HOA Fees - $9,000!!!! What should I Do ?? - Posted by bob

Real Estate Investing Real Estate Financing
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Posted by BOB on May 05, 2005 at 24:00:12:

But…

Hello. Am I on earth still?

Did I ASK anyone to calculate HOA fees for the month? NO.

Did I ASK anyone to predict what numbers I have left out? NO

Did anyone ASK ME what the exact HOA fees were per month WITHOUT making false assumpitions or calculations KNOWING they didn’t have FULL information?

You all must have failed the SATs.

When you are given a question WITHOUT enough information the answer is always, D - not enough info to calculate.

Go back and ask before making an a$$ and assuming things.

what are the HOA fees?

a. 375
b. 250
c. 500
d. not enough information to calculate
e. make up a number and flame bob

(hint: answer is D)

I can’t believe this is getting so long… haha

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HOA Fees - $9,000!!! What should I Do ?? - Posted by bob

Posted by bob on May 02, 2005 at 17:06:26:

I have a contract to buy a condo for $41,000.

I just found out that there are $9,000 in unpaid HOA fees for the past 2 yrs.

Details:

1st = 41,000
ARV = 75,000
no repairs
9,000 in HOA fees.

I spoke to the Condo Assoc. (which is managed by a company in another state) and they said they would be willing to accept $5,000 and waive $4,000 worth of late fees.

I told them that $5,000 is too much to pay, but I would like to do a ‘short payoff’ in CASH of the owed amount.

What is the best way to handle this?

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Re: HOA Fees - $9,000!!! What should I Do ?? - Posted by Natalie-VA

Posted by Natalie-VA on May 04, 2005 at 13:34:34:

Bob,

You asked, “What is the best way to handle this?” and received some informative responses from some experienced investors. I’m sorry you weren’t happy with the feedback you received, but you can’t expect us to ignore those HOA numbers. Even at $250 per month, that’s a lot of money for a 75k condo, especially with no pool. We are trying to point out some red flags here. It’s sort of like the investor who recently posted some rehab numbers and had $8k allocated to HVAC or 10k allocated to a deck. They weren’t asking our opinions on the repair numbers, but we felt it was important to point out that their numbers were too high. Our intentions were to help you out. I hope you can see this.

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Re: HOA Fees - $9,000!!! - Posted by Mary in Ca

Posted by Mary in Ca on May 03, 2005 at 12:31:37:

In addition to others’ comments, you might also check into what the HOA fees cover.

Here, the condos with the higher fees have the HOA responsible for re-roofing, water, sewer & garbage, as well as landscape, pools, etc. and those with lower fees might only cover landscape, pools and exterior items. $375/mo might not be that high if it covers reroofing tile roofs.

Here, HOA fees are all over the board ($100/mo to $500/mo) but so are the services.

(And I keep noticing condo developments where wood rot is evident even in siding on 2nd stories - making me think seriously about building a reinforced concrete & steel condo development just to minimize maintenance costs & HOA fees.)

Just a thought.

Mary

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Re: HOA Fees - $9,000!!! What should I Do ?? - Posted by Natalie-VA

Posted by Natalie-VA on May 03, 2005 at 08:05:38:

Bob,

I would listen very carefully to JT-IN’s advice. Something is wrong with this picture. The question is WHY are those fees so high? I would also be concerned with a management company that is out of state.

We bought a condo a couple of years ago and the association needed a lot of money for repairs. We ended up with a 5k assessment, and they were raising the fees to $300ish per month to get the association back in good shape. We had built in enough profit, so we still came out okay on the deal. Here we are, a year and a half later, and the same complex now has special assesments of $6300 due for the next 3 Septembers (total $18,900).

You might want to re-think this one.

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Re: HOA Fees - $9,000!!! What should I Do ?? - Posted by ken

Posted by ken on May 02, 2005 at 19:50:35:

The seller ios responsible for the dues. You already negotiated it down to $5000. Take the fees due as a credit then pay them off at the reduced rate

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Re: HOA Fees - Posted by John Merchant

Posted by John Merchant on May 02, 2005 at 19:37:02:

If you’re not locked in, get out now…unless you can negotiate the HOA down to something reasonable, or get the seller to pay them.

I took a property in trade once and was soon after notified by the HOA about dues owing.

Since the con man who did the trade with me was long gone, I thought the least I could do was demand a copy of all documents and at least read them to determine what my rights and obligations were…and eventually receiving them, I did the unheard of thing: I sat down and read them.

And guess what? My reading showed me that I had no liability for and didn’t OWE the dues. I promptly notified the HOA of such and never was bothered by them again.

My careful old Dad, a “bootstap”, poor-boy-made-good, lawyer who never saw the inside of a lawschool until I went, taught me some very valuable lessons over the years.

One of the most important, and one which I’ve tried to follow ever since was this:

“Read the document/policy/contract itself…and don’t take anybody else’s word for what it says”

That rule has made me money and caused my toast to land butter-side-up a number of times over the years…when it turned out I (or my client) did not owe it, or had money coming, etc.

So passing it on, get the HOA Documents and read them yourself to find out if you owe something, what it is, etc…then you’ll KNOW and won’t be taking somebody else’s word.

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HOA are too hiigh… @ 375 mo - Posted by JT-IN

Posted by JT-IN on May 02, 2005 at 17:46:41:

That may be the reason that the former owner was defaulted on the mtg and HOA fees together… I live in a Condo that is worth over 400K… and my HOA dues are just under $ 300 per month… consider the difference here…

The condo fee for you propose to buy, using the ARV… of 75K, and a condo fee of 375 per month, or 4500 per year, is 6% of the value per year… My condo fee is less than 1% (.008) of the value. Do you see a reason why this place might have a recurring problem, not only with that owner but each subsequent owner…?

I’d take a hike on that deal… because it is a sheep in wolves clothing…

JT-IN

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thanks - Posted by bob

Posted by bob on May 04, 2005 at 19:01:58:

Natalie,

You put it very well & as you can see from most of my posts, I have indeed “appreciated” the advice.

I have never said “you’re giving me stupid advice”

And I’ll say it again, I appreciate all the advice, I’m just shocked at they’ve assumed the HOA fees and shocked how they are loosing sight of the deal and spending their time critizing HOA fees - which in my opinion bear little importance to my deal.

Thanks again

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$250 covers a lot… - Posted by bob

Posted by bob on May 03, 2005 at 20:37:38:

The HOA covers roofing, water, gargage, sewer, landscaping etc.

no pool or clubhouse

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wow - Posted by bob

Posted by bob on May 03, 2005 at 21:46:03:

All I asked was for you all to give me IDEAS on HOW to make this deal WORK .

I already know how it won’t work.

Whatever happened to a little positive thinking?

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Ken - question for ya… - Posted by bob

Posted by bob on May 04, 2005 at 19:39:45:

you posted "Take the fees due as a credit then pay them off at the reduced rate "

Can you explain this further?

I’m not sure exactly what you mean by taking them as a “credit”

I was planing to pay the HOA fees at closing from my proceeds at closing.

However, Now I think I may tell the HOA that I will pay them the 5k unpaid dues over the next 2 yrs or something simliar.

Is that what you meant?

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Um…No - Posted by BOB

Posted by BOB on May 02, 2005 at 21:45:05:

Seller is not willing to spend a single dime on the property.

She paid $3,000 last week to bring the property out of foreclosure for the 2nd time in 12 months.

She claims she spent 10,000 in keeping that condo.

when asked what if no one buys the condo she said:

" i dont care , i will let it goto foreclosure"

So, she is not willing to pay: closing costs, repairs, hoa fees etc.

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Re: HOA Fees - Posted by BOB

Posted by BOB on May 02, 2005 at 21:42:32:

I will request the HOA company to FAX me the the agreement and send me a detail statement of what is owed.

I am hopeful that even with this large bump, I can still make this deal work.

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Re: HOA are too hiigh… @ 375 mo - Posted by Jack

Posted by Jack on May 03, 2005 at 09:30:16:

I pay a $200/month HOA fee on a similar sized and priced condo to bob’s. But, that $200 includes all Utilites. There may have been a special assesment involved. On a different Condo, they resided the entire complex recently, and charged everyone a $2500 special assessment.

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Re: wow back to bob - Posted by whyK-CA

Posted by whyK-CA on May 04, 2005 at 02:04:41:

bob, the confusion came from your own post. People doing their best guessing from the numbers you put up. Whatever happened to a little respect to folks who are trying to help you? -whyK

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Be Careful for what you ask for… - Posted by JT-IN

Posted by JT-IN on May 02, 2005 at 22:02:48:

Because You may get it… and I think you are about to get “IT” real soon on this one…

It seems that inspite of the solicitation of advice, you are adament to try to make (force) this deal (which is a misnomer, since this is not a deal, but a trap) to work. It amazes me of the folks like yourself, who solicit advice from folks who have been there, then totally disregard the advice because it isn’t what you wanted to hear.

So remember where you heard what you didn’t want to hear, when what you didn’t want to hear jumps right smack upside your head. I’d wsh you well with it, but I don’t think I will… I’ll wish someone else well, who listens to what they are told…

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they are only $250 … n/m - Posted by bob

Posted by bob on May 03, 2005 at 20:22:35:

s

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No - Posted by bob

Posted by bob on May 04, 2005 at 13:02:14:

You are confused.

The confusion was created by JT-IN. He assumed the fees were $375 without reading. I never wrote the fees were $375./mo.

Furthermore, my post has NOTHING to do with HOA fees.

I did not ask people to get into a debate if HOA fees are justifiable or whether the HOA fees are too high etc.

I simply asked on ideas on how to do the deal and all I see are posts about HOA fees, ridiculous.

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Re: Be Careful for what you ask for… - Posted by BOB

Posted by BOB on May 03, 2005 at 20:21:42:

Thanks for the advice I appreciate it.

However, the fees are only $250/mo. Not sure how you came up with $375.

The payment on the house is $440/mo PITI. Add $250 and your ate $690/mo.

The place can rent for $900/mo.

That’s $210/mo CASH FLOW + 25k equity.

By the way, who said I was going to pay the 9k or even 5k ? I will offer 2k or else the property will got foreclosure - I have nothing to loose.

Plus, I am simply flipping the property for a 9k profit. I have no interest in holding the property.

Thanks for your advice again