Non-Warrantable Condos AZ

[Jay Ford]

Hi all,

This is my first post (and it’s a bit long). I have a unique opportunity in front of me.  I currently own one condo in a property that is non-warrantable due to one investor owning 6/8 units, and renting out all of them.  I have assisted him with the operations and keeping the property up.  He is elderly and can’t do much any more although for 25 years he did a great job of maintaining the property.  He does not have any family, and is facing the possibility of going into assisted living.  He is giving me right of first refusal as he is now looking to sell all 6 units which would give me control of 7/8 of the building.  

The price of each unit is reflective of the fact that it’s non-warrantable.  I’m considering it because: 

A) Great tenants are already in them

B) I’m familiar with the building and the operations of it

C) It’s far less expensive this way (50% less than Multi-Family comps in a strong rental market)

D) I’ve done my due diligence in having the property inspected - and no significant problems were found.

I have a great lender that worked with me on my first unit and Understands the entire story.  35% down at 3.625 fixed rate 15 years and has approved my purchase of the other 6 units on individual portfolio loans for each property. 

I met with an accountant today who warned me about possibly needing to change the subdivision since I would be majority owner?  Has anybody heard of this? This is the first thing that has given me pause.  

The paperwork on the self-managed HOA, tax, and city records indicate there hasn't been a change since the property's Inception in 1984.

I have found nothing on line nor have any of my other contacts heard of such a thing. Thanks for any help on this complex topic. 

-Jay