I have a newbie question. I found a very good price on a bank repo condo. All seems fine, except the darn maintenance fee of over $300 a month. If I purchased the condo my monthly mortgage would be around $300, as well. Is it even worth looking into a condo with such a high maintenance fee? The condo is selling for 10k less than the appraised value. I wanted to fix the place up and rent it out for a year or so then sell the place because the value of the property has increased on an average 5k a year. Also, wouldn’t the maintenance fee ‘scare off’ potential buyers once I decide to sell? Also, do maintenance fees increase throughout the years? Thanks for the help guys!
You mentioned that they are asking for 10k less than appraised value, but it depends on what the appraised value is if its $20,000 thats a 50% discount. But if it’s 200,000 that’s only a 5% discount, not too great… Also appraised value doesn’t really mean much, recent comp sales are what matters.
But since you said mortgage will be $300 i’m guessing its a lot less than that. Also make sure to calculate for taxes and any other insurance that isn’t covered with the HOA fee.
You didn’t mention what comparable rents are for units in this building? I’m guessing not too much more than $600 if the mortgage would be $300…?
Yes, maintenance fees do increase through the years. Also they can go up quite drastically for example if the HOA is sued or if there is a lot of damage…like a fire.
Also make sure that you are even allowed to rent the condo out…some complexes don’t allow that or have other types of restrictions.
The maintenance fee might not scare off potential buyers if the same fees are common in similar complexes nearby . If people are buying the other ones they wouldn’t be afraid of this one. Most people will also be owner occupants so they might view it as better than paying rent.
You can’t really bet on the “average 5k a year” appreciation , especially now. So this doesn’t really seem like much of a deal. You are going to put money into it to fix it and then most likely lose some money every month in order to gain 5,000 some of which will be eaten up by transaction costs as well.
I did a “Fix up condo deal” that was anything but impressive. I now stay away from condos unless I already have buyers lined up to take them once they are under contract.
In some places where condos are in high demand then they are not bad. But in many markets condos are completely niche product homes. Meaning old people and a couple others are the only buyers. So definately use caution.
Do look at the by laws and make sure that it is rentable, that it is age appropriate not 55+ only