Bought A Property Sight Unseen...Bad Move?

Question

I'm starting this thread to keep me accountable for finishing what I started.

So I bought a condo sight unseen.  Completely by accident.  I was outbid on a unit in this building a few months ago, and I was so excited to see the price drop on this owner sell that I jumped on it, right around Christmas.  Gave myself 2 weeks due diligence, but with the holidays never got around to checking out the condo. Nevermind that it's in the next town over and I had no clue about the neighborhood. I woke up on January 2 and realized it was the last day of due diligence, and I couldn't get to see the property that day either.

So we closed on Thursday, cash deal. I got the keys when I got in town on Saturday, and I was like a kid at Christmas. Driving to the condo, the neighborhood was great, excellent location near major interstates.  The condo complex itself was just okay, but I was still excited.

We get to the front door of the building, and there's a sign that reads "Merry Christmas neighbors! Someone is trying to pick your door locks, so if you hear anything call 911".  I looked at my husband and asked what did I get us into.

We climbed the stairs to the 2nd floor, and I noticed a note on the door of one unit that said the water was leaking and someone needed to call the owner. Obviously vacant, so I made a mental note to find out who owned the condo.

We climbed the stairs to the 3rd floor, and I noticed the unit next to ours had a Fannie Mae acquisition notice posted to the door. Took a picture to capture the agent's contact information so I can find out the status when we left (notice how I went from wanting to run away to being interested in two more units in a matter of seconds?!?  Whats WRONG with me?!)

Inside of our condo unit is fine, wasn't expecting to replace all of the flooring but that's no big deal. After seeing the appliances in person, we decided to keep the range and replace the fridge and dishwasher.  Fine so far.

So i stepped out onto the balcony, and the floor gave.  Actually, I only got one foot out on the balcony when the floor gave. The wooden railing was rotten and looked like a strong wind would blow it over.  All I could picture was a tenant falling over the side of the balcony.  UGH!

So now I have to figure out how to have a 3rd floor balcony repaired or replaced. I have no clue about the costs, which is what is freaking me out. Forget going to the HOA, they won't fix it.  And until it's fixed, I can't rent it.

So after kicking myself all day Saturday, I finally reached out to some contractors to see if I could get a bid on the work. Hopefully this doesn't take too long to fix!  In all, I guess I still got a good deal.  Here are the numbers:

Purchase - $25,000 - $750 commission = $24,250 net

Rehab Estimate - $5,500

Rental rate - $700/month

Taxes - $700/year

Insurance - $320/year

Maintenance/Repairs - $600/year

Management - $0 (we'll manage this one ourselves).

HOA - $110/month

Vacancies - $725/year

So has anyone ever replaced a 3rd story balcony? Would love some ideas on this one.  And yes, I've learned my lesson about buying something sight unseen.  But I guess it could have been MUCH worse.

Ursula

Richelle T. · Answer

Hi @Ursula B. Before you get too far gone, it's a condo so you as the owner should only be responsible for the interior of the property. The HOA should be responsible for the exterior. Check you closing docs to see if the HOA dues were paid up with the proceeds of the sale. If they are, then you should be able to talk with the president of the HOA to get your balcony fixed.

I would check out the financial health of the HOA before I purchased anymore condos in the building/complex if I were you.

Ursula B. · Answer

@Richelle T. Yep, and I knew better.  This balcony issue just confirms it.  Lesson learned. My other condos are in financially stable HOAs, I just took a chance on this one.

Account Closed Thanks, I'll work on finding one in the morning, because a tenant  falling off the balcony would not be a good look for my landlording career.

Account Closed · Answer

@Ursula B.  A home inspector is very different from a structural engineer.  Even if it looks like just the floorboards need replacing, I'd still have an engineer inspect it for safety. If the repair need is more extensive than that, you'll need him to sign off on the repairs anyway for your building permit. I'd estimate he'd charge ~$500.00

You really don't want a tenant fallng from a 3rd story balcony. As you so succinctly put it: "UGH!"   :)

Account Closed · Answer

@Ursula B. Buying sight-unseen?  You're braver than I am!  :)

The balcony might not be too bad to fix but it's impossible to say without seeing it. I would however strongly suggest that you have the balcony inspected and the repairs detailed by a structural engineer. A 3rd floor balcony is nothing to take lightly, from a safety perspective. It will also help you when getting contractor bids since they will then all be bidding on the same repair method.

Jim Brown · Answer

@Ursula B.

I would recommend not going that route.  Tenants have a way of not following the rules.  If they get out on that balcony somehow and get hurt, you can count on a lawsuit.  Plus any prospective tenants are surely going to ask why access to balcony is prohibited.  Once you tell them it's not structurally sound I imagine they are will be running away.  I know I would at least.

Richelle T. · Answer

:-(

A financially unstable HOA is bad news.

Ursula B. · Answer

Account Closed So while I wait for a return call from the engineer...I kept looking at this pic and wondered out loud why I simply couldn't prevent access to the balcony by removing the locks and screwing the door shut.  Any fire code issues with that?  I wouldn't think it's a required egress since it's the 3rd floor, and I've lived in plenty of apartments with one way in and one way out.  Thoughts?  Only thing on the balcony is a very small storage closet.  All of the mechancials are inside the unit.

Ursula B. · Answer

Account Closed Ironically I did due diligence on the HOA last year when I bid on the property that I eventually lost.  That's how I know the HOA won't pay for the balcony...they're not financially stable.  But the numbers looked promising so I was willing to take the risk on the HOA.  And what I learned from the President is that with every unit purchased by investors, they get a cash influx. It's the O/Os that aren't paying the dues.

I'll still take your advice and call up the HOA President, but I just already know the answer I'll get.

Jim Brown · Answer

@Ursula B.

I like your fire....you'll get it done!

Ursula B. · Answer

@Jim Brown Thanks. Just thinking out loud, it made me feel much better to think I had a somewhat practical Plan B in the event the engineer gives me super bad news.

After a few phone calls, I finally found a structural engineer that specializes in residential properties.  They'll check out the balcony tomorrow afternoon, give me a verbal report and then a written report by Monday.  $400 for the report.

The flooring measurements were completed yesterday so I have to make my selections quickly.  Appliances will be delivered on Saturday.  I'm determined to make this property rent ready by the end of the month.  Almost there...

Bought A Property Sight Unseen...Bad Move?

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