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  • July 10, 2011 at 8:30 AM #18930
    cantab
    Participant

    I am thinking of buying a condo in a very desirable area as an investment. It is a cash-only short sale. In the last year, all or most sales in the complex seem to have been 100% cash, and prices have plummeted compared to a year ago.

    The complex is about 50 years old. In the last decade, it has turned over from mostly old people to younger residents and into vacation rentals.

    My guess is that it is impossible to get financing in this complex currently, and that explains the price plummet. Neighboring SFRs (houses) have not dropped much in price and remain very easy to finance. Per sqft, the condo is 1/3 the price of SFRs that are less than one block away. The historical ratio is more like 2/3.

    I think this is a good long-term investment because rents remain high (positive cash flow) and when the market does finally recover, lenders will be willing to make loans in this complex again, and prices will pop more than for houses. The area is one of the most sought after in all of California.

    What do other people think?

    July 10, 2011 at 9:59 AM #708741
    SD Realtor
    Participant

    You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. There is or has been some sort of building defect and/or litigation. Chances are that all deals in this complex in this complex have been and will continue to be cash only deal. I personally don’t understand why anyone would want to tie up a large chunk of cash when financing is so cheap but to each his own. If you can cash flow with a nice cash on cash return then go for it if it works for you. However understand that the liquidity of that cash tied up in the condo is very limited.

    July 10, 2011 at 9:59 AM #709588
    SD Realtor
    Participant

    You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. There is or has been some sort of building defect and/or litigation. Chances are that all deals in this complex in this complex have been and will continue to be cash only deal. I personally don’t understand why anyone would want to tie up a large chunk of cash when financing is so cheap but to each his own. If you can cash flow with a nice cash on cash return then go for it if it works for you. However understand that the liquidity of that cash tied up in the condo is very limited.

    July 10, 2011 at 9:59 AM #708838
    SD Realtor
    Participant

    You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. There is or has been some sort of building defect and/or litigation. Chances are that all deals in this complex in this complex have been and will continue to be cash only deal. I personally don’t understand why anyone would want to tie up a large chunk of cash when financing is so cheap but to each his own. If you can cash flow with a nice cash on cash return then go for it if it works for you. However understand that the liquidity of that cash tied up in the condo is very limited.

    July 10, 2011 at 9:59 AM #709951
    SD Realtor
    Participant

    You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. There is or has been some sort of building defect and/or litigation. Chances are that all deals in this complex in this complex have been and will continue to be cash only deal. I personally don’t understand why anyone would want to tie up a large chunk of cash when financing is so cheap but to each his own. If you can cash flow with a nice cash on cash return then go for it if it works for you. However understand that the liquidity of that cash tied up in the condo is very limited.

    July 10, 2011 at 9:59 AM #709435
    SD Realtor
    Participant

    You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. There is or has been some sort of building defect and/or litigation. Chances are that all deals in this complex in this complex have been and will continue to be cash only deal. I personally don’t understand why anyone would want to tie up a large chunk of cash when financing is so cheap but to each his own. If you can cash flow with a nice cash on cash return then go for it if it works for you. However understand that the liquidity of that cash tied up in the condo is very limited.

    July 10, 2011 at 11:32 AM #708761
    SK in CV
    Participant

    [quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

    That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

    July 10, 2011 at 11:32 AM #709608
    SK in CV
    Participant

    [quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

    That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

    July 10, 2011 at 11:32 AM #708858
    SK in CV
    Participant

    [quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

    That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

    July 10, 2011 at 11:32 AM #709455
    SK in CV
    Participant

    [quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

    That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

    July 10, 2011 at 11:32 AM #709971
    SK in CV
    Participant

    [quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

    That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

    July 10, 2011 at 11:36 AM #709613
    cantab
    Participant

    Thanks for the feedback. I haven’t heard any hint of building defects or litigation. How can one find out for sure? What should I look for when reviewing the HOA documentation supplied by the listing agent?

    It’s just a conjecture that the complex is cash-only, because lenders have minimum owner-occupied percentages, etc. What is the best way to find out? How/when do lenders come back to being willing to finance in a complex where they are not willing?

    One recent sale in the complex was on the courthouse steps (now remodeled and on the MLS as a regular listing), another was at a very low price after the listing expired, and the unit I’m looking at is advertised as cash only, short sale, bank wants to close in ten days.

    The complex has been turning over from older residents to younger people, I think a lot of them renters. At least one unit is advertised on a weekly basis on vrbo.com. I know the HOA is trying to stop that, but I don’t know with how much energy or success.

    When I asked an HOA officer if the complex was cash only, she would only say that I’d have to ask lenders.

    July 10, 2011 at 11:36 AM #709460
    cantab
    Participant

    Thanks for the feedback. I haven’t heard any hint of building defects or litigation. How can one find out for sure? What should I look for when reviewing the HOA documentation supplied by the listing agent?

    It’s just a conjecture that the complex is cash-only, because lenders have minimum owner-occupied percentages, etc. What is the best way to find out? How/when do lenders come back to being willing to finance in a complex where they are not willing?

    One recent sale in the complex was on the courthouse steps (now remodeled and on the MLS as a regular listing), another was at a very low price after the listing expired, and the unit I’m looking at is advertised as cash only, short sale, bank wants to close in ten days.

    The complex has been turning over from older residents to younger people, I think a lot of them renters. At least one unit is advertised on a weekly basis on vrbo.com. I know the HOA is trying to stop that, but I don’t know with how much energy or success.

    When I asked an HOA officer if the complex was cash only, she would only say that I’d have to ask lenders.

    July 10, 2011 at 11:36 AM #709976
    cantab
    Participant

    Thanks for the feedback. I haven’t heard any hint of building defects or litigation. How can one find out for sure? What should I look for when reviewing the HOA documentation supplied by the listing agent?

    It’s just a conjecture that the complex is cash-only, because lenders have minimum owner-occupied percentages, etc. What is the best way to find out? How/when do lenders come back to being willing to finance in a complex where they are not willing?

    One recent sale in the complex was on the courthouse steps (now remodeled and on the MLS as a regular listing), another was at a very low price after the listing expired, and the unit I’m looking at is advertised as cash only, short sale, bank wants to close in ten days.

    The complex has been turning over from older residents to younger people, I think a lot of them renters. At least one unit is advertised on a weekly basis on vrbo.com. I know the HOA is trying to stop that, but I don’t know with how much energy or success.

    When I asked an HOA officer if the complex was cash only, she would only say that I’d have to ask lenders.

    July 10, 2011 at 11:36 AM #708863
    cantab
    Participant

    Thanks for the feedback. I haven’t heard any hint of building defects or litigation. How can one find out for sure? What should I look for when reviewing the HOA documentation supplied by the listing agent?

    It’s just a conjecture that the complex is cash-only, because lenders have minimum owner-occupied percentages, etc. What is the best way to find out? How/when do lenders come back to being willing to finance in a complex where they are not willing?

    One recent sale in the complex was on the courthouse steps (now remodeled and on the MLS as a regular listing), another was at a very low price after the listing expired, and the unit I’m looking at is advertised as cash only, short sale, bank wants to close in ten days.

    The complex has been turning over from older residents to younger people, I think a lot of them renters. At least one unit is advertised on a weekly basis on vrbo.com. I know the HOA is trying to stop that, but I don’t know with how much energy or success.

    When I asked an HOA officer if the complex was cash only, she would only say that I’d have to ask lenders.

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