Condos Part 1
About a week ago, I got a call from a nice lady who unfortunately was in a difficult situation. She had some condos in West Palm Beach in a 55+ condo community which she was looking to get rid of “yesterday.” She found my website and reached out to me to see if I might be interested in buying her condos. She explained that she had planned to retire in this unit so she planned a complete remodel. The unit was totally gutted and in some cases, walls had been moved. Unfortunately, she had discovered some mold behind some of the walls, and one of her contractors had taken a deposit and didn’t return her phone calls. My heart went out to her because thieving contractors are last thing a retiree needs to worry about! So after getting the backstory, I offered to go take a look at the unit to estimate my costs and to see if it was a property worth buying.
Typically, I try to stay away from condos for several reasons. First, they are expensive to own. Monthly condo fees can range from just a couple of hundred dollars to over a thousand dollars per month. If I hold a property for even just a few months, that amount can go up very quickly. I have to account for that when I estimate my project costs and it ultimately means I have to buy the property for less money than I would otherwise. Second, the “condo commandos” as they are frequently called, can make doing a rehab very difficult. Construction causes noise and the neighbors typically have a low tolerance for that noise. Third, when it comes time to sell the property to the next buyer, there are special rules which govern condo sales and the approval of new residents. Plus, if the buyer is getting a mortgage, I have seen instances where the condo association is required to have sufficient reserves that satisfy the buyer’s lender. All of these issues can make fixing up and selling a condo difficult, if not impossible.
What I like to do is set proper expectations upfront for the seller, to let them know that I am willing to buy their condo, but at a price that takes all of these factors into account.
To be continued….