John D., Home Buyer in San Diego, CA

I'm looking at buying a condo conversion in San Diego. I'm going to hire a property inspector, any other due dillgence you recommend on the

Asked by John D., San Diego, CA Thu May 27, 2010

building? One thing I'm concerned about is PTB plumbing (Polybutylene) being used in the condo plumbing. It was common in buildings built in the 1980's and 1990's and has major leak issues. How can I find out if a condo building has this plumbing? Any other suggestions in being really thorough in my due dilligence? I would rather buy a SFR, but the condo conversions are the right price in the right location. Do you think I will be OK with a conversion? Thanks!

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17
Ruth and Per…, Agent, Los Gatos, CA
Thu May 27, 2010
Hi John D.

Besides getting inspectors who are ASHI and / or CREIA certified, you should
also call a good Plumber out. You have not touched on a Termite Inspector, that is very important.
Also try to find out the condition of the foundation, i.e. is the structure bolted, age etc.

Definitely attend the Inspections.

Also more importantly check what are the reserves for Issues in the HOA and how current are the
HOA Meeting notes. Depending on whether you are upstairs or down stairs it becomes important
to understand the insulation between the floors as well as the walls.

Find out pet or smoking restrictions etc. and whether this will work for you.
Find out if they are FHA approved, in the event you are applying for a FHA loan this can take time,
if you are the first one.

Goodluck and enjoy your home.
Perry
Web Reference:  http://www.ruthandperry.com
1 vote
Jeffrey Doug…, , San Diego, CA
Thu May 27, 2010
John, I spent today with a Client in North Park and it's truly a great upcoming neighborhood. I am glad to hear the conversion is smaller and recently done, both good things.

Too many people have lived over their heads when it comes to Southern California real estate, and I think your approach is a prudent one if it works for your lifestyle.

Anytime that you buy into an HOA you become responsible for issues. If you have checked out the HOA condition and established that they have good reserves I would not worry too much about the unforeseen. The large downtown towers are much more prone to expensive maintenance and repairs than a smaller building is.

Katrina, I believe John was just asking a general question to see if he missed anything. As professionals we can try to answer the question honestly or simply post a web link. He didn't ask for assistance, he asked for feedback, which is exactly what this forum is for IMHO.
1 vote
Vicki Inghram, Agent, Coronado, CA
Thu May 27, 2010
Conversions are risky. Wise decision to to "look under the hood." Biggest concern for me is plumbing. When the pipes begin bursting, the HOA reserves diminish.....FAST. Prudence is a good call.
1 vote
Matt Puzz, , Phoenix, AZ
Tue Jun 1, 2010
I would be very leery of a Condo Conversion. It is difficult to buy them and no one knows what type of financing will be available when it comes time to sell; you may need a cash buyer or be married to the property.

Matt Puzz
Citizen's Choice Mortgage
602-410-9333
Web Reference:  http://www.mattpuzz.com
0 votes
Philippe Hel…, Other Pro, Ramona, CA
Sun May 30, 2010
John,

Be sure your home inspector can check fro PB plumbing even if it is not visible! many times a home inspector will disclaim the type of plumbing when they cannot visually observe it, which is common in a condo. You just can't see it. We have the technology to test for PB plumbing even if it is not visible. Be sure to ask your inspector if they can do this.

Best wishes,

Philippe Heller
The San Diego Real Estate Inspection Co
Web Reference:  http://www.sdinspections.com
0 votes
Paul, , San Diego, CA
Sat May 29, 2010
Jon, I misplaced your number but I found some info you asked me about regarding those two buildings. When you get a chance give me a call to discuss. Kindly, Paul Montgomery
0 votes
Michael Ronn…, Agent, Healdsburg, CA
Thu May 27, 2010
That is a very small HOA. What are the current dues? What are the current reserves? I have witnessed special assessments on smaller complexes go through the roof due to inadequate reserves needed to deal with issues such as defective furnaces, termite and pest damage and more. Do your due diligence! by consulting experts to conduct the investigations. Better safe than sorry and far better to spend on qualified experts now rather than to have unpleasant and unexpected discoveries later on.

Regards,

Mike
0 votes
John D., Home Buyer, San Diego, CA
Thu May 27, 2010
Thanks everyone for taking the time to answer.

Nick, I probably do not plan on living there the rest of my life. But, the problem is the SFR's that are in my price range are not in areas of San Diego I would want to live. You can get a MUCH better location with a condo conversion. You can get a 1 bedroom condo conversion in the low $100k range in a area with $400k-$600k average SFR price. I could technically qualify for SFR probably up to $500k, but I am single and very big on keeping my monthly overhead very low and not being "house poor". I like to have flexibility & extra funds to travel, have fun and enjoy my life vs. having a giant house pymt and living off top ramen:) Also, you never know in this volatile world and economy if you will have a job or income in 6 mos. If you have a low house payment you can withstand the brutal shocks the world economy seems to have on a regular basis these days.

I've checked out the HOA thoroughly and it's not in bad shape. Checked owner occupancy %, reserves, hoa delinq. It's a small 8 unit building that was converted in 2006 in North Park. The main thing I'm challenged with is "looking under the hood" and getting a good feeling of the condition of the plumbing, electrical and structure of the building so I'm not running into expensive special assesments down the road.

Also, these properties were renovated extensively only a few years ago, so the nice thing is you get a really sharp looking interior for such a rock bottom price and payment (40% of what they sold for at the peak in 2005/2006). They need absolutely no fix up work and are move in ready. After tax my payment is less than rent for a similar 1 bedroom and I also pay principle down every month with a fully amortized 30 yr fixed loan at 4.75%. So I can't see how I could go that wrong.
0 votes
Jeffrey Doug…, , San Diego, CA
Thu May 27, 2010
Hi John D.

I would start by reviewing the Buyer's Inspection Advisory that is attached to the purchase contract. This is a really comprehensive list of things you should be concerned about during a purchase.

As many have said below proceed carefully with a condo-coversion as many of them were not done cheaply. A good home inspector should be able to point out red flags that would require further investigation by an appropriate professional. Most time the developer prettied the apartment complex up and did little to upgrade important components or insulation for noise and energy considerations.

Check the financial condition of the Home Owner's Association (HOA) and recent sales in the complex. It would also be a good idea to have your agent run a foreclosure report on the complex to see how many notice of defaults have been filed. If there are a number of them it is likely the prices will continue to drop as Banks bring them on the market and want to unload them.

You mentioned the location was right and this is one of the most important considerations. Make sure you look around at the general re-sale value of the area and that it offers good school districts, shopping, public transportation, and lower crime rates.

I hope this helps and please read the Buyer's Inspection Advisory. Many times you will pick up items to be concerned about that you would never think of.
0 votes
Sergio Casas…, , University Heights, San Diego, CA
Thu May 27, 2010
Hi John, my folks just went through a $65k re-piping because of PTB so I understand your concern. I can recommend one of the best inspectors I've ever dealt with. Use Will Johnson for your property inspection and trust me, you'll thank me later. Check his company on Kudzu and you'll see what I mean:

Will Johnson
Inspection Perfection LLC
will@sdinspection.com http://www.sdinspection.com
(619) 295-9455 cell - (619) 269 -2093 fax


If you're looking for buyer representation please contact me and we can discuss your search and I can tell you about some of my company's search methods which can show you properties before they hit the market. Best of Luck!

Sincerely,

Sergio Casas-Silva
Partner
Safe Harbor Money Management
CA DRE License #01863531
sergio@safeharbormm.com
(P) 858-405-3289
(F) 619-512-4421
0 votes
Michael Ronn…, Agent, Healdsburg, CA
Thu May 27, 2010
John, you did not mention if you are using an agent?
If not, that is a great place to start in order to navigate the process. There were major issues with PTB, lawsuits etc. I know a great highly experienced agent (Peter Buehrle) with Keller Williams and strongly encourage that you give him a call. 760-438-4141

Regards,

Michael Ronnie "The Wine Country Broker"
0 votes
Tyler Brown, Agent, Cardiff, CA
Thu May 27, 2010
I'm very hesitant with condo conversions. But, I have seen some creeming deals too. Major issue's that cause the most headaches are:
1. Is the HOA in litigation (nearly impossibl;e to get a loan)
2. Is the complex FHA an VA approved (very important if you want to get this type of loan).
3. What is is owner occupancy (that may effect it's ability to qualify with the lender).
4. Make sure the complex isn't 10% in default on HOA fee's (some bank's will lend on 15%).
0 votes
Vicki Inghram, Agent, Coronado, CA
Thu May 27, 2010
0 votes
Paul, , San Diego, CA
Thu May 27, 2010
I was involved in a number of coversions in Sd back in 03 and 04. Let me know what developments you are looking at and if I know anything I'd be happy to share the intel. Thanks! Paul 858-229-0338
0 votes
Joan Wilson, Agent, San Diego, CA
Thu May 27, 2010
Talk with your Realtor, they should be able to help you decide what inspections to get. There is a long list that you might want to consider.

Good luck,

Joan Wilson
760-757-3468
0 votes
Katrina Hami…, Agent, San Diego, CA
Thu May 27, 2010
Web Reference:  http://www.downtownREOs.com
0 votes
Nick Ruiz, , San Diego, CA
Thu May 27, 2010
Conversions are fine,

You can ask the HOA if there is PTB or if it has been revamped.

Do you plan on living there for the rest of your life? If not I suggest trying to get into an SFR all you can because the resale/rent will be greater. Later down the road it will be a better vehicle for stepping up to your next property.

Nick
Web Reference:  http://www.NickRuiz.com
0 votes
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