condo advice..

[doogan]

I have located another property in CT where there is some family issues and they need to offload ASAP. what options should i present to them to get this property. Market value is about 215,000. Initital information i have heard thru my contact is that they want to sell it for what they bought it for 2 years ago, and would prefer not to go through a real estate agent. Bankruptcy is on the cards for them.

How should i structure a conversation to get a deal on this.

thanks again everyone.

[reiauctions]

The structure of the deal and how you buy a property really depends on your exit strategy.  What are you going to do with it, if you buy it?  Also, depending on your market, buying it at the price paid 2 years ago is very likely not a deal.  The other thing to keep in mind with condos is that they usually have monthly condo fees.

[tatertot]

In some parts of the country, condos are worth a lot less now than they were 2 years ago. What sort of relationship does the price they paid 2 years ago have with the fair market value right now?

Is your condo market slow? If so, you will have to discount to sell, so fair market value is not what you are going to get if you sell.

You'd be in a better position to know what to do if you knew what they'd paid for it two years ago.

[doogan]

The structure of the deal and how you buy a property really depends on your exit strategy.  What are you going to do with it, if you buy it?  Also, depending on your market, buying it at the price paid 2 years ago is very likely not a deal.  The other thing to keep in mind with condos is that they usually have monthly condo fees.

My plan is start picking up rental units at the right price to bring in cash flow. I am learning alot from folks here in terms of what and how to look at it, however i still need to get my first one done. I plan on holding units for about 10 years and move on then.


 I am not planning on paing Market value for this property. What i am not sure on how to approach is how to approach it and present a pitch to them and get the apt at a good price ( below Mkt value)

thanks for any input

[reiauctions]

It's good you know that you want to buy and hold, that's a valid strategy.  Now what you want to do is find out the numbers (what will it rent for?, what are the condo fees?, what are your financing cost?, insurance?, etc.)  Once you know all your monthly costs and your estimated rental income you can figure out your purchase price. 

As an investor you buy at what your price needs to be or you don't buy.  There is negotiation skills involved but ultimately if you can't get it at the price you need, you move on to the next opportunity.  Don't let your emotions take over, just stick with the numbers.

[Rich_in_CT]

I'm in CT and have access to the CT MLS system, if you want to send a private message with the address I can do a little research for you and find out what other units in the complex have sold for recently and how long they took to sell. 

[Rich_in_CT]

Based on the info you sent here's what I'm finding in that town-

Average days on market for condos somewhere around 90 days or so (compared to what I saw for 2005 where most were sold in just a few weeks).  Pretty drastic change.  The active listings have mostly all been on the market at least 90-100 days and many have reduced price.  Definitely seeing a big slowdown so consider a long holdtime into your exit strategy.  Statewide I  know the average days on market is now 61 days according to a recent Courant article:  http://www.courant.com/news/custom/topnews/hc-housing1106.artnov06,0,7910605.story

Condo prices at the current time are $170k-$530k with most in the low to mid $200's.  Ranch style mostly in the lower $200's and townhouse style in the mid $200's.

I didn't seen any condos on that street sold or active in the last few years, found that a little weird but being close to NYC some Danbury homes might very well be on a NYC based MLS.

With it only being bought 2 yrs ago I doubt there is any equity and with the bigtime slowdown in condo sales in that town I would probably think there isn't a deal there.  Maybe if they put a lot down there is some equity but with them ready to go bankrupt I doubt that's the case. 

[Dave T]

Rich_in_CT,

For the rest of us that don't have access to the MLS, what was the purchase price for this property to begin with?  Doogan says market value is $215K and that the sellers just want to sell for what they paid in 2005.

What is the difference between these numbers?  In there any equity in the property at all?

[Rich_in_CT]

Rich_in_CT,

For the rest of us that don't have access to the MLS, what was the purchase price for this property to begin with?  Doogan says market value is $215K and that the sellers just want to sell for what they paid in 2005.

What is the difference between these numbers?  In there any equity in the property at all?

What's weird is that I am not picking up anything on the MLS that's closed on that street, just a few actives and none of them are condos.  Looking at the assessors info there are probably 50-60 condos on that street and a dozen or so other properties, I find it hard to believe none were listed and sold with a realtor in the past few years.  Fairfield county is a weird animal and I wouldn't be suprised if they have their own MLS that most of the listings are listed in as opposed to the statewide MLS I am looking at.  I can look at the town records and see what the transfers were in that complex but I'll also need some more details on the unit like the number of bedrooms and bathrooms, I'm guessing based on the price that it's a 2/1 but there are also 1/1 in there as well so I want to be accurate in my searching.  Doogan, if you can send me those details and the unit number I can tell you what that size is selling for and can tell you the exact price the owner you are dealing with paid for theirs.

[buffinvestor]

Can I take a little segway from this topic and ask how accurate the MLS normally is for actual sales prices?...Obviously, sometimes there's closing costs paid by the seller, etc. that probably don't show up, but are the numbers really accurate or is it pretty dependent upon how accurate the typist's little fingers are when he/she enters a lot of information into the system?...And is it possible that the agent/closing attorney just doesn't bother inputting the info?...

Thanks for any input...

John

[Rich_in_CT]

Well if you are taking at least 3 comps to figure out a properties value one screwup shouldn't mess you up.  Also, you should be tossing out or at least partially discrediting anything that's way off.  If you see something that sells for 40% less than 5 other similar properties its safe to assume there is something else working there that makes it not a comparable situation, not an arms length transaction (something like a foreclosure).

[paullee]

Looks like this is a good candidate for short sale!

[doogan]

ok - so here is the deal

He needs 218K to clear all debt. There is no equity. it was fully financed. he is are already a couple of months behind. he financed it 100% in early 2006. I am not sure what he paid - however he own's it 17 months - so assuming a high intrest rate - I am sure he paid about around 220K

All monthly fees ( common, taxes, garbage etc ) come to 380. rent in the area is 1500. The condo board have a large reserve so their books are in good shape. condo is in great shape. maintenance is up to date,  new roofs, new pool etc

I think just going in buying it at whats owed is deffinatly not a deal.

How do i go about getting it below what its worth. Is a short sale viable? Even tho sales are slow - condo prices really have not dropped that much in this area

What other options can i present to them.? what will happen when he is foreclosed..?

I am not looking to go into this blindly - however i want to explore all options before closing the book.

thanks

[Dave T]

Doogan,

What will you do with this property if you buy it?

[doogan]

My strategy is to buy hold and rent for about 10  years.

any input on the situation or possible options would be appreciated

thanks