Fractional condo ownership - pros & cons

[Fabiola F.]

I'm considering the acquisition of a batch of rental condos from a single owner with about 40% ownership of the total number of units within the condo bldg. The batch has significant NOI with immediate opportunity to increase it by 25% with less than $200k in rehab.

Pros:

1 Strong cash flow as is and rent premiums make it that much more attractive.
2 My end goal would be to resale the individual units to cash out.
3 Even if the environment for resale changes, there's still upside from rental income to hold on to the asset.

Cons:

1 HOAs can be a pain and could enforce restrictions that make it tougher to rent to new tenants or sell the individual units all at once or since.

2 Since this is just fractional ownership with the remaining owners owning individual units, the value & marketability of my units could be affected by the actions and upkeep of the other units.

Are there any other cons that I should consider besides the ones I have already listed?

[Fabiola F.]

@Danielle Wolter Resale would be to owner occupants and not other investors. As mentioned before, NOI is very healthy and would justify a long term hold if needed, but resale within 2 years would be the end game on this deal so long as market conditions are still favorable.