Buying a Condo WITHOUT management?

[Vanish3d]

I found an apartment for a very cheap price. The main downfall is that there is no management/benefits etc to the building.

I am not familiar with condo rules/ management to begin with but from what I assume is that means each person is responsible for their own utilities and whatever breaks in his apartment. Also that no one will be shoveling snow, cutting grass, etc. but I think the main problem comes if something goes wrong in the BUILDING, then all the owners would have to find a way to deal with it, correct?

I know it probably best to avoid this situation, but i'm looking into buying this and renting it out.

can anyone provide more feedback or elaborate more about issues I would face?

Thanks

[Weapon_R]

I think it's a bad idea. You need a condo board to manage things like maintenance and force people to pitch in when something major happens.

You can set up a condo board, but you'll be starting from nothing. No reserve fund is the big one. Is it that one in Bankview? It's been for sale for a while, and there's probably good reason why no one has jumped on it.

[Vanish3d]

is it possible to hire a management company if all owners agree? would that company come in with a reserve fund? or how does it work?

[atgilchrist]

You could hire a management company, but the reserve fund is essentially a saving account that is raised through condo fees.

[ExtraSlow]

You'd need to start a condo board, then get a set of condo bylaws drawn up, then get it voted on and approved by the owners.
Then you'd be in a position to hire a management company.
Probably take at least a year.
Or in all reality, if the current owners haven't gotten off thier asses to do this yet, they probably would never agree to it, since you'd have to make them pay the costs for a reserve fund, mangement co etc.

Stay away.

[JordanLotoski]

Its risky, but iam sure the price will offset the risk.

PM me with any questions you may have

[revelations]

Its one thing to have no management whatsoever and another thing for the building to be SELF MANAGED (no management co).

Which case is it here?

How many suites in the building? If its like 10, then a self managed place would make sense - once you get into the 100's of units, it becomes a full time job almost.

[Vanish3d]

Originally posted by revelations
Its one thing to have no management whatsoever and another thing for the building to be SELF MANAGED (no management co).

Which case is it here?

How many suites in the building? If its like 10, then a self managed place would make sense - once you get into the 100's of units, it becomes a full time job almost.

I dont really know which case it is. This is what it says
"Please note there is no condo corporation at present; therefore, condo fees are not payable at this time, nor are there the benefits/amenities associated with condo corporation. "

and there is about 18-20 units in the building.

[Masked Bandit]

Stay the hell away from this mess. I don't care how cheap it is, this is a nightmare waiting to happen.

[Vanish3d]

i realize this is a big risk. I am interested in hearing REASONS and perhaps personal experience, or anything i can actually use on this topic. I already know that i should "stay away" and "dont do it", but thats not why I posted on here.

I'm just doing research from all angles before making a decision.
Thanks for the input

[Ntense_SpecV]

We are a 10 unit townhouse complex. My wife is the current president of our group. It is a pain at times and she is always dealing with something, whether it is people changing banks or account numbers, or landscaping issues, rental agreements from the 4 rental places as our bylaws require board notice and contact info before we will approve any new tenants, parking problems, etc., etc. Last year it seemed she was always doing condo packages for people wanting to sell their unit. It got to a point where one unit had requested their third package and she refused until there was an offer put on the place as the owners requested a package and then they never bothered to list the unit.
Over the past 3 years she has templated all the forms which has made it a lot quicker to do everything required for the condo document package, as it needs to be current for potential buyers with the budget, estoppel certificates, reserve fund report, any outstanding notice of assessments and on and on. We have also grown our reserve fund almost 15k in the past 3 years as the condo fees didn’t keep with times or inflation. Sure the fees were cheap when we initially bought but the reserve fund lacked money for updating to the complex – it currently needs to replace the exterior mansard roof at an approx. cost of 50-70,000. Nobody on the board is compensated for their time or efforts. If we were paying for a management company to do all this with such a small complex we would never be able to save money in our reserve fund in a timely fashion without seriously raising the fees – to a point where it would be detrimental to any sales of units.

As for your situation I would never buy without any management in place either self directed or outside.

[Vanish3d]

thans Ntense, that was very informative.
it's starting to look like the risks/hasstles are out weighing the cheap price.

[Weapon_R]

Originally posted by Vanish3d
i realize this is a big risk. I am interested in hearing REASONS and perhaps personal experience, or anything i can actually use on this topic. I already know that i should "stay away" and "dont do it", but thats not why I posted on here.

I'm just doing research from all angles before making a decision.
Thanks for the input

You still don't see the risk? Without a healthy reserve fund, anything that happens will have to come out of the pocket of the owners. If the owners have no money, they won't pay. Without a condo board, you can't compel them to pay. Who will pay for a roof that starts leaking? Is it the problem of all the owners, or just the top floor owners? Will you be able to convince the guy living on the main floor to patch or repair a roof when he has no leaks at all? Who takes care of foundation cracks, flooding, cleaning the common areas, clearing the walks and parking lot, and insure the building against a major disaster like a fire or flood?

A building without a condo board and no reserve fund is a disaster waiting to happen. The fact that Jordon would actually recommend buying something like this is simply astounding.

Starting to see the problem yet?

[revelations]

I have experience with these matters and I have to agree with those who recommend staying away.

There of course are circumstances where no management co. exists :

a) new building
b) in between companies
c) self-managed


The problem I see that there is no CONDO CORPORATION at all... let alone management so no one in the building is in charge of anything, its like a Borg cube except no one picks up after themselves.

Who takes care of the building insurance for eg?

Also, IF one day the residents decide to get a condo corporation going, you are going to see huge fees the first little while, special assessments, etc. to try to catch things up.

[revelations]

BTW if the bldg has an elevator.... they will be in deep kaka a few years down the road if no maintenance is done.

[Vanish3d]

thanks for the info !


I'ma go door knocking and see what the history is. if they DID have management in the past or not, or if they are in between managements etc.

[Ntense_SpecV]

As our Condo Coporation was established long before I was even alive, who is responsible with a new build? Is it the developer's responsibility to establish the corporation? I'm curious as to how (if this is not a new build) they have allowed the corporation to lapse, or dissolve.

[Kloubek]

Originally posted by Weapon_R
The fact that Jordon would actually recommend buying something like this is simply astounding.

Starting to see the problem yet?

I was kinda surprised myself.

I guess the bottom line is that if something isn't selling, the price will continue to be reduced to potentially ridiculous levels until it does. Hence, a potentially fantastic deal on which *might* be a solid building.

With that said, I too would never purchase without a board (and more importantly, a healthy reserve fund), and I would not suggest anyone else does either.

[Cos]

As a lot of people have mentioned, it is very problematic if there is a problem. You have no way to force anyone to pay for the repairs. So if your neighbours siding is leaking causing you structural and foundation problems, your f**ed.

Run run away. All the downfalls of a duplex and none of the benefits.

[barmanjay]

ANY CONDO, even at start up will have a basic set of condo rules and regulations as per the alberta condominium act

There might not be an active management company, but not all condo's will have a management company, mostly will be run by their own set of board members

iirc: on a new building and under the alberta condominium act, there are condo rules and regulations intact and the board is run by the developer until more than 50% of the units are sold/bought; at which point a new board will be arranged with a minimum of 50% condo property owners.


As kloubek mentioned,.. it will need to have a heathly reserve fund in place.

I've heard of condo's managed by professional management companies being in really tight spots, because of mismanagement of the said professional company and not a large enough reserve fund.
On the same coin, some independantly managed condo's are in great shape.

What you really need to do is talk to a specialist in the field of condominiums

I've pm'd a lady that works out of our office and will gladly answer any of your questions (short of the info/job she charges for)

She is a Condominium Colsultant/Specialist who deals with condo's and boards. She's even developing condo plans for developers (they are approaching her because of her experience and expertise on the subject)


Good luck!