With many developers hitting financial turmoil, many projects have gone uncompleted and unsold. Some assets have been auctioned off, others sold by the banks/investors, others going into receivership.
What happens with current and new homeowners buying into these types of developments? Without the project selling out, turnover hasn’t occurred and no HOA (Homeowners’ association) has been formed. Furthermore, assessments may not be collected and reserves have not been created.
Although each project represents different issues, you will want to consult with a broker in your area and attorney and perform your due diligence for each project. There could be liens that were levied against the project, determining what they are and amounts due could help save you from unforeseen expenses.
With no HOA in place, current owners may have to get together and determine how to address costs such as water, scavenge, insurance, maintenance and common area expenses/utilities. In many cases, current owners can split these costs (per their percentage of ownership in common areas) in lieu of assessments being collected. Major problems could arise if capital expenses are involved or significant construction is needed in completing/repairing common areas.
Determining whether the property can also be financed, or if an all cash sale is required can also preclude some buyers from getting in on the action.
Many investors and liquid home buyers have purchased into such developments due to the pricing against comparable properties on the market. There could be real potential for cash flow properties and growth if the right development is picked.
Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Questions can be forwarded to Sherwin Sucaldito
”No Neighbors, No Complaints (maybe)?” by Sherwin Sucaldito is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at Realty Evolved
2 thoughts on “No Neighbors, No Complaints (maybe)?”
So helpful. I kno some of those place priced so cheap always wondered what was wrong.
Doing homework is always important. In some case, other units may have been purchased and not occupied – whether due to impending foreclosure, or new owners not having the chance to move in yet. Either of the two previous reasons could drastically change the outlook of a building.