Buying in an older condo building
October 21, 2022 11:16 PM Subscribe
I made an offer on a cute 2-bedroom condo and it was accepted. Yay! I am a first-time home buyer and condo buyer however and am undergoing baptism by fire about home maintenance and condo governance, in an older building to boot. Might be getting cold feet...
It's such a lovely space and I was really taken by it when I saw it. Old hardwood floors, a lot more spacious than some of the other places I'd been looking at (a mix of 1 and 2 bedrooms in a pretty expensive city with a strong housing market). The people selling it recently redid the kitchen and the bathroom tiling and the bedrooms are large. I was hoping to buy it and have my friend who I'd been talking to about living together move in for the first few years, or if not her someone else for the first couple of years (otherwise the monthly mortgage payments are really more than I want to commit to though they are low enough that if I couldn't fill the extra room for a month or two here and there it wouldn't be terrible).
The thing is, since the offer was accepted I've been learning more and more about the building and I'm a little unsure of whether some of the things I've learned are necessarily red flags, or if they are just par for course of owning an older building and being part of a homeowner's association. The big ticket issues so far are:
1. Plumbing. The building (18 units) was built in 1949 and has old galvinized pipes. This was the first thing I learned about upon receiving the HOA meeting minutes from the past couple of years. The HOA has been discussing replacing the galvinized piping for a few years it seems with periods where the project didn't move forward likely because people couldn't agree on next steps. However, I have since learned that the piping issue was resolved this year and they actually started the repiping project for the common areas this week. They had to fund it via special assessment because HOA reserves were too low which I think is what held it up. The sellers have offered to pay for the portion of repiping in the common areas that "my" unit would have been responsible for (though since the project has already started that just kind of seems like money they owe already). They have not opted or offered to replace the piping in my unit specifically. I think I would want to do this though just to know it is done with and would probably ask for that once we start negotiations for repairs. Anticipated cost: about $10k for repiping in the unit. For the common areas repiping, HOA decided everyone would make a fixed contribution based on the original bid and cover any extra from the HOA reserves.
2. Issues flagged in home inspection: my home inspector had actually inspected the building a few times before for other owners so he had a bit of history which was nice. He seemed positive overall about the building and said it had been "beautifully maintained" when we first met up. Main things I learned from him are that roof was replaced in the last 10-12 years and is in good condition though could use some servicing, some of the windows in the apartment itself are "failing" and glass needs replacement, someone converted the 2-pronged outlets to 3-pronged but did it incorrectly and the outlets are not grounded (recommended gfci installation which apparently doesn't ground the wiring but helps prevent people from being electrocuted), and the unit has an old fuse box which is not up to code and should be replaced with a breaker. Electrician looked at the fuse box today and said we might be able to convert it or might not be able to depending on some specifics on the wiring and how it is connected to the rest of the building/whether the city would issue a permit without requiring other wiring in the building be brought up to code. Estimated cost of repairs eminating from home inspection: $4-5k.
3. Functioning of the HOA: I read through the meeting minutes last weekend and was a bit concerned that the piping issue took so long to resolve. The second time I viewed the apartment, my realtor and I ran into a neighbor who said that the particular unit I was looking at had been well-maintained but made some mysterious remarks about how we should look into the HOA (she seemed like kind of a crotchety older lady though from some of our interactions). I DID originally try googling what I thought was the HOA but turned out to be its management company and uncovered some unhappy yelp reviews about the company as well as a newspaper article about how someone who used to be a manager there was now in jail for embezzlement. However, aside from the length of time it took everyone to come to agreement about the plumbing project I haven't found any real evidence of the building being poorly managed. They sent me two documents showing the budget for the HOA from the last two years against its expenses and it seems like they have a clear plan for maintenance of the building and have been following it while keeping under budget (though did go over-budget in 2020). I don't know why the reserves are so low to require a special assessment, though. Maybe the budget isn't large enough though the HOA fees seem to be on the higher side for the area. Oh, and one of the boilers is nearing the end of its life and will likely need replacing in the next few years, which can run up to $70-80k apparently.
4. Roommate issue: I want to have a roommate for a few years and tried to confirm that this was possible before putting down my offer. The previous occupant apparently had roommates sometimes. However, there is a rental cap (which is met) and upon reviewing the condo bylaws there is language stating that owners may not rent out less than their entire unit and otherwise can only live with family that does not pay rent. This feels like the biggest deal breaker for me at the moment if I can't live with someone else for the first few years I am there because I will have very little wiggle room in my budget to save money. I liked the roommate idea because ideally I'd like to buy a place that I'd stay in for an extended period and I feel like I'd stay longer if I had more space, which I wouldn't have in a 1-bedroom (and actually with a roommate, the monthly cost of living in a 2 bedroom would be lower than the mortgage on a 1-bedroom that I'd pay for myself which would be better/more affordable the next few years). We are currently trying to confirm the current practice/interpretation of this part of the bylaws, which could be more concerned with having the building be owner occupied than specifically written to ward off roommate situations despite some of its language.
Given all the above, does it sound crazy to buy this place? I don't know how different other HOA situations will be (I mean, probably there are HOAs in my city that have stronger reserves and a management company without a history of embezzlement), and it seems to me that a lot of the big ticket expenses are related to the building being older. I really like the space and its location and was having new house fantasies about living there when I made the offer but I think I'm being confronted with some of the realities of what living there would mean. Plus my parents have been good sounding boards and have a critical eye to some of this. And my realtor told me today that I have "a lot to think about" which coming from a realtor feels like maybe I do have a lot to think about since presumably her main motivation is for a house buying/selling transaction to take place.
Bah, sorry for brain dump. Maybe you internet strangers have insights or experiences that would be telling.
It's such a lovely space and I was really taken by it when I saw it. Old hardwood floors, a lot more spacious than some of the other places I'd been looking at (a mix of 1 and 2 bedrooms in a pretty expensive city with a strong housing market). The people selling it recently redid the kitchen and the bathroom tiling and the bedrooms are large. I was hoping to buy it and have my friend who I'd been talking to about living together move in for the first few years, or if not her someone else for the first couple of years (otherwise the monthly mortgage payments are really more than I want to commit to though they are low enough that if I couldn't fill the extra room for a month or two here and there it wouldn't be terrible).
The thing is, since the offer was accepted I've been learning more and more about the building and I'm a little unsure of whether some of the things I've learned are necessarily red flags, or if they are just par for course of owning an older building and being part of a homeowner's association. The big ticket issues so far are:
1. Plumbing. The building (18 units) was built in 1949 and has old galvinized pipes. This was the first thing I learned about upon receiving the HOA meeting minutes from the past couple of years. The HOA has been discussing replacing the galvinized piping for a few years it seems with periods where the project didn't move forward likely because people couldn't agree on next steps. However, I have since learned that the piping issue was resolved this year and they actually started the repiping project for the common areas this week. They had to fund it via special assessment because HOA reserves were too low which I think is what held it up. The sellers have offered to pay for the portion of repiping in the common areas that "my" unit would have been responsible for (though since the project has already started that just kind of seems like money they owe already). They have not opted or offered to replace the piping in my unit specifically. I think I would want to do this though just to know it is done with and would probably ask for that once we start negotiations for repairs. Anticipated cost: about $10k for repiping in the unit. For the common areas repiping, HOA decided everyone would make a fixed contribution based on the original bid and cover any extra from the HOA reserves.
2. Issues flagged in home inspection: my home inspector had actually inspected the building a few times before for other owners so he had a bit of history which was nice. He seemed positive overall about the building and said it had been "beautifully maintained" when we first met up. Main things I learned from him are that roof was replaced in the last 10-12 years and is in good condition though could use some servicing, some of the windows in the apartment itself are "failing" and glass needs replacement, someone converted the 2-pronged outlets to 3-pronged but did it incorrectly and the outlets are not grounded (recommended gfci installation which apparently doesn't ground the wiring but helps prevent people from being electrocuted), and the unit has an old fuse box which is not up to code and should be replaced with a breaker. Electrician looked at the fuse box today and said we might be able to convert it or might not be able to depending on some specifics on the wiring and how it is connected to the rest of the building/whether the city would issue a permit without requiring other wiring in the building be brought up to code. Estimated cost of repairs eminating from home inspection: $4-5k.
3. Functioning of the HOA: I read through the meeting minutes last weekend and was a bit concerned that the piping issue took so long to resolve. The second time I viewed the apartment, my realtor and I ran into a neighbor who said that the particular unit I was looking at had been well-maintained but made some mysterious remarks about how we should look into the HOA (she seemed like kind of a crotchety older lady though from some of our interactions). I DID originally try googling what I thought was the HOA but turned out to be its management company and uncovered some unhappy yelp reviews about the company as well as a newspaper article about how someone who used to be a manager there was now in jail for embezzlement. However, aside from the length of time it took everyone to come to agreement about the plumbing project I haven't found any real evidence of the building being poorly managed. They sent me two documents showing the budget for the HOA from the last two years against its expenses and it seems like they have a clear plan for maintenance of the building and have been following it while keeping under budget (though did go over-budget in 2020). I don't know why the reserves are so low to require a special assessment, though. Maybe the budget isn't large enough though the HOA fees seem to be on the higher side for the area. Oh, and one of the boilers is nearing the end of its life and will likely need replacing in the next few years, which can run up to $70-80k apparently.
4. Roommate issue: I want to have a roommate for a few years and tried to confirm that this was possible before putting down my offer. The previous occupant apparently had roommates sometimes. However, there is a rental cap (which is met) and upon reviewing the condo bylaws there is language stating that owners may not rent out less than their entire unit and otherwise can only live with family that does not pay rent. This feels like the biggest deal breaker for me at the moment if I can't live with someone else for the first few years I am there because I will have very little wiggle room in my budget to save money. I liked the roommate idea because ideally I'd like to buy a place that I'd stay in for an extended period and I feel like I'd stay longer if I had more space, which I wouldn't have in a 1-bedroom (and actually with a roommate, the monthly cost of living in a 2 bedroom would be lower than the mortgage on a 1-bedroom that I'd pay for myself which would be better/more affordable the next few years). We are currently trying to confirm the current practice/interpretation of this part of the bylaws, which could be more concerned with having the building be owner occupied than specifically written to ward off roommate situations despite some of its language.
Given all the above, does it sound crazy to buy this place? I don't know how different other HOA situations will be (I mean, probably there are HOAs in my city that have stronger reserves and a management company without a history of embezzlement), and it seems to me that a lot of the big ticket expenses are related to the building being older. I really like the space and its location and was having new house fantasies about living there when I made the offer but I think I'm being confronted with some of the realities of what living there would mean. Plus my parents have been good sounding boards and have a critical eye to some of this. And my realtor told me today that I have "a lot to think about" which coming from a realtor feels like maybe I do have a lot to think about since presumably her main motivation is for a house buying/selling transaction to take place.
Bah, sorry for brain dump. Maybe you internet strangers have insights or experiences that would be telling.
Best answer: Given all the above, does it sound crazy to buy this place?
As someone who has owned multiple properties, including a condo where I served on the HOA board, there is nothing in your post that gives me even a second of pause.
Regarding the piping, I will point out that in many jurisdictions, if the HOA establishes a special assessment prior to noon on the day you finalize the purchase, that special assessment is legally the responsibility of the seller.
The roommate thing is weird - normally there's a difference between having a roommate and renting out the whole unit, and as long as an owner resides there, it's fine. I wonder if there's a misunderstanding somewhere along the line.
posted by NotMyselfRightNow at 4:43 AM on October 22, 2022
As someone who has owned multiple properties, including a condo where I served on the HOA board, there is nothing in your post that gives me even a second of pause.
Regarding the piping, I will point out that in many jurisdictions, if the HOA establishes a special assessment prior to noon on the day you finalize the purchase, that special assessment is legally the responsibility of the seller.
The roommate thing is weird - normally there's a difference between having a roommate and renting out the whole unit, and as long as an owner resides there, it's fine. I wonder if there's a misunderstanding somewhere along the line.
posted by NotMyselfRightNow at 4:43 AM on October 22, 2022
Best answer: I bought a vintage condo that was not too far away from having the kinds of issues you describe. What proved most settling for me was getting on the board so that I more fully understood the issues. (Maybe it took the board a long time on the plumbing issue because they hated to levy a special assessment on owners. That's not necessarily a bad thing.)
In an older building, there are going to be maintenance and repair issues both large and small. The key is to know what those issues are likely to be and then plan for them with higher assessments, so that owners aren't having to cough up special assessments time and again. In other words, building up reserves is important to the health of the building, and it will help you when it comes time to sell.
I can't tell from your description if the management company is doing its job or not. (Of course the Yelp reviews are negative, disgruntlement is what Yelp is there for; what an employee once did isn't compelling to me.) One thing on that score though: if you change companies, insist on a manager who has the Certified Property Manager (CPM) credential from the Institute of Building Management. Which is to say, you want real professionals, not some outfit managing as a side hustle.
If I were in your shoes regarding the roommate issue, I would ask the real estate attorney you've hired to close on the place about the wording/meaning of the bylaws. I would expect them to include such insight in their closing fee without billing extra.
Finally, while I perfectly understand your concerns and the stress you're feeling about them, remember that they are all temporary if your board is addressing them with a view to the longer term. In my case, I lived very happily in my condo for 24 years (and eventually sold the place for twice what I paid). That emergency roof replacement and tuckpointing job we had to divide into three separate jobs over three years to be able to afford it? They are barely memories now.
Best wishes to you!
posted by Short Attention Sp at 5:46 AM on October 22, 2022 [1 favorite]
In an older building, there are going to be maintenance and repair issues both large and small. The key is to know what those issues are likely to be and then plan for them with higher assessments, so that owners aren't having to cough up special assessments time and again. In other words, building up reserves is important to the health of the building, and it will help you when it comes time to sell.
I can't tell from your description if the management company is doing its job or not. (Of course the Yelp reviews are negative, disgruntlement is what Yelp is there for; what an employee once did isn't compelling to me.) One thing on that score though: if you change companies, insist on a manager who has the Certified Property Manager (CPM) credential from the Institute of Building Management. Which is to say, you want real professionals, not some outfit managing as a side hustle.
If I were in your shoes regarding the roommate issue, I would ask the real estate attorney you've hired to close on the place about the wording/meaning of the bylaws. I would expect them to include such insight in their closing fee without billing extra.
Finally, while I perfectly understand your concerns and the stress you're feeling about them, remember that they are all temporary if your board is addressing them with a view to the longer term. In my case, I lived very happily in my condo for 24 years (and eventually sold the place for twice what I paid). That emergency roof replacement and tuckpointing job we had to divide into three separate jobs over three years to be able to afford it? They are barely memories now.
Best wishes to you!
posted by Short Attention Sp at 5:46 AM on October 22, 2022 [1 favorite]
It sounds like the HOA is doing a good job on maintenance. The real concern would be the roommate.
posted by haptic_avenger at 5:50 AM on October 22, 2022 [7 favorites]
posted by haptic_avenger at 5:50 AM on October 22, 2022 [7 favorites]
Best answer: On the management company point, I personally would not really factor that in at all unless it's truly a scam or something (like the "management company" is just one of the HOA board members). My experience is that few if any HOA management companies are amazing, and people love to complain about them online (as Short Attention Sp said). Sometimes for things that aren't their fault, like their enforcement of policies the HOA itself made... Also, management companies can and do change. Even if you bought into a building with an outstanding management company, there's no guarantee that they will either stay outstanding or that they will be the management company forever. And on the flip side, if they really are bad, that's something that's possible for the HOA board to change. Based on what you said, I wouldn't give another moment's thought to that particular issue.
posted by primethyme at 6:12 AM on October 22, 2022
posted by primethyme at 6:12 AM on October 22, 2022
Best answer: My realtor specifically cautioned me against buildings with super low maintenance fees because they won’t have a high enough reserve. You don’t want unnaturally high fees either, but there is a middle ground where it’s not bleeding you dry but the building can still pay for stuff.
Some kind of condo politics happens everywhere. In my building, we share some common facilities with the building next door and there are always disputes about it. I wouldn’t worry about this.
posted by ficbot at 6:45 AM on October 22, 2022 [2 favorites]
Some kind of condo politics happens everywhere. In my building, we share some common facilities with the building next door and there are always disputes about it. I wouldn’t worry about this.
posted by ficbot at 6:45 AM on October 22, 2022 [2 favorites]
Best answer: Assessments are normal but can be quite high in smaller buildings. I'd ask how much past assessments have been and how long they lasted so you can get a sense of how the pain is shared.
I know someone who lived a 10 unit condo and the assessment to replace the roof and brick repair was $700 a month for awhile. Another person lived in a 100 unit building and had their whole elevator system replaced and it was $100 or so a month for a few years.
posted by perdhapley at 7:56 AM on October 22, 2022 [1 favorite]
I know someone who lived a 10 unit condo and the assessment to replace the roof and brick repair was $700 a month for awhile. Another person lived in a 100 unit building and had their whole elevator system replaced and it was $100 or so a month for a few years.
posted by perdhapley at 7:56 AM on October 22, 2022 [1 favorite]
Best answer: Sounds totally normal. Definitely get the roommate situation ironed out, in writing, since that's essential to you being able to afford the place. But that level of repairs is completely within reason for buying basically anything.
posted by Stacey at 12:38 PM on October 22, 2022 [1 favorite]
posted by Stacey at 12:38 PM on October 22, 2022 [1 favorite]
Response by poster: Thank you for all your insights! I got confirmation in writing that roommates are not subject to the rental cap and overall it seems like people do have roommates despite whatever the fine print of the bylaws say and it's above-board/people know about it. Negotiated some money for the repiping of the unit with the sellers and it looks like things are moving forward!! Very excited for this next step.
posted by knownfossils at 10:19 PM on October 28, 2022 [1 favorite]
posted by knownfossils at 10:19 PM on October 28, 2022 [1 favorite]
This thread is closed to new comments.
posted by kinddieserzeit at 2:03 AM on October 22, 2022 [6 favorites]