1. Location: This one is a no brainer, but you will have much more success with your vacation rental if it is in close proximity to entertainment areas and activities. Our investors have great success with their vacation rentals near Old Town Scottsdale.
2. Short Term Lease Ability: Many condo HOA's will not allow leases for less than 90 days, and there are even a few that do not allow the condos to be leased out at all.
3. Financial Stability of the HOA: If the HOA has a serious delinquency problem that could result in addition assessments to you, negatively impacting your cash flow. It's a little unreasonable to expect that there will be $0 delinquency, but a high percentage (20% or more) would be a significant downfall.
4. Ability to Finance: You didn't mention how you were planning to purchase the home, but it's important to know that not all condo's can be purchased using a loan. This is typically due to high HOA delinquency or pending litigation. If you are planning on using financing, your Loan Officer and Realtor will help you to determine this.
Good luck on your purchase!
*2012 Finalist for Realtor Magazine's '30 under 30'
Then, you will want to look at the financial statement. If an HOA is financially unstable then you could be facing special assessments to get maintenance done to the complex. Many complexes have problems because with the foreclosures people were not paying their dues.
Also make sure there are not pending law suits such as with the builder for faulty work etc.
Ron & Brenda Cunningham
West USA Realty
* Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley"
* Search the Official MLS for home on our website for FREE
Feel free to visit http://www.INSTANTRENTERS.COM , we are a full service company that specializes in the Arizona rental market. I look forward to hearing from you.
1) Read through the financial statements to see how sound the Condo unit is in terms of balance shet, upcoming expenses
2) Ask your realtor to see a history of assessments to see how stable it has been.
3) HOA fees for condos may include different items - understand what is included and what may cost you extra (eg roof, painting, Cable, Utilities)
4) Read CC&Rs association rules) to ensure they meet your needs and expected usage
5) For older condos, consider there may be expenses with updated plumbing, sewer repairs, roof replacements, A/C replacements
6) Have a lawyer review documents
Finally, be open and talk with your real estate agent about what is important to you - the more information you provide to them, the better job they can do for you. Best wishes in your vacation home hunt!
Since you will be buying a condo and turning it into a vacation rental, THE MOST important thing to check is the Covenants, Codes, and Restrictions (CCR's) to see if you can even do what you want to with the property.
I know, for example, Manzanita Villas REQUIRES 3 month minimum rental, therefore, that complex would NOT be a good candidate for a vacation rental.
Hope this helps.
Terry S. Smith
Arizona Resident for 46 years.
Grew up in Scottsdale, AZ
DPR Realty LLC
8341 E. Gelding Drive
Scottsdale, AZ 85260
Direct (602) 763-1858
The most important thing to keepin mind is the HOA monthly fee. That is a constant expense and is liable to increase over the years. I would also check to see if the HOA has any special assessments that are comming up. The last issue is to check out the solvency of the HOA. Some HOA's are not in great financial shape due to the amount of vacancies that are not paying dues. I hope that helps.
HOA's that are broke or near bankruptcy are also a concern because fees will skyrocket as a result.
Finally the condition of the property is an indicator of a well or badly run HOA and one that is not well maintained does not bode well for the owners because increased fees and assessments will be forthcoming.