Julie Brown, Real Estate Pro in Los Angeles, CA

I am in escrow to buy a townhouse in the San Fernando Valley. I saw that the homeowner's association in operating in the red, has no money, and an un

Asked by Julie Brown, Los Angeles, CA Sat Dec 29, 2012

I am in escrow to buy a townhouse in the San Fernando Valley. I saw that the homeowner's association is operating in the red, has no money, and an unfunded reserve. The HOA President confirmed the situation and said no other owner was cooperative in this 28 unit complex and he was advancing funds to keep the Association solvent. I am buying the REO townhouse for rental investment at a good price but this seem like a precarious situation. Does anyone have any experience or advise in this situation.

Help the community by answering this question:

Answers

10
This does not sound like a good building to be buying in for an investment. I see lawsuits and/or special assessments looming on the horizon.
Web Reference: http://www.homejane.com
1 vote Thank Flag Link Sat Dec 29, 2012
You need a majority of the owners to vote for the special assessment. I do not see that happening. I probably would go ahead if that was the solution.
Flag Sat Dec 29, 2012
Buyer beware. Hoa operating in the Red is a red flag. You maybe buying at a great price but what will it cost you before it is all said and done. I would walk way from this deal.

Good luck I am here to assist you if needed.

Regards,
Katherine Johnson
Prudential. California. Realty
Direct 951-538-412dre 01205852
Probate,sres,bpor,first time buyer specialist, hafa certified,short sale certified
0 votes Thank Flag Link Tue Jan 1, 2013
Buyer beware, HOA's in the red can quickly result in poor property maintenance, HOA bankruptcy, quickly increasing dues, and big headaches... They could make it out alive, but if they are already in red... Well, you definitely have a good warning sign...

I am actually from the San Fernando Valley myself...


Have you considered investing in Las Vegas, Nevada?

You can get homes below today's building costs, recently built, with high capitalization rates and amazing ROI, all with low risk and high returns.

Contact me directly to learn more, from purchase and management to sales, and more.

Mark, 702-291-8186
Mark@sellstatedeluxe.com

Or, visit us on the web:

http://sellstatedeluxe.com/las-vegas-real-estate-investments/
0 votes Thank Flag Link Tue Jan 1, 2013
This does not sound right. You know the facts about it. This "great deal" could become a "worst deal." HOA financially is unstable and going down hill. You might encounter problems with your future tenant due to building safety and sanity.
If this is a so great deal to buy it and to hold it on until HOA gets very sound financially, then buy it without renting it.
0 votes Thank Flag Link Sun Dec 30, 2012
I would only consider buying it if you are getting a great deal and paying cash.
0 votes Thank Flag Link Sun Dec 30, 2012
Being an absentee owner and if it was me I would cancel this transaction. In the near future all owners will be payi g out if pocket or the association will be forced to file bk. if you decide to go thru with it get involved with the association. You may also contact me to assist you with purchasing another property as it also sounds like you need someone to do homework for you.

Regards

Katherine johnson
Prudential California. Realty
Dre 01205852
Direct:9515384126
0 votes Thank Flag Link Sat Dec 29, 2012
As an Owner in such an Association, you will be taking on the appropriate share of the liabilities. I advise seller pay his share as a part of closing or you will be liable for this debt if and and when it comes due.
0 votes Thank Flag Link Sat Dec 29, 2012
The question really is--can you get out? Eventually, you know that one of two things will happen: 1) the association goes bankrupt (that would be the time to buy) or 2) the money HAS to come out of somewhere (uh, owners?). Also, the President acknowledges "advancing" funds--do they expect to be paid back? And with you being an absentee landlord...how do you see this ending up?
0 votes Thank Flag Link Sat Dec 29, 2012
I would run from it, fast!
0 votes Thank Flag Link Sat Dec 29, 2012
It can be a very sticky situation. Are you paying cash? If not, you may not be able to get the unit financed. I wish you all the best! Let me know what happens.

Dot Chance, Realtor, CDPE
DRE #01494182
Keller Williams Realty World Media Center
0 votes Thank Flag Link Sat Dec 29, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer