Signs of a dysfunctional condo association [DC]

[Anonymous]

Anonymous wrote:First OP, condos are no more “transitional” than single family homes without associations. Whether or not your living arrangements, when purchased is transitional is up to you. A four to six unit building is too small for outside management. The bylaws and meeting minutes would be important. Do the owners actually meet and how difficult isn’t to make a decision. Red flags would be maintenance and high board turnover(people constantly quitting) or too low turnover (same person stays on board forever and is horrible to deal with,hence everybody else quitting). But with that small number of units, it won’t matter as everybody’s input should be required.

OP here: agreed...also with the small number of units everyone's opinion matters.

[Anonymous]

When we bought our condo (six unit building), I was told that having more than 25% rented could make it more difficult to secure a mortgage. We also received data on how many units were behind in their HOA fees. Ours was self-managed and it took forever for any decisions to be made. Also, challenging personalities stand out more in such a small group.

[Anonymous]

Anonymous wrote:I live in a TH condo with 5 units and we definitely know who owns and who rents. It might not seem like it to renters, but the owners definitely know who is who when it’s that small.

I live in the TH with 5 units, one unit is rental but I do not know the arrangements, e.g. who is living there, how many people etc.

[Anonymous]

Anonymous wrote:When we bought our condo (six unit building), I was told that having more than 25% rented could make it more difficult to secure a mortgage. We also received data on how many units were behind in their HOA fees. Ours was self-managed and it took forever for any decisions to be made. Also, challenging personalities stand out more in such a small group.

agreed, I live in 5 units TH, last year we got a manager because of multiple personality clashes especially after it became evident that our treasurer is stealing money by paying to his contractors from the association account, However all the difficult people are still here and the building looks neglected... It is ironic that the owners who were against some TLC are now cannot sell their unit for almost 9 months

[Anonymous]

Every building should conduct reserve studies. These aren't cheap surveys, but essentially an engineering company will assess the state of the building and identify the state of each of the major systems (roof, plumbing, windows, facade, etc.) and outline the reserve requirements for a 30 year window. That's really the most important thing - if the building does not have a sufficiently detailed reserve study (or does not have reserves to cover the expected costs) then I would say the building is poorly managed. Having intentionally low fees is a pretty slimey thing to do, where basically each owner is hoping to pass the issues on to the next owner.

I would say ask for the most recent reserve study, details of the current state of reserves, and inquire about the dates and details of the most recent renovation projects. Additionally, small details like a well maintained garden, clean trash areas, lack of trash/bulk items in the common areas, and a clean lobby can proxy for a board that at least attempts to care a little bit.

That said, 4-6 units is tough, because one or two people can really throw the building either in one direction or the other. With a building that small, I would hope that there is at least one owner that is there 'long-term' or has been there some time and has knowledge of the history and details of the building.

[Anonymous]

Anonymous wrote:Every building should conduct reserve studies. These aren't cheap surveys, but essentially an engineering company will assess the state of the building and identify the state of each of the major systems (roof, plumbing, windows, facade, etc.) and outline the reserve requirements for a 30 year window. That's really the most important thing - if the building does not have a sufficiently detailed reserve study (or does not have reserves to cover the expected costs) then I would say the building is poorly managed. Having intentionally low fees is a pretty slimey thing to do, where basically each owner is hoping to pass the issues on to the next owner.

I would say ask for the most recent reserve study, details of the current state of reserves, and inquire about the dates and details of the most recent renovation projects. Additionally, small details like a well maintained garden, clean trash areas, lack of trash/bulk items in the common areas, and a clean lobby can proxy for a board that at least attempts to care a little bit.

That said, 4-6 units is tough, because one or two people can really throw the building either in one direction or the other. With a building that small, I would hope that there is at least one owner that is there 'long-term' or has been there some time and has knowledge of the history and details of the building.

OP here: thank you, however I am surprised that people who are living in the building short term care less about it- after all they have to sell it soon and it is them who should be concerned about its appearance - or if they know their neighbor is about to sell- it is in everyone's interest that the unit sells well and fast

[Anonymous]

Just don’t buy into an association that is not professionally managed. If there’s even one crazy, it can ruin your experience living there and make your life hell. This from experience…

[Anonymous]

Anonymous wrote:Have owned two different condos and have many friends who have owned condos as well.
Red flags:
Self-managed
Fees too low
Special assessments (indicates fees may have been too low to cover upkeep, poorly managed, or similar)

Also, look at upkeep of the building. Clean? Well maintained? Not a guarantee there’s nothing wrong if it’s clean, but can be a red flag of other deferred maintenance if you see obvious signs of wear and tear or neglect in the common areas.

Why are low fees bad?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Every building should conduct reserve studies. These aren't cheap surveys, but essentially an engineering company will assess the state of the building and identify the state of each of the major systems (roof, plumbing, windows, facade, etc.) and outline the reserve requirements for a 30 year window. That's really the most important thing - if the building does not have a sufficiently detailed reserve study (or does not have reserves to cover the expected costs) then I would say the building is poorly managed. Having intentionally low fees is a pretty slimey thing to do, where basically each owner is hoping to pass the issues on to the next owner.

I would say ask for the most recent reserve study, details of the current state of reserves, and inquire about the dates and details of the most recent renovation projects. Additionally, small details like a well maintained garden, clean trash areas, lack of trash/bulk items in the common areas, and a clean lobby can proxy for a board that at least attempts to care a little bit.

That said, 4-6 units is tough, because one or two people can really throw the building either in one direction or the other. With a building that small, I would hope that there is at least one owner that is there 'long-term' or has been there some time and has knowledge of the history and details of the building.

OP here: thank you, however I am surprised that people who are living in the building short term care less about it- after all they have to sell it soon and it is them who should be concerned about its appearance - or if they know their neighbor is about to sell- it is in everyone's interest that the unit sells well and fast

That's true, appearances can perhaps be deceiving. My experience is with a slightly larger building (20 units), where those external appearances are just indicative of a more proactive board. But as you mentioned, with shared buildings it's really all about incentives. If you intend to own for, say, 6 years, it's probably in your best interest to get into a building with super low fees and pass the deferred maintenance of major systems onto the next set of owners. But that carries the inherent risk of being the set of owners who gets hit with the special assessment because your boiler fails and you have no reserves to cover that cost.

Putting aside financial dysfunction, there's also the interpersonal aspect. I am super happy in my current building, mostly because we're financially prudent and responsible but not super strict with the rules and regulations. If I have to store something in a common area overnight or whatever, that's fine, because we're neighbors. Nothing gets left their for months, because again, we're all neighbors. It's all about finding that happy balance between strict responsibility and reasonableness.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Have owned two different condos and have many friends who have owned condos as well.
Red flags:
Self-managed
Fees too low
Special assessments (indicates fees may have been too low to cover upkeep, poorly managed, or similar)

Also, look at upkeep of the building. Clean? Well maintained? Not a guarantee there’s nothing wrong if it’s clean, but can be a red flag of other deferred maintenance if you see obvious signs of wear and tear or neglect in the common areas.

Why are low fees bad?

Because if the fees are too low, the association can’t cover basic upkeep and maintenance much less plan for a major issue like replacing the roof. Then you get hit with a special assessment, which can be expensive and stressful to owners and can lower the value of units because when a potential buyer asks for the condo docs they will see that the association doesn’t have their act together

[Anonymous]

I am an attorney who at one time represented condo associations comprising tens of thousands of units. Low condo fees are the number one bad sign.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Have owned two different condos and have many friends who have owned condos as well.
Red flags:
Self-managed
Fees too low
Special assessments (indicates fees may have been too low to cover upkeep, poorly managed, or similar)

Also, look at upkeep of the building. Clean? Well maintained? Not a guarantee there’s nothing wrong if it’s clean, but can be a red flag of other deferred maintenance if you see obvious signs of wear and tear or neglect in the common areas.

Why are low fees bad?

Because if the fees are too low, the association can’t cover basic upkeep and maintenance much less plan for a major issue like replacing the roof. Then you get hit with a special assessment, which can be expensive and stressful to owners and can lower the value of units because when a potential buyer asks for the condo docs they will see that the association doesn’t have their act together

Wouldn’t you look at the reserves for that? Maybe they have tons of reserves.

[Anonymous]

To PP - yes, you look at the reserves and the reserve study to see that they are aware of and planning for repairs down the road. But you don’t build up reserves with too low fees.

[Anonymous]

A fe things I know :

Professional management
Delquency ratio (you wouldn't know about it till you get the condo docs)
FHA or what kind of lender approved this
High renter vs owner ration. Banks would have problem renting it out to investors(not owner occupied) if this is higher than 15%.
Very low condo fees, any lawsuits or special assessment.

[Anonymous]

Anonymous wrote:A fe things I know :

Professional management
Delquency ratio (you wouldn't know about it till you get the condo docs)
FHA or what kind of lender approved this
High renter vs owner ration. Banks would have problem renting it out to investors(not owner occupied) if this is higher than 15%.
Very low condo fees, any lawsuits or special assessment.

Can someone comment on the renter owner ratio in regards to being able to get loans (someone that has a wide breadth of experience with this) I suspect banks are not actually so strict with this - especially the 15% number.