cash-only condo complexes

[cantab]

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.

[SD Realtor]

Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

To the OP… The HOA will not have any opinion on whether you can finance the home or not and frankly it would be a liability for them to make any statement as such. All you can get from them is whether there is any on going or past litigation and whether there have been any builders defects. Have your realtor look at all of the sales in the conplex for the past several years to see if any of those deals were financed. Try to get the hoa to give you the property managers number to get the owner occupancy although it should not matter since you are purchasing the home as a rental.

Don’t expect help from the hoa, you are on your own so make sure ytou have a good lender who will not make promises up front that they cannot keep. Since it is a short sale then things are not going to happen for awhile anyways. If you are gonna use cash then hopefully you can get a better deal.

[SD Realtor]

Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

To the OP… The HOA will not have any opinion on whether you can finance the home or not and frankly it would be a liability for them to make any statement as such. All you can get from them is whether there is any on going or past litigation and whether there have been any builders defects. Have your realtor look at all of the sales in the conplex for the past several years to see if any of those deals were financed. Try to get the hoa to give you the property managers number to get the owner occupancy although it should not matter since you are purchasing the home as a rental.

Don’t expect help from the hoa, you are on your own so make sure ytou have a good lender who will not make promises up front that they cannot keep. Since it is a short sale then things are not going to happen for awhile anyways. If you are gonna use cash then hopefully you can get a better deal.

[SD Realtor]

Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

To the OP… The HOA will not have any opinion on whether you can finance the home or not and frankly it would be a liability for them to make any statement as such. All you can get from them is whether there is any on going or past litigation and whether there have been any builders defects. Have your realtor look at all of the sales in the conplex for the past several years to see if any of those deals were financed. Try to get the hoa to give you the property managers number to get the owner occupancy although it should not matter since you are purchasing the home as a rental.

Don’t expect help from the hoa, you are on your own so make sure ytou have a good lender who will not make promises up front that they cannot keep. Since it is a short sale then things are not going to happen for awhile anyways. If you are gonna use cash then hopefully you can get a better deal.

[SD Realtor]

Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

To the OP… The HOA will not have any opinion on whether you can finance the home or not and frankly it would be a liability for them to make any statement as such. All you can get from them is whether there is any on going or past litigation and whether there have been any builders defects. Have your realtor look at all of the sales in the conplex for the past several years to see if any of those deals were financed. Try to get the hoa to give you the property managers number to get the owner occupancy although it should not matter since you are purchasing the home as a rental.

Don’t expect help from the hoa, you are on your own so make sure ytou have a good lender who will not make promises up front that they cannot keep. Since it is a short sale then things are not going to happen for awhile anyways. If you are gonna use cash then hopefully you can get a better deal.

[SD Realtor]

Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

To the OP… The HOA will not have any opinion on whether you can finance the home or not and frankly it would be a liability for them to make any statement as such. All you can get from them is whether there is any on going or past litigation and whether there have been any builders defects. Have your realtor look at all of the sales in the conplex for the past several years to see if any of those deals were financed. Try to get the hoa to give you the property managers number to get the owner occupancy although it should not matter since you are purchasing the home as a rental.

Don’t expect help from the hoa, you are on your own so make sure ytou have a good lender who will not make promises up front that they cannot keep. Since it is a short sale then things are not going to happen for awhile anyways. If you are gonna use cash then hopefully you can get a better deal.

[AK]

Isn’t there a minimum owner-occupancy requirement for FHA or GSE financing? I think 50% minimum though Fannie, Freddie, and FHA use slightly different calculations.

If that’s what is causing financing problems I’d doubt that owner occupancy will increase in the near future, if ever. Hope that unit is cash-flow positive!

[AK]

Isn’t there a minimum owner-occupancy requirement for FHA or GSE financing? I think 50% minimum though Fannie, Freddie, and FHA use slightly different calculations.

If that’s what is causing financing problems I’d doubt that owner occupancy will increase in the near future, if ever. Hope that unit is cash-flow positive!

[AK]

Isn’t there a minimum owner-occupancy requirement for FHA or GSE financing? I think 50% minimum though Fannie, Freddie, and FHA use slightly different calculations.

If that’s what is causing financing problems I’d doubt that owner occupancy will increase in the near future, if ever. Hope that unit is cash-flow positive!

[AK]

Isn’t there a minimum owner-occupancy requirement for FHA or GSE financing? I think 50% minimum though Fannie, Freddie, and FHA use slightly different calculations.

If that’s what is causing financing problems I’d doubt that owner occupancy will increase in the near future, if ever. Hope that unit is cash-flow positive!

[AK]

Isn’t there a minimum owner-occupancy requirement for FHA or GSE financing? I think 50% minimum though Fannie, Freddie, and FHA use slightly different calculations.

If that’s what is causing financing problems I’d doubt that owner occupancy will increase in the near future, if ever. Hope that unit is cash-flow positive!

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[Author]

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