Coral Springs Florida Condo

[CJ Chen]

Hi All,

I am a first time investor and wanted to start small - so purchased a buy and hold rental condo to "learn" and it's been quite a lesson. My goal is to create cash flow on buy and hold properties - but a little appreciation is nice too.

I am under contract on a 2 bed / 2 bath / 1 garage condo in El Ad Poinciana. The condo is in mint condition, in a nice association, and in the neighborhood of Coral Springs, which based on reading City-data and NeighborhoodScout and visiting - is a very nice place with quickly rising prices.

The numbers are as following:
Purchase price: $131,500
4 units available out of 222 units x 70% investor rentals
Lowest comparable rent is $1350 on a less perfect unit

If I assume $1325 monthly rent x 8% vacancy
Monthly expenses are: $246 HOA, $66 Property Tax, $50 insurance, $20 for other (LLC registration etc)

I get to a cap rate of about 5.5%. Now that's low, I agree - but on my first purchase - I'm more concerned about making sure to have a profit.

The downsides of this condo I found out are:
1) I have to get commercial financing b/c the condo is non-warrantable to investors b/c of the 70% investor base in the complex, though warrantable to primary and secondary home purchases by the GSE (but not FHA)
2) I can probably get a 9% cap rate investing in multi-family in the area - but since I'm a first time buyer - those are at a much higher purchase price (more like $500K) - so I would be risking a lot more

I've found a loophole in the contract b/c the seller has not given me all the condo docs yet - so I can still terminate if I request it and . What should I do?

1) Should I just go forward and use this as a "learning" opportunity - or is it likely I'm going to lose money on this deal?
2) Should I cancel the deal and try for Multi Family instead - can I be sued despite not getting all the condo docs?
3) Should I use this loophole as a negotiating tool?

Any help much appreciated!