Home Buying in 96740>Question Details

Rs Hayes, Home Buyer in 98070

What is the easiest way to determine the health of a Condo complex?

Asked by Rs Hayes, 98070 Sun Nov 7, 2010

I've noticed a lot of units for sale in a given complex and wondered about how healthy it is financially

Help the community by answering this question:


And to add to what the other professionals have said, speak to board members and review the financials carefully. Ask about future projects being discussed and costs.
1 vote Thank Flag Link Mon Nov 8, 2010
Take a look at its budget. In fact, take a look at the past 3 years. How many of the units are current on their condo payments? Are the condo fees covering the expenses, or are the reserves being depleted? How stable are the condo fees--relatively flat (good) or rising sharply (perhaps to cover units that aren't paying). And are there any lawsuits pending against the condo? That's not necessarily a red flag, but it does raise concerns. Also, look to see whether some services have been trimmed back or eliminated. Moderate trimming back may be prudent. But perhaps not a 70% reduction in something like landscaping or pool maintenance.

That'll give you a quantitative picture. For a qualitative picture, do a bit of door knocking. Talk to 4-6 residents at the condo. Ask how it's going. Ask how management is. Ask what problems there are.

Those two steps--looking at the books and then talking to some owners--will give you a good picture.
1 vote Thank Flag Link Sun Nov 7, 2010
Don Tepper, Real Estate Pro in Burke, VA
Feel free to contact us and we can provide you with the latest state filing of the association.
0 votes Thank Flag Link Sun Mar 31, 2013
As a former property manager for 20 years, I can tell you that there are several key points of interest that should be reviewed. Start first with the last two years of the annual audit report, conducted by an outside independent CPA firm. The property manager, a board member, or a homeowner in the complex should be a good source for the audit. Look at the financials and read the notes carefully. Look for negative cash flow, that is more expenses than revenue. Check to see if any loans have been taken out, and if so, how much is owed, and for how much longer. Make sure the complex has set up a capital reserve system that will meet the future major maintenance needs. Make sure there are no negative notes about management's handling of the association's funds.

Then review the current financials. Again, these can be obtained from the property manager, an owner or board member. Check the balance sheet and the accounts receivable due report. If more than 10% of the unit owners are 60 days or more past due, that's a big red flag. That shows owner resistence to paying the dues, which is a tell tale sign that they may be having a problem making their mortgage payment. The new judicial foreclosure process can take months, or even a year to complete, while the association is only protected for six months of dues. This time lag compounds the problem of lost revenue to the association.

Then review all the minutes from both the owners meetings and board meetings from the past two years. Review discussion regarding collection of past due accounts, future major maintenance issues, and pending or current lawsuits. Take a walk around the property and look for signs of deferred maintenance. Is the paint peeling? Is the landscaping well maintained? How does the roof look?

Interviewing the property manager, homeowners, board members and realtors can be helpful as well. However, be wary of homeowner, tenant, and property employee gossip. Sometimes they don't have the full picture, or have been biased for some reason.
0 votes Thank Flag Link Mon Jul 16, 2012
Ask your agent to contact the property manager of the complex. Ask for current occupancy ownership. Ask him/her about assesments on the complex. Is there any major repairs such as pools, roof replacing or litigation pending.
0 votes Thank Flag Link Tue Jul 10, 2012
go look on a rainy day, for leaks!
0 votes Thank Flag Link Tue May 1, 2012
There are some good answers here. I would also recommend that you look for a history of assessments in the complex. When large unexpected expenses arise, that have not been accounted for in the budget, many associations are forced to divide it up and assess the individual condo owners to pay the bill. I can tell you from experience, it's no fun writing that check. You should also ask the management company to provide the number of owners that are in arrears on their dues. Lastly, as others have mentioned, read the meeting minutes, review the budget and if possible, talk to current owners.
0 votes Thank Flag Link Mon Sep 26, 2011
Easiest? Hmmm. It's easy to check for high levels of maintenance and cleanliness, just walk around the place.

Realistically, you can't find out details about their finances until you engage at the transaction level.

All the best,
0 votes Thank Flag Link Mon Nov 8, 2010
Ask a Realtor who is familiar with the complex. Reviewing association documents is the appropriate answer to this question. However, the reality is that for legal/liability reasons, much of the information you want and/or need will not appear in the minutes. Managers will be reluctant to put in writing things they might say to you off-the-record. They will be even more willing to talk to a Realtor who works the area, rather than to a member of the public. Talking to residents is good advice. However, in many complexes, particularly in Hawaii, owners live off-island and don't have a clue as to what is happening in the complexes. Tenants may not give you the straight story as they don't want the unit sold-out from under them. As the #1 condo sales people on the island since 1991, I can tell you that there is no "easy" way to determine the health of a complex. It takes alot of investigating from multiple sources. Start by associating yourself with a knowledgeable agent.
Web Reference: http://www.Go2Kona.com
0 votes Thank Flag Link Sun Nov 7, 2010
Reviewing the Association documents can be helpful. Nowadays, many homeowners are in default not only with their mortgages but with their association dues. If you are able to talk to the Association or management company, you could ask what is the default percentage. Also, talking to the homeowners can be pretty helpful. Some info may be heresay but some info can be useful. Let me know if I can be of any help. Aloha, Ken
0 votes Thank Flag Link Sun Nov 7, 2010
You can order from condo association all the documentations for your evaluation. Some of these documents include Approved Minutes of the board meetings at least the last 3, Articles of Incorporation, Bylaws and amendments, copy of any and all pending litigations, Current an/or Proposed Budget, Current Financial Statement, Current House Rules, Declarations and Amendments, Insurance summary, Minutes of last Annual Meeting, Property Information Form from managing company, Reserve Study or Summary, Planned Community Documents and all other documents you can get.
0 votes Thank Flag Link Sun Nov 7, 2010
If you see legal fees anywhere in the docs, find out what it was for.
Flag Wed May 2, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer