FHA loan, 4% interest rate, for a home up to 125,000 (could get more with a higher down payment), so this is easily in range, and at that price my mortgage payment, with ALL insurances and fees and taxes included would be like... maybe 700, practically half of what I currently pay
I'm trying to think... what is the downside of this? What is my risk? What am I not seeing about why this (or similar deals) would be bad. Why would I pay almost twice as much for a similarly sized single-family home if I am still single, etc? I obviously am aware that houses are nicer in some important ways. But there's a slider of "nice vs affordable and still pretty good" which I am flexible on. Plus with my income it's the kind of thing where I could afford to move out and rent it pretty easily.
So
A) What am I missing
Peoples general experiences with condos
*edit* in florida if it matters
I'm getting closer to D-day now (current lease expires on the last day of September) so in about a month I'm going to need to start seriously looking at properties. I have always been strictly looking at single family homes. But I recently had a slight change of heart.
Before any discussion about the practicality of buying an apartment can be engaged, it must be first known that I am presently being raped in a 1/1 apartment for $1250 a month with zero utilities included that isn't even particularly nice, and my days of living in cheap apartments are over, even if I have to keep being raped.
In stark contrast to the $texas rates of nice-ish apartments around here, the condos are f'ing cheap, and why I am even thinking about it is because last year when I was planning to move into this place, I was also considering a privately owned condo rental in the downtown area of St. Pete for 1200...
Come to find out now that exact same property is on sale... for $75,000
It's a brand new building (2007), in the heart of downtown, two blocks from a major league baseball stadium... 2/2 a shade over 1100 sq ft. This seems like a really good deal. It's 7 stories, 4 units per floor, so not particularly crowded... the unit in question sold in 2007 for $240k in the heart of the bubble.
I was already approved for an FHA loan, 4% interest rate, for a home up to 125,000 (could get more with a higher down payment), so this is easily in range, and at that price my mortgage payment, with ALL insurances and fees and taxes included would be like... maybe 700, practically half of what I currently pay
I'm trying to think... what is the downside of this? What is my risk? What am I not seeing about why this (or similar deals) would be bad. Why would I pay almost twice as much for a similarly sized single-family home if I am still single, etc? I obviously am aware that houses are nicer in some important ways. But there's a slider of "nice vs affordable and still pretty good" which I am flexible on. Plus with my income it's the kind of thing where I could afford to move out and rent it pretty easily.
So
A) What am I missing
Peoples general experiences with condos*edit* in florida if it matters
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Jasconius on
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i dont think this is a thing here
Not sure on the fees. I am 90% sure that this is a building where the tenants control the property or something similar. It's not like it's a big apartment property that was converted. so I am guessing it's lighter than average
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i do not qualify for down payment assistance as a result of my income. i wish I did. if I did then it would be no problem at all
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1) You have no control over your condo fees. You could end up with an amazing COA that charges you what they should, takes care of the necessary preventative stuff, and doesn't go nuts. You could end up with a shitty COA that charges you waaaaaayyyyy too much, and overpays for all kinds of shit you don't need or want. You could end up with a shitty COA that charges way too little, doesn't take care of preventative shit so that it blows up into a huge problem later that you need to pay ten times as much for.
2) What lawsuits are the COA, developers, and/or contractors involved in? If your answer is "none," you need to find out what lawsuits they're going to be involved in. It's less of an "if" thing, and more of a "when" thing.
3) Condo insurance is going to cost you substantially more than renters insurance. You should find out how much more, and if it's included in your condo fees.
4) Condos do not increase in value as quickly as houses.
You should really do an analysis of how much you expect it to cost you to rent, how much you expect it to cost you to buy the condo, and how much you expect it to cost you if you end up taking a bath on the condo.
but is is effectively impossible for that condo to be much cheaper than it currently is. the average is about 110k in the area for "fringes of downtown"
It's substantially below average for the area and in my opinion not only a nicer building, but a nicer unit itself. in my opinion it could only go up, which is part of the math I am doing
but that can be said of most property in Florida. there is just area wide catastrophe in home values, everything is rock bottom. even my realtor is taking a blood bath on her stuff. so it strikes me as the appropriate time to buy, single family or otherwise
I'll have to look into the COA... I should assume that my *realtor* will be able to fish up this information right? Because I have no idea who to contact on the actual COA's end
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This is like asking a used car salesman if there's anything they'd like to warn you about regarding the car you're thinking about buying.
i don't know if that makes a difference
it only benefits them to convince me out of a condo since I'd pay more for a house anyway
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You may want to try to find out if your realtor knows why this unit is so much below the apparent market price for the area. Maybe you've just lucked out.
You will for sure want to find out about the Condo Fees/Association Fees. Those can be surprisingly ridiculous sometimes. You will also want to find out the financial state of the condo association, the board, and the property(ies). There's a report for this, but I forget what it's called. Your Realtor should know it and make sure you see it before you put an offer in (or a final offer--a conditional offer on you seeing and accepting the report is OK). This report will tell you things like if the Condo Board as a sufficient reserve fund and is collecting fees sufficient to maintain a good, solid fund. How old things are, when major replacement/repairs/maintenance were (was) completed and when things are coming up in the forecast. When I bought, it was a report from a guy with a firm that does this kind of auditing of condo boards/associations to judge the health of the board/association.
I pay $130 a year for insurance for my 1 BR 635 sq ft apartment-style condo. I'm in Saskatchewan, Canada, so the markets are absolutely different, but I wouldn't necessarily worry that the insurance is going to be ridiculous. Go online and do some rate quoting to get an idea of what it will cost for you and your situation. Know this going into making your offer, so you know the real costs per year/month. The Realtor should be able to find out (at the very least) what the Condo/Association Fees were for the last year, if not what they are currently (through this year).
**I guess it might work differently in the states, but up here the percentage that the Realtor(s) get(s) comes off the price paid to the Seller. As in, you pay what you offer and then your Agent and the Seller's Agent share a certain percentage of the agreed-upon selling price. You wouldn't pay more than if you agreed to the same price with the seller and no agents were involved. (This can vary by agent if you are buying from a seller who is selling as a Private Sale, but it's a specific exceptional case, basically.)
Absolutely make sure to get a copy of any and all Association rules/bylaws. My wife and I are going to move from Chicago to Hawaii in August, and property values right now are too low to sell our unit here. Association rules in the past would have prevented us from renting until our unit had been on the market for 12 months (only other time renting is allowable is if family size outgrows our town's recommended occupancy size for that many bedrooms). Only in the past year has the association finally allowed widespread renting due to the large number of units that simply cannot be sold at this time.
Point is, be sure there are no rules you can't live with now or in any likely future.
Another thing to consider is you can't do too much in the way of renovations/remodeling without it being a pain in the ass, going through the HOA for approval, etc.
There was a leak in a unit 2 floors above me which severely damaged my ceiling, walls and floors in 1 bedroom.. cost about 4k to fix.. of that insurance paid for 2k and the HOA paid $750. Per Florida law you are responsible for everything from the DRYWALL IN.. that includes the paint. The association is responsible for everything BEHIND the paint, this includes drywall, electrical, plumbing, framing, etc. PM me if you have any more specific questions.
Home Inspection and Wind Mitigation
http://www.FairWindInspections.com/
These are good points. I was wondering about remodeling/upgrading. The unit in question is pretty much a boilerplate in terms of fixtures and appliances, if I lived there I'd be aiming to upgrade them. I wonder what the restrictions are.
The building itself appears well occupied, I don't see anything else listed for rent OR for sale in the building, so I take that to mean there's nothing in distress. I believe the price is low because of competition (a good dozen or so condos within two blocks for sale in the low 100's), plus this building itself is right on the fringe of the good part of town. (then again, everything in St. Pete is 2 blocks away from urban decay)
I will be sure to get all this data on the HOA before I do anything. I am still basically leaning house, but there are 2-3 good deals in town right now and I didn't want to thumb my nose at them.
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I've never heard good things about them ever. First to lose money when house markets drop and last to gain money usually. You'll be lucky if you can offload it for the same price you purchase it for. Excluding NYC/San Fran locales where they are hot shit.
this is florida
the market is rock bottom
i may not be properly articulating what a disaster real estate is state wide in Florida. I do understand the value risk involved, but unless Tampa somehow becomes Detroit, I feel like I'm OK and at that price stand to break even or have it mature even slightly... it has to be pointed out, this building is 7 blocks from the heart of downtown st. pete.. the location is literally as good as it gets without getting well into the 300k+ range
The reason I want to stop renting is because rent prices are insanely high. The people I've talked to who know a little about real estate have expressed that it's because everyone and their dog got foreclosed on in the bubble which is spiking the demand for rentals. As I said in my OP, I have a modestly outfitted 1/1 in a nice neighborhood and it's burning my wallet. The job I have right now is very good and stable, so knowing that I could stay in the area for another several years is part of my reasoning. I mean, if I thought I was going to move to Cali next year then I wouldn't even think about it.
I have the financial situation where if I get into a condo with a very cheap mortgage, I can pay the shit out of that principal, and if the time comes that I have to move away, I wouldn't die if I couldn't sell it immediately. The same is not *exactly* true of a house, which would be more expensive. If I get a 150k house, I'll be wrapped up for the most part. So what I am assessing with a condo is convenience and flexibility at the expense of quality.... which I am for if the price is right.
Anyway, this is just conversational. I don't want to sound like I've already decided this is what I am doing. I really do prefer a house. I just want to figure out if I should care at all about a condo. This has really helped my figuring.
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1st: you mentioned lots of people got foreclosed on and the price of that apartment fell from $240K to $75K (which by the way: holy hell. i've seen parking spots here go for $75K), so you need to find out how many people in the building are still current on their loans? any foreclosures/walk outs? b/c if they stop paying, you have to chip in more for the building maintenance until your condo board resolves things with the bank (hint: this usually takes ages AND legal action to accomplish) - are you OK paying an extra $500/month assessment to replace a roof or an elevator, or whatever if other deadbeats in the building aren't buying?
2nd: same thing with the building itself - is it solid? or was it built quickly and cheaply during the bubble? example: my friend's ~$500K condo (small 1 br, by comparison
3rd: the post above which mentioned condos are first to fall and last to rise in price is correct, and this also impacts your resale ability - lenders may not approve loans for a poorly managed condo building! if they see the building has no capital reserve, or is 50% unoccupied b/c people walked away from their mortgages, you're stuck!
so yeah, the most important thing is to do extensive research! condos can be a great deal, or a poor deal, and anything in between. i suggest spending the $500-1500 on a real estate attorney to give you the lowdown - don't trust the agent.
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just to give you an idea of what real estate in florida is all about
a single-family house I've had my eye on just got price reduced
3/2, 1700 sq ft. 9000 sq ft lot. built in 1980, in the HEART of a very nice neighborhood near Clearwater
$54,800, bank owned
i would classify this as a buyers market
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We pay about $190/mo in condo fees for our end-unit town home. That's building insurance, lawn maintenance, and the usual. And don't be afraid to harass the board to get off their ass if there is something that needs doing. They are notoriously slow and reluctant to spend money on anything non-routine. When we bought here, we had to get our entire property re-graded, an eaves trough replaced (previous owner backed into it with the moving van and told the board that he hired someone to fix it the next week, so the board gave the go-ahead that he was clear. Of course, he then cancelled the contractor), and a bunch of other little things. On its own accord, it has dug up and redone our driveway, brand new roof, and absolutely stellar property landscaping.
I gladly pay for the convenience and peace of mind of all of that.
But something tells me you like the appeal of condo life more than homeowner life (not that I blame you because of what frenchenstein has gone through).
The biggest thing about the condo in question is that I am a die hard baseball fan, and season ticket holder, and the stadium is a 5 minute walk, and the core of St. Pete nightlife is a 10 minute walk
That's as close as I can get to total recreation for a good price
House = value
Condo = fun
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Hm.
http://binged.it/LJLjbB
Sorry it had to be bing. Couldn't figure out how to make Google to push pins.
1 is where I live right now. High ass rent. Basically nothing for sale at a reasonable price. This is 250k+ country, and it holds its value because as you can see, it's the heart of the Tampa Bay area, equidistant from everything. This is why I even moved here to begin with.
2 is where I work. Middle of nowhere (practically). I have no interest in living here at all. It's about 25 minutes to drive from 1 to 2
3 is where MOST of the houses I am interested are at. This neighborhood is called Safety Harbor. Prototypical "decimated by the bubble" area. Lot of 300k+ houses that are now selling for 100k or less.
4 is where this ultra cheap condo is. I get right on the highway and it's about 40 minutes to work. I can live with this.
5 is where some very acceptable houses are that are quite affordable, but these are a lot of "old florida" houses. 1920's-30's construction... some of them are very well kept, but overall this neighborhood is a checkerboard of "awesome" and "holy fuck I'm going to be stabbed if I take my trash out tonight".
I mean. 1 is where I *wish* I could live. But there are simply no affordable options. So it's either move to the city, or move to the 'burbs. Or keep getting hammered on rent.
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How much longer of a drive would those condos be?
We've been overall happy with our condo. It's a older (50+ years) building, so issues here and there, but they keep a pretty good watch on it.
The biggest thing for us was we got screwed in the home inspection, which is not unique to condos. He completely missed the fact that our patio window was basically an inch off the ground - the last owners crammed a misfit window into the spot. So magically when we move in, our downstairs neighbors want my insurance number to file a claim for water damage in their unit.
So get a good (two) inspections on whatever you're looking at, and find out any upcoming projects like roofs, etc.