Posted by John Behle on December 05, 1999 at 20:58:16:
You do have extra liens that can happen with condos. The condo association fees if unpaid can be lien. sometimes they can go years and accrue to a significant sum.
Co-ops are a different matter. They are similar to condos, but not as uniform. Read the documents carefully and I would not advise investing in them without the aid of an attorney at first. Co-ops can do some strange things. I had bought and sold many in a particular complex. On one I had a wrap (proprietary lease in this case) that was terminated when a majority of the people got together - without me - or even notifying me! - and turned it back into an apartment. I was amazed - and out $1200 bucks.
Re: Have you bought a COOP or CONDO in foreclosure. - Posted by TomC-(MD)
Posted by TomC-(MD) on December 06, 1999 at 01:05:03:
The first property I ever bought was a HUD-owned forclosure. Got in for less than 3% ($1700) down on 57.5K and HUD pre-paid the condo fee for a year. I also financed most of the closing costs. I lived in it for a year, now it is a rental.
It doesn’t generate any cash flow, but I am slowly building up equity. I also get a depreciation write-off on my taxes. One of the nice things about having a condo as a rental is that you own almost no land, mostly improvements (the building). You can depreciate about 90% of the value over 27.5 years.
I took posession of a condo through tax lien foreclosure, there were delinquent condo maintenance fees but my lien had priority over them so they didn’t affect me. Like John says, a co-op can get very complicated. Since all you own is shares you can be affected by the overall financial state of the building. I would steer away from co-ops unless I knew
exactly what pitfalls I could potentially encounter and how to avoid them.