Know This Before You Buy A Townhome, Loft or Condo!
Lofts in Heritage Lofts in Chamblee used to sell between $279,000 - $329,000 back in 2005. They are in the eclectic, up and coming down town Chamblee historical district and feature great views of the Atlanta skyline, outstanding brick walls, wrap around spiral stair cases, granite countertops, stainless steel appliances, stained cement floors and they are all two stories inside! Gated, and with amenities that include a gym and an excellent business center/conference room, it's a great project. There's a great pizzaria called "Vintage Pizza" on the main floor that is jam packed every time you stop by, and the pizza is outstanding. The bar provides an instant nightlife, and on Saturdays you'll find antique shoppers galore up and down the street as they shop the high end consignment furniture shops and antique shops. There is even a ice cream, smoothie, slushie place in a red caboose across the street.
When you find a $279,000-$329,0000 loft for sale at $144,000 and market prices have shot up as they have in the last year, you don't feel too badly about missing the one that sold for $114,900 a year ago, especially if the only other loft on the market in the Chamblee development of Heritage Lofts is on the market for $205,000. This is especially true when one sold for $178,932 in September of 2012. This last loft sold to a business owner who decided it was much cheaper to have his office in this building, and much more chic than to pay an office lease somewhere!
So after grabbing a slice of pizza and noticing that tht MARTA train that went by every 10 minutes was hardly heard in the building we headed through the security gate and the coded doorway to get into the building. The elevator skipped a floor and you could push lobby, 2 or 4 since each of the floors was 2 stories high, which was unique. There were only 18 or so lofts in the building and this seemed like a real find.
When we entered the unit, we noticed that there was wasted space, and the bathroom is immediately to the left when you walk in, which when the door is open makes for an odd greeting. Then you walk forward nearly 15 feet before you enter the living room area which was small but went up two stories to overcome any concern. The exposed brick and spiral space were very cool.
The upstairs is cutting edge, because there aren't any doors to the bedroom, and the open balcony allows a view of the city through the very tall windows directly across on the exposed brick walls. Makes you very closely acquainted with a roommate, but isn't a problem otheriwse. Certainly you couldn't build this place for $144,000, I mean even the land in this area would be pretty expensive for a 1,200 foot print, and the brick and cement and high end finishwork? You certainly couldn't touch this anywhere for this price, and you are buying it for a fraction of what the original owner paid, right? Getting furniture into this place, changing light bulbs, dealing with the occasional train horn were things we could overlook for this price. THINK OF THE INVESTMENT ONCE IT THE REAL ESTATE MARKET RECOVERS!
Then as we walked out discussing negotiation strategy we met a very professional tenant who walked us through the amenities which made us even more interested. As the property had been on the market a couple of months we thought we might be able to even get a better deal, maybe $7,000 off, which in this market would really be saying something. We knew we would need to review the HOA documents and find out what the $210 per month fees covered.
However, when we walked out discussing what we would do in due diligence, we met a very educated owner who pointed out:
- There is a sink hole in the parking lot along a retaining wall that seems to have some problems. There are a couple other driveway problems, which shouldn't be there at this stage of the game for a building built in 2003.
- There is a lawsuit against the HOA or against the builder developer for some plumbing problem supposedly.
- There is about to be an assessment of $1,500 on each tenant to cover the repairs.
- The HOA president lives out of the state, making the HOA not responsive to the other owners apparently.
- The HOA fees are apparently being raised to $250.
- They have rented out more units than the HOA allow to be rented, and the HOA president's unit is rented out (Now that is leadership).
- All units bought now have to be bought with cash because lenders won't lend when there is a law suit involving the HOA.
Whether these things are accurate or just the one owners opinions, it brings to light important things to check into when buying a loft, condo or townhome:
- Alwyas find out how much the HOA fees are, and what do they cover?
- Are there any assessments that the condo, townhome or loft community might assess? How much?
- Do they see any of these assessments coming down the road?
- Are there any suits against the HOA or the developer?
- How much does the HOA have in reserves, can they cover exterior maintanence?
- Are the owners mostly current on their fees?
- Are all water/sewer bills current and is the HOA in good standing?
- How do these condo's, townhomes, or lofts appreciate compared to single family homes?
- Does the HOA allow renters, if so what percentage do they allow?
On this beautiful property, we have decided to wait off, and even if we made an offer, we would likely make a much lower offer due to the law suit and potential inability to get financing, which hurts your exit strategy. Both of the previous two sales were cash sales, and neither buyer apparently was aware of these issues until after the sale closed. We are needless to say, still looking, and we might give up some upside potential to avoid such problems.
If you need help learning about the type of due diligence you need to do in buying a townhome, loft or Condo, you need a professional on your side. If the Rich Life Real Estate Team can help, please feel free to give us a call 404-718-9126. Visit us at www.richliferealestateteam.com or listen to our weekly radio show on WDUN AM 550 and FM 102.9 archived at www.richliferealestateshow.com
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