Buying a Condo in Today’s Market is more challenging than in years past. These are particularly problematic at the lower price range of $75-300K. Being aware of them can enable you to choose better complexes, as well as the appropriate loan program.
- Low Homeowner Occupancy – Many of the lowest priced condos were condo conversions developed during the craze. With these and other condos purchased during the boom years, home-owners are all upside down. If they are unable to continue the payments, they may likely rent out the condo. This creates a complex where the renters outnumber the homeowners and the stability of the complex is at risk.
- Construction-Related Litigation – This can be a large or small item; it just depends on what the issues are. It is incredibly common, and occurs in a great many condos. If there are a number of defects reported in plumbing, electrical issues, mold, or anything like that, a home-owner’s association may sue the developer. This becomes a challenge for the buyer because it GREATLY limits which lenders will loan on the property. Often, the only way to buy when this is going on is to rely on cash deals without financing.
- High Number of HOA Fee Delinquencies – When people default on their mortgages, they typically also default on their HOA fees. This then creates financial hardship for the HOA associations since large amounts of money are owed.
- Investor-Flipped Property – This last item is not limited to only condos. There has been a cottage industry of investors with cash who purchase foreclosures at auction, rehab them, and turn them around quickly for a profit. This is called ‘flipping.’ Many loan programs will not lend on these types of sales since the property has been turned over within 90 days.
With different types of sales and situations, I have seen MANY of my buyers end up with different lenders than they began with. Sometimes, you just need top work with the lender that can get the job done.
I still like condos for first time buyers and those who seek a low-maintenance lifestyle. Buying a condo in today’s market is possible when you are prepared for the types of obstacles you may need to face.