Sun, 13 September 2015
The shift to condominium ownership is linked directly to the ascendance of the condominium form of ownership along with other perceived difficulties in cooperative ownership.
A Cooperative is a multi-family complex owned by a corporation organized for this purpose. A purchaser of shares in the corporation acquires a proprietary lease and the right to occupy a particular unit along with obligation to pay a pro-rated share of the corporate expense.
The corporation is, in fact, a lessor and the purchaser a lessee.
The corporation is governed by a Board of directors whose duties and powers are set forth in its by-laws.
a. Joint liability (the shareholders in the corporation are jointly and severally liable for all debts incurred by the corporation) has been a major disincentive to the further growth of cooperative housing.
b. Financial institutions apply more rigorous credit standards regarding the shareholders in the cooperative before advancing either construction or permanent financing. As a result of these standards and practices, the effective market for cooperative house is severely reduced, and consequently, the supply of those units is increasing at only a modest rate...in Charlotte, not at all.
Here are the two co-ops in Charlotte, NC.
The Kimberlee off Park Road
Morrocroft , a neighbor to SouthPark
Sun, 13 September 2015
Insurance(s) for Condominiums
If unit suffers maximum damage, the master policy will bear the expense for the restoration of ceilings and walls. And then there are the grey areas: appliances. Sometimes a master policy will cover them and sometimes not. Remember the deductible and your HOA should know that figure.
But…read carefully…any improvements that previous owners or you have made will not be covered. I read this in my insurance brochure, the word is “betterments”. Wallpaper or upgrades in the kitchen or bathroom are not covered. It is better to know this before you need to know this, right? The most common occurrences are the overflowing bath tub or shower. Tumbling water into the units below. The Master Policy will repair floors and ceilings…other items that were damaged like that hand woven Greek wall hanging, Persian rug or priceless water color will lack coverage. For those items, you will need your own individual policy. This insurance policy is known as an HO-6 policy. This gives you coverage subject to a deductible for your personal furniture, clothing and “betterments” in your unit.
Depending on your own financial situation, the HO-6 policy can also include such things as reimbursing you for monthly assessments and alternative lodging while you are unable to reside in your unit; water and sewer back-ups (which are all too common especially in older buildings); and even expensive jewelry, stamp or coin collections, or fur coats. You should be able to obtain this kind of policy through any insurance agent
Some associations require that every owner obtain the HO-6 policy, and many experts strongly recommended that every association make this a requirement.
Sun, 13 September 2015
Hotel-Condo Conceptually Attractive, but...Lynnsy Logueal Estate
From an article published by the Associated Press, June 2005 Mike Schneider
"The hybrid concept of a luxury hotel that sells some of it units as condominiums has become one of the most popular trends in the industry in recent years. Condo-hotels in the past two or three years have expanded beyond traditional markets in ski resorts or Hawaii and into other tourist destinations such as Orlando and Las Vegas. Projects also are under construction in urban centers like Atlanta, Chicago and New York, where the Plaza Hotel is being converted.
The concept has risks for both the developer and the condo buyer.
2014-this application still holds.
The Securities and Exchange Commission considers the condo offering a security if income and expenses from the rental units are pooled and if a condo unit is sold with the explicit expectation the buyer will earn money or derive tax benefits from it. If the development is structured as a security, it can only be sold by a securities broker and it is easier for an investor to sue the developer under the SEC's anti-fraud rules, according to Los Angeles attorney Jim Butler.
Most developers choose not to sell their projects as securities to avoid the SEC complications, so they are prohibited from discussing the economic or tax benefits from a rental arrangement or project on how much a condo unit can earn in rental income. Many buyers make decisions without all the facts.
A developer typically has to come up with around 40 percent of the equity for a traditional hotel; a condo-hotel development requires much less investment.
"If you're not allowed to communicate revenue expectation, often times buyers are making a decision based on incorrect information or overly optimistic information," a quote from Mark Lunt, Ernst & Young in Miami.
Sun, 13 September 2015
These are snippets from years and years ago...could be history repeats itself?
Even though the Charlotte area apartment market is overbuilt now, real estate experts say the cycle eventually turns and the supply tightens.
Some local developers are reluctant to jump on the conversion bandwagon. They remember how quickly conditions can change.
The city experienced a conversion boom in the 1970s and 1980s that went bust after developers put too many units on the market at once, depressing sale prices and eroding resale value.
"The condo market really hadn't matured then," Martin said. "Demand was satisfied rather quickly in a limited market."
With a surge of empty nesters seeking to downsize and more young professionals entering the market, experts see this trend continuing -- at least as long as mortgage rates remain relatively low.
Apartment owners and investors pay close attention when property values rise in desirable neighborhoods near one of their complexes.
That's an important cue that the time might be right for converting rental units to for-sale condos. They compare current value with conversion value and determine how much to charge for a condo to make a profit.
Some do extensive renovations to buildings and grounds, adding such amenities as granite countertops and hardwood floors, while others simply repair, repaint and install fresh carpeting.
When renters are notified of a conversion and given an opportunity to buy their units, developers say most prefer to vacate. Some converters allow tenants to remain during the initial stages of renovation as units are completed a section at a time.
Condo buyers get the investment and tax advantages of home ownership, often for monthly payments similar to what they were charged for rent.