So its complicated...I need advice!

[Funmilola Oladini]

Hi guys!

So I'm a resident physician living in the Bay Area and my fiance owns a 3 BR 2 BA condo in the North Kenwood area in Chicago, a 6 unit multifamily condo building. The HOA was severely mismanaged by a self-managed HOA board that didn't really read the by-laws carefully and depleted funds over a pet-related lawsuit with an owner who is now short-selling. Simultaneously the building wasn't aware of the building made of split-face block, requiring sealant every 3-5 years. Based on how the building was built, apparently the CMU was only 4 inches thick and it's causing a lot of problems we have now with the face brick bulging and separating from the rest of the building- long story short this repair will cost at least $200K for the building, split roughly across 6 owners. Up to 3 owners out of 6 may be unable to afford the repair, and the HOA president, as a parting gift, submitted to partial receivership to oversee the repair prior to resigning from the board.

I was just starting to explore my options with real estate investing when this happened, and given that I still have a decent amount of money saved up (previously was planning to purchase a townhome in the Bay Area), I'm wondering if I can somehow turn this disaster into a salvageable situation. I've considered advocating for deconversion if up to 3 owners are unable to pay their portion of the repair. But should I be exploring other options given the funds that I have for a potential real estate investment?

Thanks in advance for your help on this issue. 

Lola

[Bob Floss II]

@Funmilola Oladini Sorry to hear about your situation. Considering a deconversion is a good idea given the cost of repairs. That area is in high demand for investors and you may get a higher value for your units together as a building rather than try to sell individually. If the other owners are not in agreement, you will have to look into getting financing for the special assessment and have the work done immediately before it gets worse. Depending upon the cost of the units, you can also look into buying your neighbors units and deconverting yourself to keep as a rental property. However, if this is your first time getting involved with an investment property, I wouldn't recommend a project with repairs of this size.