Posted by Jim Rayner on November 16, 2000 at 01:43:17:
Joe
i’m just about to head out the door for ed and terry’s workshop but in order to really give you sound advice i would need more information in order to suggest a structure. The immediate reaction is that you are looking at a purchase of 28.5 % of the total units. this immediately is cause for concern. You need to find out how many units are owner occupied out of the 14. This is critical to any attempt to structure this deal involving a lender for any portion of it. Also you need to get a copy of the association CC&R’s to confirm vital information regarding ownership and rental issues. You also need to request a copy of the current years annual budget as well as the last three years annual reports. a condo fee that low would suggest a self managed association confirm this, it is also important. Make sure they provide you a line item budget identifying all uses of the condo fees as well as the size of the reserve fund. Inquire also as well as to the history to major repairs and maintenance. Look hard at whether the common property has been maintained according to the provided history. A low condo fee also suggest that there is no line item budget other than operating costs with minimal input to reserves for capital expenses ie painting roofing parking lot etc. you will need all these documents for any lender involved as well. You should also research comps to confirm values. Closing by the end of the year should be no problem for most lenders but do you have the necessary capital? Without all the facts i can’t begin to advise except to tell you that the worst case is that you will need 30 % down and expect rates to be 9.5% and upwards. I will be back from CA on tuesday if you have the info needed i will be more than glad to help. Condo’s can be a great investment but you have to very careful.