The Landmark showflat are really unique from purchasing only one family dwelling, city household, or apartment making. When most households will qualify for almost any financing, condos could be a lot additional tricky. Given that they are a collected group of householders sharing precisely the same land, partitions, & maintenance expenses, rules are necessary to govern the common good of the entire creating or buildings. An association of dwelling entrepreneurs or a private management company will administer the rules, collect monthly payments, pay bills and administer improvements or repairs. In order for a condo constructing to qualify for financing the association must be active and healthy. Here are 10 recommendations to make your rental purchase smoother and flush out all the potential challenges ahead of making an offer.
1. Will the developing qualify for financing? Due to the fact the down turn in The Landmark showflat, funding options have changed and tightened up considerably. Unless you are obtaining a household with cash, it will need to be financed. Make sure the setting up is usually financed with relative ease. Find out what types of loan could be used, this will affect ease of resale if multiple loan types is often used.
2. What types of loans may be used? Currently the most common financing options for buying a condominium are:
– FHA (government backed with only 3.5% down payment. Building has to be FHA approved and meet guidelines)
– Conventional (5-20% down payment, higher qualifications & most likely sold on the secondary mortgage market)
– Portfolio Loan (higher down payment, bank will lend its own money & keep the loan usually at a higher interest rate)
– Cash (necessary when a constructing will not qualify for financing)
The next 6 questions will determine funding options.
3. How many condos are being rented? Owner occupancy will affect funding given that conventional & FHA loans allow no extra than 50% to be rented. A good association will have rules in place to keep rentals at an acceptable level.
4. What’s the investor concentration? Find out if one person or entity owns a lot more than 10% of the building. With smaller buildings 3-10 units if one person owns more than 1 apartment. This is another financing guideline for FHA & Conventional loans. This standard is in place so if that 1 person or entity defaults, the whole setting up doesn’t suffer.
5. Are more than 10% of the condos delinquent or behind in assessment payments? This can also be road block to funding because it is usually leads to the entire association not being able to pay its bill or insolvency. Many times it’s also sign that condos house owners will default on their loans.
6. How many condos are for sale as foreclosure or short sales? Not only do a high amount of short sales and foreclosures hurt values for all condos in the building but, conventional & FHA guidelines only allow for 25% or less.
7. How substantially is in reserve funds? Reserve funds are meant to pay for special projects or common repairs such as a roof, decks, exterior partitions or other common elements.
8. Are there special assessments? When a condo constructing doesn’t have enough reserves to cover repairs or updates a special assessment is needed. This comes in the form of additional payments from each condominium owner with a one time payment or monthly installment payments over a set period of time ie 1-3 years.
9. What’s included in monthly assessments? Find out what your monthly assessments cover heat, electric, cable, internet, parking and common amenities such as a pool or gym.
10. Is parking included? Parking spaces can be included as a common element with each unit, deeded & sold separately, or leased.
Prior to starting your rental search make sure you get pre-approved for a loan. This will help guide in your condominium search by letting you know which financing method you can use and which buildings will qualify for that type of funding. The most disappointing feeling is finding that perfect place and finding out later that it won’t qualify for the type of financing you are using.