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Buying a unit in a condo with less than 50% owner occupancy

I am attempting to buy a unit in a low-rise condo building with less than 50% owner occupancy.  The 29-unit building is owned by a developer who decided to wait on converting the building to condos until the market rebounds.  One of the first buyers is now selling her unit (it is one-bedroom unit and she is expecting a baby). 

I am extremely interested in the property as the unit has been completely renovated, it is in my ideal location and the price is very good.  I have the 20% down-payment and a credit score in the high 700's, however my lender will not approve the property due to the occupancy levels. 

My realtor has recommended financing through a credit union instead of my big name bank.  Is this a safe/smart idea or should I just walk away?
  • June 09 2009 - Somerville
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Answers (5)

I would say this.

If your lender is unwilling to lend in that complex...that should be a big warning sign.  Unfortunately for a lot of Condo developements recent changes in available condo financing is going to impact the marketability of the condominiums.  When it comes time for you to sell this property the buyer will likely run into the same issue. 
  • June 09 2009
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You should probably be warned that if you need to sell you will run into the same problem for yourself. When buying in a complex you should always be sure it's on an approved FHA list so that reselling will not be a problem. I would consider other options.
  • June 09 2009
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The value of anything is based on supply and demand.  Even if you are able to get a mortgage for this unit your condo will not appreciate significantly until it is easy for someone to get a mortgage.  Also, the developer still owns over 50% and if anything goes wrong with them you could be adversely affected. While, due to the difficulty in getting a mortgage, you could probably get a big discount on the price, you risk the inability to sell it until ownership exceeds 50% and there is no guarantee that will ever happen.  I would not buy in that property.
  • June 11 2009
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Profile picture for BaronessS
CA bank and trust will do these loans if you will occupy the unit
  • December 08 2011
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Profile picture for TerritoryRE
A credit union or small local bank are both excellent options. Our preferred lender at Territory.com typically places these types of loans with B of I Federal Bank. If you want more info contact Jason Jastrezbski at Mortgage Master - http://territory.com/team#lenders
  • December 15 2011
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