FLU I think the reasoning on the IO loan is to conserve cash for dp on the detached home down the road. It is not a question of being upside down in the future, he will be upside down and most likely not be a little. However the condo will be kept and turned into a rental. The problem there is negative cash flow which indeed could be more substantial then at first glance. This is by far one of the largest underestimations first time landlords make.
One other disturbing thing about condos that “may” occur. Given a large complex that will undergo severe depreciation and may see substantial foreclosures that will have a potentially severe effect on HOA reserves. Remaining homeowners “may” indeed face assessments or reserve requirements payments due to the fact of shortfalls from higher vacancies….I doubt that a lender pays HOA dues for an empty condo, perhaps I am wrong. It is speculative to mention this but it certainly is not out of the realm of possibility.
