What’s a good reserve amount for an HOA? Should we pull the trigger? Potentially buying into a 100 year old building with 12 condo units.

Our situation

Hi, I am currently renting a condo looking to purchase the unit with my SO in the coming weeks. We are first time buyers and have been renting here since the beginning of the pandemic.

It’s a 3br 1ba unit in a great location in a HCOL area. 15% down no PMI, we have a 5/1 30 year ARM ready to go at ~3.49%. No purchase agreement or price yet, but we have a family friend lawyer that we will pay in the near future if we proceed.

The unit was aggressively priced for rent and never had a single increase in its 8 years of being rented. As such, all monthly fees as potential homeowners here will likely run us a tiny bit more per month than we pay now as renters.

Not appraised yet, but recent valuation + the fact that the owner loses money here/is keen to sell to us/we aren’t using a realtor means we could probably get this under $350k.

Building and some HOA expenditures

We finally received the latest HOA financials which includes a forecast for this year.

The building has at least one assessment per year. They don’t have any outstanding loans/credit/debt expenses thankfully, and their insurance looks to be cheaper this year than it was last year. Cap Ex comes out at $8k. Including the one assessment this year it seems like our HOA fee would be around $420 monthly.

We are asking for meeting minutes to make sure they don’t have anything else up their sleeves this year. Roof won’t need to be replaced for probably some time, it’s inspected yearly. The flashing is good and most of the work is just patching here and there. Majority of the future work (10+ years from now) will be brickwork along the facade closest to the street – we are set further back.

HOA Reserves

HOA collects almost $50k a year, $4.5k of which goes towards reserves.

The ‘Reserve Balance’ shows $4.5k which is what they collect annually to pad the reserves with. The wording does make it seem like this is what they have in the bank right now though lol. As their budget increases this will increase too, currently the reserve contribution is 10% a year.

Our unit would roughly pay about 10% of the fees each year, as it’s the third largest. Thankfully we already got an agreement to replace our windows and the HOA is reimbursing our landlord directly. As far as inside the unit goes, it’s pretty fine just some plaster imperfections here and there + we should probably re-encapsulate a windowsill or two in the near future (gotta love our grandparent’s deregulation and their affinity for lead based paint)

Reserve Balance (end of 2021) = $22.1k

Expected Reserve Balance (end of 2022) = $26.5k

Question: Do these numbers seem healthy to you, and would it turn you off of buying in a place like this? Roof or foundation could be very expensive, but at least in the short term it doesn’t appear that assessments of that magnitude are expected. Small stuff is to be expected in an old building for sure. We love it here. We were not originally in the market for buying, but given the circumstances and favorable price (it’s not on the open market) I don’t want to regret passing this up. Thank you!

submitted by /u/Equivalent_Nature_67
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Our situation Hi, I am currently renting a condo looking to purchase the unit with my SO in the coming weeks. We are first time buyers and have been renting here since the beginning of the pandemic. It’s a 3br 1ba unit in a great location in a HCOL area. 15% down no PMI, we have a 5/1 30 year ARM ready to go at ~3.49%. No purchase agreement or price yet, but we have a family friend lawyer that we will pay in the near future if we proceed. The unit was aggressively priced for rent and never had a single increase in its 8 years of being rented. As such, all monthly fees as potential homeowners here will likely run us a tiny bit more per month than we pay now as renters. Not appraised yet, but recent valuation + the fact that the owner loses money here/is keen to sell to us/we aren’t using a realtor means we could probably get this under $350k. Building and some HOA expenditures We finally received the latest HOA financials which includes a forecast for this year. The building has at least one assessment per year. They don’t have any outstanding loans/credit/debt expenses thankfully, and their insurance looks to be cheaper this year than it was last year. Cap Ex comes out at $8k. Including the one assessment this year it seems like our HOA fee would be around $420 monthly. We are asking for meeting minutes to make sure they don’t have anything else up their sleeves this year. Roof won’t need to be replaced for probably some time, it’s inspected yearly. The flashing is good and most of the work is just patching here and there. Majority of the future work (10+ years from now) will be brickwork along the facade closest to the street – we are set further back. HOA Reserves HOA collects almost $50k a year, $4.5k of which goes towards reserves. The ‘Reserve Balance’ shows $4.5k which is what they collect annually to pad the reserves with. The wording does make it seem like this is what they have in the bank right now though lol. As their budget increases this will increase too, currently the reserve contribution is 10% a year. Our unit would roughly pay about 10% of the fees each year, as it’s the third largest. Thankfully we already got an agreement to replace our windows and the HOA is reimbursing our landlord directly. As far as inside the unit goes, it’s pretty fine just some plaster imperfections here and there + we should probably re-encapsulate a windowsill or two in the near future (gotta love our grandparent’s deregulation and their affinity for lead based paint) Reserve Balance (end of 2021) = $22.1k Expected Reserve Balance (end of 2022) = $26.5k Question: Do these numbers seem healthy to you, and would it turn you off of buying in a place like this? Roof or foundation could be very expensive, but at least in the short term it doesn’t appear that assessments of that magnitude are expected. Small stuff is to be expected in an old building for sure. We love it here. We were not originally in the market for buying, but given the circumstances and favorable price (it’s not on the open market) I don’t want to regret passing this up. Thank you! submitted by /u/Equivalent_Nature_67 [link] [comments]

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