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[Chee]

How does a condo association work in those 2 or 3 family home converted condos?
What is going to happen if there is a major repair?
What if one unit stops paying the condo fee?

My husband and I are thinking of living in a walkable neighborhood.
I would like to know what is the pros and cons of converted condos.

[GenXer]

I guess you'll need to have the other owners to agree to make the repair and split the cost. Otherwise, most likely nothing will happen. You'll probably need to have a legal document that talks about the condo fee and the rest. I'm sure that if the other owners signed the document, they'll have to pay or else they will most certainly be taken to court and lose. Don't forget - everything is a legal contract. I think this type of document is called condo charter, or something similar. I'm not sure if you need a lawyer to write one up, or if you simply take a 'stock' document, but you'll have to address repairs/condo fees in writing, and have the other owners sign this document. This way you can prevent costly lawsuits against your fellow owners (which I bet happen anyway) - at least you'll know how to go about getting things done.

[JCK]

Personally, I'd stay away from a two-unit condo association. If your upstairs/downstairs/next-door neighbor happens to be crazy, doesn't want to pay their fees, doesn't want to spend money on necessary maintenance, or rents out their unit to college kids, you're going to have major headache on your hands, regardless of the legal rights granted to you by the condo association documents.

At least with a three-person association you can have 2 on 1, which is much better, than 1 on 1, although I suppose getting two other crazy owners isn't out of the question.

I live in a sixteen unit building, with 2-3 crazy owners, but we can deal with them because (a) there are a critical mass of non-crazy owners and (b) we have a professional management company that can interact with the crazy owners directly, so the condo trustees don't have spend their whole life dealing with these jerks.

I'm not saying it's going to be awful, but it's worth considering the risk that you're taking on.

GenX is basically right about the details; there are condo docs recorded at the registry of deeds, probably some association rules as well that are not recorded. These will determine how the association is to be run.

If the other condo owner isn't paying their dues, you can attach a lien (look up condo super-lien in Massachusetts) onto their property for the backed condo fees and legal/collection fees, and foreclose on them if no payment is forthcoming. Any of these steps, however, is a major pain.

Personally, I wouldn't want to be in an association without professional management that is capable of and experienced in handling these matters.

[CL]

I think JCK is right in that your neighbor is key in a 2 unit (or low # of unit) condo. I will say if you do consider buying a duplex, talk to the neighbor first before you consider your offer.

I live in a duplex and I did my due diligence with the neighbor before buying the place. So far it has no issue. The risk, of course, is the neighbors turn bad or moving.

[Chee]

Thanks. Now, I don't want to live in a multi-family conversion.
But there are not so many condos big enough (over 1000sf) for a family with 2 kids in those old brick buildings. That's been a dilemma for us.
we would like to live within the subway system.

[CL]

There are some 3 bed condos around 1500 sqft in old brick buildings in Brookline, with good school and green lines. Price of course will be an issue.

[JCK]

[CL]

I will say Brookline 3 bedroom condo is around 500-600K for size around 1200-1500 sq ft, instead of 600-800K which probably raise the sq ft to 2000 or even 2000+

The real issue for Brookline condo is 1) parking typically is not included, and 2) Most of these condos do not have elevators so need to walk up stairs. So having heavy groceries/infant + car seats/etc. will be a hassle. Other than that, it's really good option I think.

[john p]

From an architectural perspective, certain building types require less maintenance than others.

If you get a certain type of brick building, it might not need painting so you don't have to worry about what color to paint it or having to paint it every five years or so. Also, certain types of roofs are longer lasting than others and knowing how old it is would be something I'd look into.

I know they had a big deal at the Colonade Condos near the Aquarium where they installed a HVAC system and gave like $50-150k bills to each tenant. There are sometimes big capital expenditures in a larger building that require debt schedules and shares etc. I'm not sure what a "condo fee" covers with respect to certain types of capital expenditures like roofs, furnaces, painting, etc. If the condo fee is for maintenance then you have to be prepared to deal with potential capital issues.

Other little things are if you live on the ground level and the person above you never turns on their heat, you can be paying for their heat for the shoulder months anyway. These things aren't big deals unless you're the type that lets that sort of stuff get under your skin.... Maybe seeing chipped paint isn't a big deal to you but is for the other tenant. Maybe you've got a nice tax refund and want to tackle the roof this year, but your neighbor lost his job...

The people I know who aren't afraid of these issues are typically pretty handy or know people who can. Lots of old buildings have so many coats of paint that they are pretty protected and some people can look a place over and say, gee, this place could go maintenance free for like five years. To people like this, they're used to seeing stone foundations with cracks in them where a layman might get freaked out and be concerned that the house was going to fall over. They have a generally better feel of what type of fatigue is a big deal and what isn't. On the other extreme, you might get someone DRAWN to a place because it is falling apart because they think it seems "rustic". They might actually like the moss that is growing on the roof and think that is "character".

My brother had an offer accepted on a place 1,200 s.f. 1 1/2 bath for $415k in the 128 Belt. I went over the inspection report with him and he got the place for $405k. Since, he's put on a new roof $15k, had tree work done $2k, installed new windows and put on new siding $15k, new cabinets and a few interior projects $5k, repaired an old damaged brick stair $5k (all within 5 years). And the place has small rooms and is still "tired" looking. Now, he was in a decent cash position to field all these projects, but I just looked at it like, why buy a fixer-uper for short money if it needs a ton of work and then after all that, you'd have been better off to have bought a larger place that didn't need the work?

I mean, if you add the condo fee to the price of a decent condo, really how far is that apart from a starter home?

Within the starter home stock, you have families that have kept up with repairs, have painted regularly, repaired the roof, don't have overgrown vegetation that has caused rotting, have updated the cabinets, bathrooms, kitchens, installed insulation and new windows; these are the places that I'd consider if I was in the 128 belt. Even with all of that, I don't really like the general flow of these homes because they aren't open and I think that the dining rooms and formal living rooms are a waste of space. I think that when you run the numbers you have to consider whether that 3 bedroom 2 bath house has had an owner who's been keeping the place up to date or if it is a total beater. Sometimes people don't want to admit that they've neglected their home, but for sure, you don't want to absorb the risk for their lack of stewardship in their property.

Anyway, these are things I'd consider to see if this was a good fit for me.

Someone told me something that I think is important. Buy a house that you can drive a car around the home on the lot. Whenever you have weird grade issues like retaining walls, these are like mouths that you need to feed and you often can have water issues or structural issues when you're holding up grade. This isn't always necessarily true, but it is something I'm not comfortable with. Also, look for a nice overhang around the building because it keeps a lot of the rain off the exterior walls, and then look for positive drainage around the building (make sure that the ground slopes AWAY from the house on all sides). The biggest cause of settlement issues is a water source that makes the ground wet under a foundation.

Lastly, in a market that is going up and up and up, many beaters were moving right alongside the decent places, but in a down market the beaters are getting more and more scruitny. I've heard of people going after inspectors for not catching stuff so they're not as open to overlooking issues. If you buy a beater, expect that if you don't repair it, others might break it down and start to deduct money in their offer for all the work that's needed, so you better do it when you go into it.

[balor123]

I've noticed that a lot of people on HGTV are asking for fixer uppers and homes with charm. But there's always a new construction home in the mix and they always end up picking that one. Some homes do have what most would call character. Old Victorians in Brookline for example, with fancy fireplaces and glasswork. They have character because rich people used to live in them. Rich people STILL live in them. They are expensive. When most people say they want a home with character now, it's their way of making themselves feel better for buying a piece of junk at a bloated price I think.

[john p]

Along those lines, you have to understand what features are really worth. Granite countertops aren't that expensive and shouldn't drive the price up $50k, yet whenever someone says they spent more than $350k on a condo and I wince, they say "It has Granite Countertops!"

I know there are awesome condos out there and I am not really the source for being able to break them down, I just don't feel comfortable with them unless maybe I were to rent them and somehow they were totally cash flow positive (which I don't think they have been for many years, unless you buy them cash).

Rich features I'd be impressed with are: a nicely detailed hard wood stair, nicely detailed hard wood trim around doors, windows, bases and chair rails, and wainscot a bonus. If it is scuffed up, I wouldn't be as interested unless it could be repaired easily. I'm not into the old tubs with the claws, I almost took a header in one a few months back when I stayed at a friends. I like nice plasterwork on a ceiling like a rosette around where the light fixture goes. I am not interested in a house if the exterior walls aren't insulated. Those modern lofts with raw brick and big glass windows cost a fortune to heat and cool, even though they are cool looking and because they are so raw they are easy to clean. Really nice hardwood floors are great, and to get nice solid hardwood doors with nice door hardware and hinges are great. A nice fireplace surround is great as well, but you can buy these. There is a place near one of the Red Line stops in South Boston that sells old fireplaces. You can also get a stone guy to come in and build one out for you.

Lastly, having an architectural design goes a long way, because all the elements hang together visually. You can tell if a house is designed by an architect because of the basic proportions. An architect will space the windows with basic proportions so that the space around the windows or the negative space is composed. Another example would be a gambrel roof (a barn roof). Typically a barn roof is configured so that the points on the corners of the slopes of the roof fall along a semi-circle. These are the little compositional organizing ordering things that make a structure more visually appealing, and these are things you don't notice right away, but get a general overall sense. Typically if a home has that overall composition of the parts the rest of the details will tend to be pretty decent. They call these types of buildings "High Style" versus a more "Vernacular" type of home that say might have been an old farm house that was added onto like six different times and all the woodwork is different because it was built in different periods etc.

[JCK]

[JCK]

[Chee]

Well, we can't afford a half a million dollar condo in Brookline. but don't want a piece of old junk that should be bulldozed in a car dependent suburb.
Basically, we are planning to save the transportation, energy and maintenance costs while our kids are small. And later, we can move up to a better house by selling the condo.

So, what we are looking for is a 1200sf condo with a parking space in a well maintained sound structure in a safe area for around $300K or less.

I guess there is no such thing in Boston. How are average families living there?? Do you know anyone with 2 kids living in a condo in Boston?

[john p]

I don't think there is any thing flawed about your logic.

What is flawed is the logic of those who bought those places and who currently own them.

The buyers 8 years ago bought these beaters and crappy condos and overlooked the maintenance and said exactly what you're saying, that you'd go to a suburb once you were in a better financial position. The difference between you and them is that they also expected price appreciation and that these beaters were actually going to be investments where they could take out $80-$100k after they sold them four years later and they could use that equity as a down payment for their home in the burbs.

If I were you, my reaction would be, who cares, too bad so sad... Well, here is how it does affect you; these people are stuck and many are upside down, so they might not sell and realize a loss unless they are forced to sell or if they can trade up and get a steal in the house they are trading up to. This is why I was posting earlier about how the low rates might help induce trade up buying. Some of the other guys were saying that why bother if the market might continue to fall? Others seem to want to wait and see what happens after the Government housing stimulus policies (steroids) leave the system.

I read something in Friday's Wall Street Journal about rumors of Fannie and Freddie loan holders getting write-offs for a certain amount of principal. We also are hearing about having tax policy recognizing and being pegged to cost of living, so that if you get an $80k salary in Manhattan, that is quite different than say Omaha, Nebraska. Maybe things like this were always being floated and were moderated by others and perhaps the Press never covered it, but it makes people nervous to hear Senators even float these types of ideas because it is somewhat unsettling not knowing if a big change might come about. Bottom line is do people trust that government understands what it is doing. If they eliminate certain housing stimulus policy is it based on insight that the market is recovering and it is not needed, or do they even have a clue or not? Do these Senators have any concept of the unintended consequences and have they modeled out what would happen if they did change tax policy to not only be progressive, but be adjusted to cost of living. Take a guy like Baylor, he keeps talking about how much cheaper Austin, TX is; if he's telling you that you can get a 3,000 s.f. house with a pool for $325k in Austin for the same job, why would you buy a beater or a tiny condo in a rough area of Boston where you'd have to worry about your kid's safety? The City's need the flow to be into the cities and not out, chasing a lower cost of living and a better quality of life. Changing the tax policy to adjust for cost of living would TOTALLY change that dynamic. I think the market corrects itself when people relocate because it more evenly distributes the wealth and growth. If you look at the blue and red (republican and democrat) county map, it is totally clear that urban areas break Democrat, so it is in their self interest to have a cost of living adjustment for tax policy. The Democrats are going to have more losses in the Mid-Term election and their biggest challenge is what Party's base is more motivated to show up and vote. The Democrats have been very busy writing and getting policy passed versus selling what they've done. I am curious to see what issues or proposals they put on the table in order to motivate their base in the Mid-Terms. Jay Leno is even making jokes about Obama blaming Bush for everything, so blaming Bush won't work, so the Democrats need to either sell what they've done or make a new proposal that is attractive to their base. For the housing sector, we need to monitor: job's proposals policy (number 1), extending first time homebuyer or home remodification or loan forgiveness policy or any taxation policy which changes the dynamic of affordability. Also, Obama's positions in Education align with most young families living in urban areas (being one himself), but he risks pissing off the Teacher's Unions. If we get Education Reform in Urban Areas, that will be a major change to housing in urban areas and be much more attractive to younger families. Now if Obama takes this on, he risks demotivating his Unions support, so maybe that is something he'd do after the Mid-Term? If this is true, look for tell signs like if he starts to do a bit of political code speak where you see him trying to appeal to both sides to give both a sense that their interests will be taken care of. Dangling a big stimulus out there bribes a lot of special interests and gets a lot of political interests motivated to spend advertisement money.

One last note, former Democrat N.J. Governor Jim Corzine lost his reelection because he didn't cut government enough. He was much smarter than his challenger, but his challenger, the new Governor is actually cutting government. Jim Corzine now works for a large Global Bank and he just recently laid off 12% of the workforce. Now as a Democratic Governor he didn't cut jobs like that; funny how it is ok to flush private sector workers down the toilet but the public sector employees are the sacred cows that we're using the stimulus money to feed.

I mention this because a lot of young families actually try to change City Hall in these cities and after the college try throw up their hands and move out to the suburbs to get away from the b.s. If the Public Sector gets the upper hand and they are brazen about it and openly hire patronage and vote in absurd self serving rules and unsustainable pensions and benefits, and ignore abuses, I would say to avoid living in a community with a big political machine local government, unless you think that they have enough juice to bring home the bacon and be bailed out for their irresponsibility and wasteful spending. When you rent, you aren't on the hook for a lot of local government debt as homeowners pay local real estate taxes, so understanding what your taxes cover and what you're exposed to is similar to understanding the scope of what your condo fee covers...