Advice for first time buyer

**terryh** · July-27-10, 07:46 PM

I may look into some town houses in Ferndale that are short sales? Both are under 10 years old, asking prices are 77,000 and 57,000, both were valued at around 170,000$ several years ago.....there is a $100 association fee, taxes are under $3000. most of which I would have refunded at tax time? Are there any tax breaks and or aid for a first time buyer?

Thanks.....

**gnome** · July-27-10, 08:11 PM

If you are lookiing at a condo, you need to protect yourself. What you are doing is joining a bunch of strangers in a million dollar investment; therefore, demand to inspect all condo documents including articles of incorporation and the financials going back at least five years.

A condo complex is required by state law to have at least 10% in reserve in case of some crazy act of god ... if there are a lot of units in arears, then any remaining co-owners will be required to pony up the difference.

So for example, it is a 15 unit complex, the maintence of the grass, utilities for the outside lights, window cleaning, snow removal, vaccuuming of common areas etc ... all that adds up to X divided by 15. If 5 units are empty and no one is paying the dues on the empty units, you divide X by 10 plus the extra missing from the reserve.

The low cost of a condo and carefree nature of life can be sweet, but if you get mixed in with a bunch of folks who are going belly up, you will discover the true meaning of pain.

**terryh** · July-27-10, 08:26 PM

Originally Posted by gnome

If you are lookiing at a condo, you need to protect yourself. What you are doing is joining a bunch of strangers in a million dollar investment; therefore, demand to inspect all condo documents including articles of incorporation and the financials going back at least five years.

A condo complex is required by state law to have at least 10% in reserve in case of some crazy act of god ... if there are a lot of units in arears, then any remaining co-owners will be required to pony up the difference.

So for example, it is a 15 unit complex, the maintence of the grass, utilities for the outside lights, window cleaning, snow removal, vaccuuming of common areas etc ... all that adds up to X divided by 15. If 5 units are empty and no one is paying the dues on the empty units, you divide X by 10 plus the extra missing from the reserve.

The low cost of a condo and carefree nature of life can be sweet, but if you get mixed in with a bunch of folks who are going belly up, you will discover the true meaning of pain.

Ahhh something to chew on thank you very much.

One is currently owner occupied, the other I believe is empty,and I noticed another unit for rent...some specifics to look for in the articles of incorporation and financials?

**gnome** · July-27-10, 08:42 PM

You need to find out who the Property Manager is and get the documents from them. If they won't hand them over, run away.

**gnome** · July-27-10, 08:52 PM

If the complex is really small, you might not have a property manager but rather a Condo Board president who acts like the block capitan. He/she enforces regulations and can levy fines for those residents who don't comply.

... things like leaving bikes in the hallway, hanging laundry on your balcony, displaying inappropriate items in you windows, parking on the grass, washing your car, changing your oil, renovating your place without permits, ... there should be a whole list of shit yo can't do. You will find all that stuff in the condo by-laws

**Neilr** · July-28-10, 07:08 AM

In addition to Gnome's cautions, there are several other potential problems that come with condo ownership.

Condos often have very loose rules for owners who want to rent out their units. While this can be an advantage for these owners, it might create some problems for owner-occupied units. Among those would be less of a sense of community and commitment to the development and a higher turnover of residents. Another might involve the willingness of banks to give mortgages to buyers in developments with a high percentage of renters.

Condo boards are less likely to throughly screen the finances of potential buyers which may lead to foreclosures down the road.

Also, in a foreclosure, the lender would have first claim on money paid when the unit is sold so it's likely that the condo association would not be able to collect any of their fees that are in arrears.

I'm not suggesting that you not buy a condo, just make sure that you do your due diligence before you commit to any purchase.

Finally I need to add that I live in a coop and my bias is toward coop ownership which has a different financial/social setup from a condo.
http://www.vasileffrealtydetroit.com/condo_vs_coop.htm

**Jimaz** · August-02-10, 10:29 PM

FWIW: Wayne team takes on real estate fraud

**DetroitPlanner** · August-05-10, 09:59 AM

How can most of your taxes be refundable at tax time? You get to itemize, which helps, but refundable? I don't think so.

There used to be something known as the MCC tax credit to help low-income first time homebuyers. I bought my house this way, though I lost the tax credit when I refied a few years later. Credits are refundable, deductions ain't.

**spiritofdetroit** · August-07-10, 12:59 PM

There is a property tax credit of up to $1200 for low and middle income families. Just a guess, but if you're buying a home in this price range, then your income is likely not exorbitantly high, and therefore you're likely to qualify for most or all of the $1200.

http://www.michigan.gov/taxes/0,1607...538---,00.html