Worst case scenario for an underfunded HOA

[4plexowner]

HOA let the insurance lapse?

no units are going to get through loan underwriting while that is the case

before someone can close escrow on a condo they have to show that the HOA has adequate insurance

I’m wondering what happens when the HOA’s insurance lapses – how do the mortgage holders/servicers of the individual units find out that the HOA no longer has insurance? – I’m guessing that they don’t

if I let the insurance lapse on my property the lender sends me a bill for the insurance that they purchased on my behalf

~

I have always considered condos a less-than-ideal real estate investment – the current downturn is uncovering some condo issues that I had never considered – the relative price declines of condos vs single family residences is showing how the market values SFRs over condos – condos get hit first and HARD when real estate corrects

[Coronita]

Recordsclerk and others. Dumber question. How does one typically get section 8 tenant. Got a link to website that describes the process (rather than having to type it all out ?) Thanks, just picking your mind some more.

Edit. Never mind. I can google it.
http://www.hud.gov/progdesc/voucher.cfm for start i guess, and there’s always wikipedia.

[Coronita]

Recordsclerk and others. Dumber question. How does one typically get section 8 tenant. Got a link to website that describes the process (rather than having to type it all out ?) Thanks, just picking your mind some more.

Edit. Never mind. I can google it.
http://www.hud.gov/progdesc/voucher.cfm for start i guess, and there’s always wikipedia.

[Coronita]

Recordsclerk and others. Dumber question. How does one typically get section 8 tenant. Got a link to website that describes the process (rather than having to type it all out ?) Thanks, just picking your mind some more.

Edit. Never mind. I can google it.
http://www.hud.gov/progdesc/voucher.cfm for start i guess, and there’s always wikipedia.

[Coronita]

Recordsclerk and others. Dumber question. How does one typically get section 8 tenant. Got a link to website that describes the process (rather than having to type it all out ?) Thanks, just picking your mind some more.

Edit. Never mind. I can google it.
http://www.hud.gov/progdesc/voucher.cfm for start i guess, and there’s always wikipedia.

[Coronita]

Recordsclerk and others. Dumber question. How does one typically get section 8 tenant. Got a link to website that describes the process (rather than having to type it all out ?) Thanks, just picking your mind some more.

Edit. Never mind. I can google it.
http://www.hud.gov/progdesc/voucher.cfm for start i guess, and there’s always wikipedia.

[EconProf]

Recordsclerk, from what you have described, that condo complex seems to be in a death spiral. There seems to be no hope, as sales cannot occur if no lender will touch such a situation. With the downward momentum firmly in place as to prices of condos, what is the future of these places? A train wreck for sure for this, and possibly many more aging condo complexes.
I suspect that as more condo complexes enter this stage, two or more possible scenarios will play out. One is that an apartment developer will come along and offer a price for the whole complex that will cash flow for him, after rehab. The condominium model of individual owner-occupiers just is not viable with mostly absentee owners and many not paying HOA dues & deferred maint. scaring away buyers.
Another scenario is for the gov. to buy the whole bunch, perhaps with eminent domain, rehab. & then turn it into low rent public housing. The economic virtues of a single owner running the place, whether private or public, overpower the downside of a bunch of warring private absentee owners.
With either of the two above approaches, the last holdouts could be offered a sweet deal to cooperate, as they have some legal leverage here to risist the new single owner.

[EconProf]

Recordsclerk, from what you have described, that condo complex seems to be in a death spiral. There seems to be no hope, as sales cannot occur if no lender will touch such a situation. With the downward momentum firmly in place as to prices of condos, what is the future of these places? A train wreck for sure for this, and possibly many more aging condo complexes.
I suspect that as more condo complexes enter this stage, two or more possible scenarios will play out. One is that an apartment developer will come along and offer a price for the whole complex that will cash flow for him, after rehab. The condominium model of individual owner-occupiers just is not viable with mostly absentee owners and many not paying HOA dues & deferred maint. scaring away buyers.
Another scenario is for the gov. to buy the whole bunch, perhaps with eminent domain, rehab. & then turn it into low rent public housing. The economic virtues of a single owner running the place, whether private or public, overpower the downside of a bunch of warring private absentee owners.
With either of the two above approaches, the last holdouts could be offered a sweet deal to cooperate, as they have some legal leverage here to risist the new single owner.

[EconProf]

Recordsclerk, from what you have described, that condo complex seems to be in a death spiral. There seems to be no hope, as sales cannot occur if no lender will touch such a situation. With the downward momentum firmly in place as to prices of condos, what is the future of these places? A train wreck for sure for this, and possibly many more aging condo complexes.
I suspect that as more condo complexes enter this stage, two or more possible scenarios will play out. One is that an apartment developer will come along and offer a price for the whole complex that will cash flow for him, after rehab. The condominium model of individual owner-occupiers just is not viable with mostly absentee owners and many not paying HOA dues & deferred maint. scaring away buyers.
Another scenario is for the gov. to buy the whole bunch, perhaps with eminent domain, rehab. & then turn it into low rent public housing. The economic virtues of a single owner running the place, whether private or public, overpower the downside of a bunch of warring private absentee owners.
With either of the two above approaches, the last holdouts could be offered a sweet deal to cooperate, as they have some legal leverage here to risist the new single owner.

[EconProf]

Recordsclerk, from what you have described, that condo complex seems to be in a death spiral. There seems to be no hope, as sales cannot occur if no lender will touch such a situation. With the downward momentum firmly in place as to prices of condos, what is the future of these places? A train wreck for sure for this, and possibly many more aging condo complexes.
I suspect that as more condo complexes enter this stage, two or more possible scenarios will play out. One is that an apartment developer will come along and offer a price for the whole complex that will cash flow for him, after rehab. The condominium model of individual owner-occupiers just is not viable with mostly absentee owners and many not paying HOA dues & deferred maint. scaring away buyers.
Another scenario is for the gov. to buy the whole bunch, perhaps with eminent domain, rehab. & then turn it into low rent public housing. The economic virtues of a single owner running the place, whether private or public, overpower the downside of a bunch of warring private absentee owners.
With either of the two above approaches, the last holdouts could be offered a sweet deal to cooperate, as they have some legal leverage here to risist the new single owner.

[EconProf]

Recordsclerk, from what you have described, that condo complex seems to be in a death spiral. There seems to be no hope, as sales cannot occur if no lender will touch such a situation. With the downward momentum firmly in place as to prices of condos, what is the future of these places? A train wreck for sure for this, and possibly many more aging condo complexes.
I suspect that as more condo complexes enter this stage, two or more possible scenarios will play out. One is that an apartment developer will come along and offer a price for the whole complex that will cash flow for him, after rehab. The condominium model of individual owner-occupiers just is not viable with mostly absentee owners and many not paying HOA dues & deferred maint. scaring away buyers.
Another scenario is for the gov. to buy the whole bunch, perhaps with eminent domain, rehab. & then turn it into low rent public housing. The economic virtues of a single owner running the place, whether private or public, overpower the downside of a bunch of warring private absentee owners.
With either of the two above approaches, the last holdouts could be offered a sweet deal to cooperate, as they have some legal leverage here to risist the new single owner.

[recordsclerk]

You would have to be a cash buyer or have access to money to buy into situations like this. I have always wondered what the government will do in these extreme cases. Currently the pending condos have an asking price of 85K for a 2bd 1ba and the other condo listed at 75k for 1bd 1ba. I’m just sitting on the sideline waiting for prices under 50K. I would probably at that point be able to buy 4 units. The one bedrooms are renting for $700+ and the 2 bedrooms are renting for $900+. I think this thing can be fixed but it will take time. I’m not sure if someone can buy out this complex because these are individually owned and are going to be sold 1 at a time. There are some serious risk involved, but at a low enough price it might be worth it. I also think that when the price becomes more enticing there will be enough investors to make this work.

[recordsclerk]

You would have to be a cash buyer or have access to money to buy into situations like this. I have always wondered what the government will do in these extreme cases. Currently the pending condos have an asking price of 85K for a 2bd 1ba and the other condo listed at 75k for 1bd 1ba. I’m just sitting on the sideline waiting for prices under 50K. I would probably at that point be able to buy 4 units. The one bedrooms are renting for $700+ and the 2 bedrooms are renting for $900+. I think this thing can be fixed but it will take time. I’m not sure if someone can buy out this complex because these are individually owned and are going to be sold 1 at a time. There are some serious risk involved, but at a low enough price it might be worth it. I also think that when the price becomes more enticing there will be enough investors to make this work.

[recordsclerk]

You would have to be a cash buyer or have access to money to buy into situations like this. I have always wondered what the government will do in these extreme cases. Currently the pending condos have an asking price of 85K for a 2bd 1ba and the other condo listed at 75k for 1bd 1ba. I’m just sitting on the sideline waiting for prices under 50K. I would probably at that point be able to buy 4 units. The one bedrooms are renting for $700+ and the 2 bedrooms are renting for $900+. I think this thing can be fixed but it will take time. I’m not sure if someone can buy out this complex because these are individually owned and are going to be sold 1 at a time. There are some serious risk involved, but at a low enough price it might be worth it. I also think that when the price becomes more enticing there will be enough investors to make this work.

[recordsclerk]

You would have to be a cash buyer or have access to money to buy into situations like this. I have always wondered what the government will do in these extreme cases. Currently the pending condos have an asking price of 85K for a 2bd 1ba and the other condo listed at 75k for 1bd 1ba. I’m just sitting on the sideline waiting for prices under 50K. I would probably at that point be able to buy 4 units. The one bedrooms are renting for $700+ and the 2 bedrooms are renting for $900+. I think this thing can be fixed but it will take time. I’m not sure if someone can buy out this complex because these are individually owned and are going to be sold 1 at a time. There are some serious risk involved, but at a low enough price it might be worth it. I also think that when the price becomes more enticing there will be enough investors to make this work.

[Author]

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