Thinking about jumping in. I’ve noticed some “condos” (ie converted apartments) in some fairly decent neighborhoods are now at 50% (or less) of 2005 prices. I’m in a position where I can offer all cash (and will aggressively try to discount any price I see), but before I make my purchase, I want to seek the ever wise opinion of the people here. Note, I intend this to be a cash flow rental property and I am immediately discounting any concept of “appreciation”.
1 – How wary should I be of the state of this HOA of the complex? Is it better to be in a complex with a large number of units or small?
2 – The HOA fees seem reasonable. How much additional costs should I factor in to the property maintenance? I’m assuming that it’s not a simple “well, I can just discount any expenditure due to the property managers watching the building”.
3 – I want to have an LLC to hold the property. I’ve read on separate sites that it’s better to have an LLC for each property held, which a parent LLC that holds all the children. Any thoughts on this?
4 – If I do have an LLC holding the properties, will I have to pay corporate tax on it, and then income tax on any income I generate to get a double whammy?
5 – What have I missed?
-Y[/quote]
I’d wonder about the following
1) How much of the current complex is owner occupied versus investment?
2) How much of the current owners have been are old versus new? I guess for a condo convert or new complex, that would be a moot question, but probably that should raise a few concerns.
3) Is the HOA underfunded? If so, expect special assessments.
4) Any major repairs coming, like a leaky roof,common areas etc? (Did you check out the HOA meeting minutes/etc)? If so, expect special assessments.
5) What exactly is the occupancy rate. Are there a lot of empty units? If so expect special assessments.
In general , condo’s are the last to appreciate and first to depreciate.
Me personally, I don’t like condo converts. Because most of them were done in the 2004-06 range, at the time of the bubble. I ‘d be suspicious that some of the owners would be on solid financial footing or majority of owners be owner occupied or both. And in a shared community, that to me is a red flag, especially on beaten up but fixed up apartment converts.
But that’s just how I feel. Your mileage will vary.
