A professional association management group knows that sometimes what we don’t know and don’t know to ask can make all the difference when making a purchase, particularly when we are talking the difference between a warrantable and a non-warrantable condo. Even if it doesn’t make a difference in the short run, in the long run the implications can damage resale.
What does it mean if a condo is non-warrantable?
When a condo is non-warrantable, the loans made on the units cannot be sold to government loan programs like Freddie Mac or Fannie Mae thus making non-warrantable condos hard to finance and hard to sell.
An association management group like RISE in the Houston area has staff with the expertise to help your condominium property review its status then makes recommendations to bring it compliant or warrantable. One thing they point out is a community keeping its warrantable status is a moving target that should be maintained by a plan that includes a professional association management group.
What makes a condo non-warrantable?
Most of us have no idea what impacts the decision that a condo is warrantable or non-warrantable; that is why a professional association management group is always a great idea. Below is a list of some of the more common causes for a condo to be unwarrantable:
- The ratio of renter to owners. Condos that have over 50% renters normally have a status of non-warrantable. There is a perception that renters do not maintain the property the way owners will; thus this makes for a risker investment according to a professional association management group.
- Another place that calls for the expertise of an association management group is insurance. If a condominium is not carrying the required level of insurance needed to protect against catastrophic damage to the buildings and common areas themselves. Again, a possible lapse or insufficient insurance increases the risk substantially.
- Improper funding of reserve fund is a big issue in non-warrantable condos. A top association management group like RISE in Houston will tell you, the reserve fund and the studies that establish and maintain it are must haves. Any condo property that does not have a line items on their budget that shows at least 10% of their overall revenue is going to reserve funds is not warrantable and quite frankly isn’t really a great investment.
Warrantable condos are normally better run properties.
The truth is condo properties that are warrantable are normally better run, and have a relationship with a strong association management group who know what it takes to maintain the value of your investment. Performance by your association management group means a better place to live, and financial stability. Yes, you want to find a warrantable condo, and not just for the lending side, but also for the living side. Want to know if your condo is warrantable, check it out!
Interested in seeing how an association management group can help your property become and sustain its warrantable status. Explore your options by visiting RISE or request a quote by contacting RISE at (713) 936-9200 or [email protected]. Condominium management that increases your value and living experience daily.