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How many condos in your building are rented?

Does it matter how many condos in your building are rented? Yes,it does. Almost all the condos in downtown St Petersburg have some renters, so the question is really “What percentage of condos in the building (or complex) are rented?”

From a value perspective, it matters because the percentage of rented units matters to a lender. If you’re buying a unit, you won’t be able to get a conventional mortgage on the property if there is a higher % of rentals than the lender will allow. If you own a unit and may be selling it, if prospective buyers can’t get a mortgage, then the number of potential buyers decreases and the value of the unit decreases.

From a lifestyle perspective, it matters because there’s a different feel to a building that is primarily owner occupied and one that is primarily renter occupied. There is no magic number. It will also affect the feel if the renters are mostly short term or whether they stay a year or more.

From another financial perspective, it matters because owners living in the building and absentee owners who are renting the unit out often have different view – and votes – on issues from building reserves to rental policies.

Your real estate agent should be able to give you a general idea of how many are rented. You can also check with the Pinellas County property appraiser and see what percentage of units have a Homestead Exemption.That’s not an exact determination, but is a gauge. Your relationship with your real estate agent shouldn’t end with the sale. Call your agent when you have questions, whether it’s about rentals in the building, changes to make to your home, or even where to find a pet psychoanalyst.

 

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Buying a condo with a mortgage

Are you buying a condo and planning to get a mortgage? If so, remember that the lender needs to approve:

  • the buyer
  • the price (through an appraisal)
  • in the case of a condo, the property

What’s involved in approving the property? The lender will check the ratio of rental units, the ratio of commercial space, the number of delinquencies with condo fees, the sufficiency of the reserves, the adequacy of the condo insurance, and even the condo docs. They could deny to finance, for example, if the condo has a right of first refusal to buy a condo.

You should have your lender check the qualification of the condo upfront. It’s frustrating for everyone involved if the lender leaves this to the last minute in underwriting and a day or two before the scheduled closing lets everyone know that condo won’t qualify so they won’t make the loan.

Some lenders have a list of preapproved condos. Some have a variety of programs and can finance with a larger down payment. 

If you’re paying cash for your condo purchase, you may be able to negotiate a better price, just to avoid all the uncertainty of the mortgage process. 

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