Things to consider:
Get a copy of the latest financial statement from the condo association.
Ask the board of directors – which is elected by the unit owners from among themselves – if major repairs or improvements are imminent. If so, find out how much they will cost and whether there is enough money in the reserve to cover them.
Check the by-laws, rules and the covenants, codes and restrictions (CC&Rs). You may find, among other things, that they prohibit or restrict pets and the renting of units. Some may require that the board have the right of first refusal on the sale of any unit.
Learn everything you can about the homeowners association, including legal disputes and conflicts. Start by reading the minutes of the association meetings.
Find out the owner-to-tenant ratio. Because many condominiums are often purchased as investments, there could be a high percentage of tenants in the building.
Title 1 Home Improvement Loan. HUD insures the loan up to $25,000 for a single-family home and lenders make loans for basic livability improvements – such as additions and new roofs – to eligible borrowers.
Section 203(k) Program. HUD helps finance the major rehabilitation and repair of one- to four-family residential properties, excluding condos. Owner-occupants may use a combination loan to purchase a fixer-upper "as is" and rehabilitate it, or refinance a property plus include in the loan the cost of making the improvements. They also may use the loan solely to finance the rehabilitation.
VA loans. Veterans can get loans from the Department of Veterans Affairs to buy, build, or improve a home, as well as refinance an existing loan at interest rates that are usually lower than that on conventional loans.
Rural Housing Repair and Rehabilitation Loans. Funded by the Agriculture Department, these low-rate loans are available to low-income rural residents who own and occupy a home in need of repairs. Funds are available to improve or modernize a home or to remove health and safety hazards.
Here’s what you can do:
Avoid the Yellow Pages. Check with family, friends, neighbors and co-workers for recommendations.
Deal only with licensed contractors. The state licensing board and local Better Business Bureau also can tell you if there are any outstanding complaints against the license holder.
Interview each contractor, request free estimates, if possible, and ask for recent references.
Ask for proof of worker's compensation insurance and get policy and insurance company phone numbers so you can verify the information. If the contractor is not covered, you could be liable for any work-related injury that takes place during the project. Also check to make sure the contractor has an umbrella general liability policy.
Never hand over a deposit at the first meeting – you could end up losing your money.
There is no financing. You need cash and lots of it.
The title needs to be checked before the purchase. If not, you risk assuming a seriously deficient title.
It may not be possible to inspect the property’s interior before the sale. So you have no idea of the property’s condition.
Foreclosures are routinely purchased “as is,” which means you cannot go back to the seller for repairs.
Also, estate and foreclosure sales are the only property sales that are exempt from some state disclosure laws. In both instances, the law protects the seller – usually the heir or financial institution – who has recently acquired the property through adverse circumstances and may have little or no direct information about it.
Other things to consider:
Will you be able to afford repairs, maintenance, insurance, and utilities?
What about fees to pay agents who rent the property for you?
If you live several miles away from your vacation home, who will clean up between tenants and take an inventory of household items once the tenants leave?
What if you are unable to rent your second home? Can your pocketbook withstand the strain of paying the mortgage?
When the home is on the outskirts of town, ask the developer about future access to public transit, entertainment venues, shopping centers, churches, and schools. Also review local zoning ordinances. A remote area can quickly turn into a fast food haven.
You want to ensure the neighborhood will not spiral out of control and lose its residential appeal.
Other things to consider:
Ask homeowners already living in a development about the builder. If none currently live there, find out where the builder has previously built and speak to those owners to find out if the builder followed through on promises and needed repairs.
Ability to make changes. Most homes in a development resemble each other. But the developer may impose restrictions on house color, landscaping, renovations, and other items that a homeowner may want to alter.
Do not buy into the highfalutin images created by marketing experts. Form your own opinions about a property and only buy where you feel comfortable. After all, you are the one who will be living there.