Before you skip this episode we aren’t just talking about what the different properties are, which you may know. We are sharing why the type of property might impact your buyers ability to buy and where roadblocks to a sale can come in. What are the differences between a single family home and a condo? What makes something a condo instead of a townhome? How about what happens to the value of a mobile home after you buy it? We are getting into the specifics on each type of real estate property including the benefits and potential pitfalls with each. We hope that even if this episode is a refresh for you that the specific situation examples we share will help your future clients navigate their sale smoothly.
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The following is a rough transcript provided by Otter.ai.
0:01
Please don’t ask me any additional questions, because I have no more answers. You took a deep breath. It’s
0:08
all coming back to me. So
0:09
you’re like, I remember how tough it was. It was very tough.
0:13
And what ended up happening in my sad story? Oh, no. Imagine if your client was like, Hey, Katie, thanks for your help. But I actually bought a house at Target.
0:28
That old thing that I say all the time, you don’t know what you don’t know. Right? And we’re just trying to be out here telling you what to know.
0:36
Hi, y’all. Welcome to hustle humbly. It’s Alyssa and Katie. And we are two top producing realtors in the Baton Rouge market.
0:42
We work for two different companies where we should be competitors. But we have chosen community over competition. The goal of our podcasts is to encourage you to find your own way in business to stop comparing yourself and start embracing your strengths. Hi, Alyssa. Hey, Katie.
0:56
It’s episode 205. Okay. And today we are talking about types of properties.
1:04
This was inspired, let’s hear it. We’ve had a few newer agents in our office that I’ve been helping. And we have had some situations where they have been confused between condo and Townhome. Okay, so understanding what the difference is, but also other types of properties as well.
1:26
Yeah. And I think we’re gonna cover what the pros and cons are of some of these and what the potential challenges are, and maybe touch very slightly on to some financing concerns. In this episode, I feel like will be a good one also for the public. Yeah, who just want some more information about real estate as a whole? I think most places, property types are pretty consistent. Okay, shall we just what do you want to do? Start with a list of the different types of property? Let’s do that. I’ll start like this. I went to my good friend, Chad GPT, and said, we’ve
2:06
been playing around with it a good bit and
2:07
said, What are the types of properties? I will say I didn’t agree or maybe correction. I didn’t properly inform the mechanism that I was looking for. I’m picturing what are the actual different types of housing? Like the buildings sure the different types of styles are Yeah, this one said vacation homes. I don’t think a vacation you could have a condo vacation home, you could have a detached vacation home. Right, right. So we’re gonna remove that. My point is, these aren’t types of houses, or their actual different types of buildings that have like residential people live there. Okay. Okay. Great. Perfect. All right. Number one, single family homes also sometimes in our market and probably others called a detached home okay, so it’s attached to nothing else it is its own thing and you own the house and the land and the way real estate works is you own it up to the sky and down to the center of the earth that’s
3:08
in every state though I in Louisiana that’s how it is. I know but you know, in some states you don’t get your mineral rights right so maybe or your air right so that will be something to check on in your area in your area here. Yeah, real property goes all the way up and all the way down and then interesting, right?
3:26
Which is I guess the theory why like if your neighbor’s tree branch grows way across your yard or even any across your yard, it that’s your problem now yeah, the line goes up from the property line. Okay, so something to think about single family homes we’ll come back and deeper into them but let’s just go over the types single family home then you have a multi family home okay. Okay. multi family home is like separate units starting duplex duplex means to two units triplex wait for it means three units. Can you tell me how many units are in a four Plex four? That’s right. And apartment buildings. So those are all considered multifamily. Sometimes when you’re an investor, you’ll say I’m looking for a multifamily property. It’s like, you know, each one is its own unit. But technically speaking, that’s still just a descriptor of could be a condominium. Right, yeah. Or a townhome or an apartment. Those are the three ways right right. Okay, so multifamily just so you know when people say single family and multifamily that’s what they mean. Next up, condos, condominiums. Do you want to tell us what those are?
4:43
I have been told that you own from interior sheetrock. To interior sheetrock. Yep. And from floor to ceiling. Yep. You do not own your exterior. No, you do not own your land.
4:57
No. And they are usually They are individual units that are part of a larger building or complex. And again, you’re right. They own the interior. And they might have a share of common ownership in a common area. Right? The pool, the whole, the whatever’s the ground base, elevators, parking garage, whatever. But But you only own walls in so like, I guess we’ll come back to that in a minute, but there’s some insurance situations there. Okay, next up townhouses. Yes. All right. Your townhouses are a lot like condominiums and that they’re multi level like multi units right? They are attached by one or more wall right with the neighbor attached somehow they’re attached to a neighbor somehow if it’s if it’s a single unit not touching anything. That’s really not a townhome, right. Okay. And they though then own land, right, so and then it gets very sticky about how they’ve structured the HOA the homeowners for a townhome sometimes we’re kind of like a condo and that may be the the association takes care of the outside and sometimes they don’t, right right. Yeah. All right to know but in a townhome you own the land so in Louisiana, you would own all the way down all the way up so you I guess in theory, you never have a townhome that’s like a second level unit.
6:22
And and I was always told to if you aren’t sure and you were looking in MLS if it is a townhome, it will have lot dimensions and a lot number and a lot number. Yeah, but if it’s a condo, they usually sometimes we’ll put the unit number as the lot number. And there is no no no land dimension, no dimensions at all.
6:47
Those two get mixed up quite frequently. Yes.
6:50
And that we might spend some time I think it’s important to understand why that matters. Yeah, we’re gonna doesn’t matter.
6:56
Yes. Okay. But broad strokes. Next up came Co Op apartments. I had never heard of this. This is like very common in your big cities. Okay, right. We are not, we don’t have those where we live any of these. But a co op is similar to a condo and that they’re part of a larger building or complex. However, in a co op residents own shares of the building rather than individual units. Please don’t ask me any additional questions, because I have no more answers.
7:26
If you are one of our listeners, and you are familiar with coops and this is a thing in your marketplace. Why don’t you head over to our Instagram? And tell us in this week’s episode post what you think and I also wondered, can our Realtors involved in those transactions? Okay,
7:43
please tell me you’ve seen at least one movie where the person goes in front of the co op board and they have to be interviewed to join the co op say like you I mean, I guess it’s to a specific unit. But in the end, you own a part of the whole thing.
7:59
Yeah, but you still have your own space.
8:03
Yeah. Okay, but you have to get approved and everyone is in ownership together
8:07
listeners please educate us this I was like realize that I
8:12
could remember what movie I’ve seen this in you know, it almost looks like they’re in front of a parole board. Like there’s a bunch of people asking you questions and you’re trying to get approved to be in the coop Okay, whatever we’re moving on because we don’t know what we’re talking about. Last up is mobile home. Yes.
8:27
You want to tell us what a mobile home is mobile home the obvious manufactured home. What is your definition?
8:34
It says these are properties are designated to be moved from one location to another. That’s really have you sold any? Oh, God, don’t hold me to it. I feel like I have no I have for sure. Okay, great. I have I sold one. Yeah, they’re they’re tricky.
8:53
I don’t plan to again. Okay. It was terrible transaction. Very difficult.
8:59
I learned a lot though. Yeah, a lot.
9:03
Now, if you are not sure about those, I did learn that these are a very southern thing. Oh, mobile home. Mobile homes are very southern. Oh, you don’t say yes. I will read to you the top seven because that’s where I
9:18
saw for the lay people. So sometimes these are just called trailers. Yes. Right. Yes. Trailers mobile home mobile. Home right.
9:27
Modular which is a little bit little different. But because I don’t think you move the modular rounds. Bill, it’s just a it’s it could be a detached home. It’s just built differently. Yeah. Okay. Carry on. So in the south, the Okay, this is what I learned to. This is how they ranked this list. This is from the 2021 census. Oh, okay. Every state has a certain number of permits. Oh, for new builds or new development. Okay. Okay, her lot. Mississippi is the only state that manufactured homes took up more permits. Oh, then detached single family homes. Okay, so Mississippi is the leader in the mobile in the mobile home market. Okay, they have more than any other state per the 2021 Census Bureau. Got it. Second place, West Virginia. Interesting third place, Kentucky. Okay, fourth place, Louisiana, fifth place, Alabama. And then six was New Mexico, and seventh was Michigan, Michigan that came out of nowhere and then I stopped fine. But I thought it was just there are people that aren’t we’re like, what’s a co op? They may be like, what’s a manufactured home?
10:46
Good point. Okay. Alright, so that’s the basic types, we’re going to cover single family, condo, townhome, and mobile homes for the purpose of our we’re not going to dive into multifamily, as it’s a class more than a type of property right. And we’re not going to dive into Co Op because we don’t have a clue what we’re talking about, I will
11:05
say on multifamily. If you are planning on living in one of the units and routes, check out the others house hacking. Financing is not very different
11:18
than regular purchasing a detached home, right, cuz you’re gonna live there,
11:22
you’re gonna live there, your owner occupied even though you’re not occupying the whole thing. It’s very similar to just buying a regular home,
11:30
right? And let’s, for the sake of everyone house hacking is if you live in one unit, let’s call it a duplex, two units, okay, you live in one unit, and then the other unit, you put a tenant in place and they pay their rent and basically cover the majority or hopefully all
11:44
of your mortgage and your living for free free or close to three rate investment strategy house hacking house hacking, if I was single, right, you know, I
11:55
feel like we had a ton of those types of properties though here. It’s a little bit trickier. I mean, you could probably find like an older home with a garage, apartment and kind of house hack. You could even house hack even more by getting higher rent by putting the tenant in the big house and you staying in the garage. Yeah. Apartment, the garage apartment. Right? Like it’s a fully livable space right now you don’t live in a garage. Don’t live in the garage. Please, please have a shower. Don’t live in the garage. Okay. All right. Let’s, why don’t we just start with the basics. What? Let’s talk about single family homes.
12:28
I don’t have too many notes. I feel like most cases know what a
12:33
detached home is not attached to anything else. You own the land.
12:36
What are some of the pros to this type of property? More space? Yeah, more freedom. Privacy, privacy. Independence. Yeah,
12:45
you maybe get some like, neighborhood draw. Okay. Also, I find like parking Yeah, typically is maybe a little bit easier on a single family home. And these mortgages are very easy, or easiest to acquire. Very straightforward, right? Straightforward. We buy the house, we own the house. We live in the house. This is this is the easiest for us to deal with. The cons on your single family home. Do you have any more maintenance? Yeah, you’re gonna have more maintenance, cuz you’re in charge of everything, the lawn, outside the inside the whole deal? Everything. And then that’s pretty much all that I would say. I did not agree with Chet GPT his response to the rest of this. They said the cons were like, it might be hard to run out if you need to move. I completely disagree and TPT Yeah, in our market, I would say that it’s maybe even easier to rent out a house than a attached property. Yeah. Okay. So so we’re not going to dig into what how they were wrong, but they were wrong. Just so you know, I’m not reading off my list from chat. GPT I’m filtering it through my brain. Okay. Great local realtor brain. Okay, next up, let’s do con. Do you wanna do condo or townhome? Where do you wanna go first?
13:58
Well, let’s talk about these two together, because I’ll share your story. Great, perfect. Let’s hear it. Um, once upon a time, I had a condo listed. I received an offer on it with a pre approval letter in the financing section and said buyer was putting 20% down, okay, which I knew was good and what we needed. This condo was going to be pretty difficult to sell unless it was a cash buyer. Okay, I knew that going into it. And the reason is that banks and lenders consider condos to be more risky than a house or townhouse, right? They feel this way because you are at the mercy of an HOA to maintain the property. So if your roof is bad, you can’t just go up there and fix it.
14:52
Yeah, and you have to hope that the HOA is taking care of the money correctly collecting everyone’s dues using it wisely by budgeting like there’s a lot to it and active.
15:03
Yes, exactly. And so they want to review all of those documents. What insurance does the HOA have on this property? They are also realizing that you are somewhat at the mercy of if the toilet upstairs leaks, it could come down into your unit. Yeah, there’s just a lot of factors that it’s a little more risky. It’s more risky. And it doesn’t matter what your credit score is, and how strong of a buyer you are. Bank doesn’t want it on their books. Yes, the banks are like, if you’re gonna buy a condo, you’re gonna have to have a pretty hefty downpayment. There are certain condos, that could be FHA approved, which is our government loan. Many are not in our market, many are not right. A few things that they look at, for condos, is the owner occupancy rate versus the renter rate. Right. So if there are too many renters and not enough owners living in the unit, they label it high higher risk. Right. And so they don’t want to unnecessarily Lind there.
16:07
And I mean, I’m assuming that the higher risk is because the more renters in place, the less likely they are to take care of the property as if it were their own, because it isn’t their own.
16:15
Correct. Okay. That one? Yes, yes, that is why I have had a condo transaction fall through because the lender required X amount of insurance to be carried. Okay. And that was not with the master policy was with the HOA. And I investigated having it increased so that we could close but they did not have the funds to pay for that type of policy. It was a very expensive policy. Interesting. So I have also had a condo financing fall through because of flood insurance. Okay, the land that the condo sits one was technically in a, an AE higher risk flood zone. But the condo that was being sold was on the 33rd story. We’re not going to flood, but it doesn’t matter because they’re worried about the
17:08
whole building, because they’re because they’re investing in the in the complex as a whole. Yes, right. Right, like maybe the pool floods or the common area, and then it’s not worth as much
17:18
right? Or if they have to do assessments on the whole building, you’re all in a split between all the owner. So if there is a situation where balcony rails need to be replaced, I’ve had that happen, okay, it is, you know, they’re getting they get a price and it is split between the owners, right? Even if you are not a balcony owner, sometimes not every time, but just depends on how things are structured. If there’s a pond or any other thing that requires maintenance a gate, those things cost money. And so you’re looking at a little bit higher dues, and possibly some when they
17:55
don’t have right when they don’t have the dues enough to take care of something that has to be done, like a big project big Yeah, big project, then they have to do an assessment. Yes. You know, interestingly, while we’re on assessments in case anyone’s curious about that, it’s basically just that a large project that’s going to cost an amount of money that you don’t have in the budget to take care of. And then everyone has to share the burden if you’re in a single family home, okay, so a detached home. In a gated community locally. I don’t know this is the same everywhere. Once you put up that gate in our area, the roads are no longer public, right? They’re private roads. Okay, so the neighborhood is gated the private roads. This means when the road gets old and torn up, and it’s time for a resurface or if the city is resurfacing all of the roads and coming around, they’re skipping you, you’re your neighbors, and you are going to have to split the cost to resurface your roads because they belong to the neighborhood because you put that gate up and now they’re not public roads. Right. Very interesting. That might be a potential con to a gated neighborhood. Yes. Okay, carry on. So,
19:08
well, I also had a situation recently and I thought this cuz I’m like, why couldn’t the situation have happened before we recorded the due diligence. It’s like, that’s what I love about real estate though is I have been in it for over 10 years and I am still learning new things. And this was a very basic thing. Yeah, I just learned I had a townhome listed okay, my listing and under things that the HOA covers, you know, it was roof, surprisingly, that this was a townhome and the HOA did cover the roof, okay, that was listed. And so we have a home inspection. And the home inspector says, hey, look, the shingles are just very brittle. It is at the end of life. If it needs a new roof, and I’m going okay, I thought it had a newer roof come to find out the HOA replace all okay, all of the roofs on the on the main houses but not the shingles over the garages. Oh because they had to stick to budget. Okay. And it was very urgent that they cover the living area. Okay. And these roofs were not connected because they were separated by a walkway. Yeah. So they were the garages were technically like detached from the house property. Okay, so for the HOA. So anyways, they’re talking about the garage, I come to find out. So I’m like, Okay, well, we need to find out when the garage is being replaced, okay. And I found out through all of this investigation that the HOA in this particular complex, so this would be something for you to know, during your due diligence to read the restrictions and to really understand what is covered. The HOA in this complex does roof replacement, if there are any repairs needed before it is replaced? It is on the owner. So if you have a leak, you patch it, okay, you do what you have to do until it is time for all of them to be replaced. Okay. Okay. So I was like, this is very interesting. So for the sake of writing a repair request, and luckily, I had a great buyer’s agent that was also learning with me, and we were both very experienced agents interested and neither of us had experienced that. perience this Yeah. So what she, how she wrote it, which I thought was very smart, and probably how I would have written as a buyer’s agent was licensed roofer to inspect the roof. Make sure there are no active leaks, missing shingles or other repairs needed. Okay. If there are seller to make all repairs, okay, then she wrote that the seller was to provide proof that the roof was on the agenda to be replaced in the near future a, she just they just wanted to know that it was on the HOAs radar. Okay. I thought that’s a great way to handle this. Yeah. Because we can’t replace it. Now. Even if you wanted us to, right, we can’t not your problem. So I had my roofer go out and he evaluated the whole roof and said, I will tell you it is old, you know, the shingles are very brittle. But nothing is there’s no missing shingles. I could not see any leak. Okay. You know, I think you just gotta hang on, he did tell the buyer after a next big storm, you may want to have us come out and reevaluate it. Yeah. Because it is so brittle. It’s not a super strong roof. Right? Oh, gosh. Right. So they were okay with that. There was really nothing for us to do. There was not any repairs needed. And then I went to the HOA president, and I had to get a copy of the minutes from the meeting, okay, where it showed that they discussed the roof of the of the garages, and that it was going to be coming up next year, as an item that needed to be addressed. Right. I also had an email from the HOA President telling me like confirming so she just needed something in writing to where it’s not well, the listing agent said this right. So that is how we handle that
23:39
pretty good. Isn’t that interesting? Very interesting. I know. I thought this, I will say and we do cover it a little in the due diligence episode. There’s a lot more due diligence, this might be a con to buying a townhome or condo because you really do need to know the ins and outs of that HOA which has a homeowner’s association. Like how is it being run? Who’s in charge? When are the dues do not just how much are the dues? Who collects them? Like what’s the budget for the year like what are the rules? What happens if I want to change my unit in some way like Who do I like there’s all these other it’s not just your they are alone and you’re detached home and you get to do whatever you want. You might depend on someone else to help you out if your unit gets termites right one I have sold before Oh my which was a townhome, okay, but it was the same situation, the roof and the exterior were covered under the HOA, okay, and the HOA provided the Pest Service. So it was under a termite contract, that then this particular unit got termites and so when my client went to research all of it and get it repaired as it turned out. There was no like damage waiver or whatever on this termite contract and they were just on the hook to fix this termite dam. Even though the HOA had a termite contract and paid for service, they couldn’t really prove when the last time it had happened for sure, like did all the units get the treatment? Well, I wonder, like the previous owners had put a paver patio and because it’s a townhome, so they had this cute little backyard very small, but it’s cute. But they had basically previous owner paver, the backyard area. And it went right up to the house and it was too close, like the slab wasn’t exposed and the termites were just running right underneath those pavers and right into the house to chew on the wall. Oh, gosh. And what should have happened is that the HOA had hired this pest company and the pest company should have said, these pavers have to move because there are a lot. It’s not showing the slab, which is a requirement of being you know, properly treated and under contract.
25:52
Interesting.
25:53
I mean, so really negligence, a little bit on the HOA and the pest company, and still my people were on the hook to repair
26:01
like they’re right there like welcome, spray it but we’re not making any repairs, a wall was eaten
26:05
up. Oh, no, it’s like a $3,000 situation. So that’s something to keep in mind to like when you’re doing your due diligence. If you’re going to buy one of these types of properties. Just be aware. Yeah, you have to know the rules.
26:23
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26:29
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26:48
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26:56
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27:09
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27:21
episode number 31 For more information, or head over to email templates, one Oh one.com. So dog one, the one you had that dog when recently where the condo didn’t know,
27:35
the HOA restrictions, had it was a condo development, and they had a restriction on how large of a pet you could have in the complex, right? I guess it kind of makes sense. You know, in certain situations. I realized I didn’t finish telling my story about please do. Okay, so I had this condo listed. I knew we were going to have to have a buyer that could put at least 20 to 25%. Right, right. Okay, I got an offer. I saw it was conventional financing. Okay. And I saw that they were putting 20% down. So yep, I did. Yes. The first thing I did though, was I emailed the lender. And I said, Hey, lender, I just received this offer. I think we have the lender template in our package of email templates. And then I just modified it to fit my situation of this is a condo, right, and I wanted to make sure that you felt good about your buyer. I see they’re putting 20% down. This is a condo, the lender immediately responded and was like no, this they are not putting 20% down. They are going 3% conventional, they would prefer to go FHA and in no way can they buy a condo. So in our market here in Louisiana, in our specific city, yeah. Cuz we don’t have a ton of condo? No, and we don’t have a ton of high end condos. Right. I would say our attached inventory is more price point friendly. Yeah. But then the condos are harder to buy because you have to have so much cash, right. So it’s like if you’re paying this price point, you probably don’t have that much cash, right unless you’re buying it as an investment. Yes. And so it’s this in our market. It’s kind of this weird spot where I really want to buy and own my own home but my budget only allows for a condo. But I don’t have enough money to buy a condo. Yeah, even though that’s my price range. Right? And so it’s this whole spy that’s kind of hard to navigate. It’s a little bit tricky. So I had to call the agent and let her know that while I really loved her offer we could not take it isn’t gonna work. I can’t take it because I have to and I had in the financing conditions like cash or conventional. There’s no FHA I want more VA rd not here, not in this condominium complex, right? She was surprised to come to find out she was a newer agent. And she thought that if you were going conventional, you were putting 20% down. Oh, and I also think that a lot of our older generation, I’ve encountered many parents helping their kids by that thought, well, to buy a house, you have to put 20% of their need to get that. So I think she just thought that it was not right, right. So we could not move forward with that offer, because the financing was not going to work out. We ended up selling to a cash buyer. And so we didn’t have quite as many hoops to jump through, right? Usually, when you have a lender financing a condo, they ask the HOA to fill out what’s called a condo questionnaire. It is a tedious questionnaire, that HOA management companies usually charge money to fill them charge money to fill them out. And they greatly dislike filling them out.
31:07
And they’re someone who’s really hard to just find someone who will fill it out at that complex. I mean, I’ve had to have buyers just move on. Yeah, we can’t buy here, even though we have the loan and a work. No one will fill this questionnaire out. And that’s part of the loan requirement.
31:21
Right? Well, so hard. I know. It’s just, you know, something to think about. Now, with a townhouse. They don’t typically do those things. I guess now, there’s not a townhouse questionnaire that I have heard of and marketplace? I don’t think so. But But I know in many other cities, the condo market is different because in our market, you are usually in a lower price point. Right? And other big cities, they like you said they are luxury condominiums.
31:54
Like, you know, in Chicago, or like New York, they all they did were condos, right. Like and that was high in anyway. What are some of the pros you think to buying a condo versus a townhome or both?
32:09
I think definitely lower maintenance. Yeah. And then just feeling like secure if you’re leaving to go out of town. Right. You know, like you’re not having to get someone to cut your grass and water all your plants. Yeah, stuff in the yard.
32:21
Well, right, less outdoor maintenance. Okay. I think that the pros to or like most condo complexes or even townhomes have some kind of amenity, a pool park, you know, some type of fitness center, maybe you can rent out a clubhouse space, like there’s something there that’s offering some sort of amenity to you. Definitely in the maintenance.
32:44
I had a client who was from New Orleans, and she moved to Baton Rouge for a job but did not want to sell her place in New Orleans because this was going to be somewhat short term. She bought a nice condo near LSU. Okay, and it was a one bedroom. But they had a common space that had like a meeting room and a kitchen. So she said whenever her husband was in town with her, she would go work in the meeting room. No one was ever in there. And it was like, This is my office. Right? It’s nice, it’s nice. And then she ended because she also said she was debating if she was going to have to rent a space okay to have an office when she was in Baton Rouge. And because of this common space she didn’t have to and I think that’s a nice like if you are a condo or townhome or look at your amenities and use them right so people don’t use they don’t even use they just they get excited for them. Yeah, right. Like no one’s in the pool today. Right? Go go to your playground private pool. Right.
33:51
I love that. I wanted to mention too, in townhouses specifically I think one of the pros is that you do get a little bit of yard space or a big patio, you have an outdoor space that’s yours condo, you might not even have a balcony, right you do. But in a townhome, you usually have something outside so if you have a pet that needs some room outside or something like that, a townhome is really a good option for that. I also wanted to mention that the fees vary especially here wildly from condo townhome it doesn’t matter. Right? Each complex the fees are very different a lot of times depending on what are the amenities. who’s managing it, are we paying a management company? How do we take care of all this stuff? Is there a lot of common space that needs to be mowed or whatever? So you do have to check your your HOA fees, a lot of times they’re paid monthly, sometimes they’re bi annually sometimes they’re annually and sometimes they cover utilities. Yeah, so you need to be thinking about okay, what exactly is covered in this fee? Am I not paying water sewer trash? It’s all in there. Okay, I need to like weigh that out. And that I think comes into play too, with investors, because yeah, sometimes those feet, those fees aren’t like paying into your mortgage, you’re not paying down the principal. That’s that money is gone, right? So cost of owning this property. And even if you had no mortgage, if you were cash investor, you got to pay this every month.
35:15
So that’s a really good point to consider too is that if you have a buyer that you are working with, and they are pre approved for a certain amount, and you’re really pushing that number, there are situations where HOA dues can push push them over their debt to income ratio. So they really need to understand that that number, that monthly note estimate that they were given when they got pre approved does not include any HOA dues, right? That is paid totally separate outside of your mortgage. And so making sure that you understand those numbers, you feel comfortable with that monthly note, you still qualify. And there are some single family detached homes that have HOAs. Yeah, they’re usually not near as expensive. But you may still have to get approval to paint the exterior of your home. Yeah, it just depends on where you are.
36:09
Okay, any other cons to condos? Or townhomes? I noise Oh, yes. And then you can tell me like going like it’s, it’s going to become a problem. That’s why the in unit is so well desired. Like in a townhome complex. It’s always advertised in Unit, well, then you only have one shared wall, that the walls are usually pretty thick, but not in every complex. I had a client who bought a note no lesson in Unit Townhome. And the people next to her were always like punching holes in the wall or something. It was awful.
36:43
Yeah. I mean, it was like, you’re really at the mercy of your neighbors. They’re so close.
36:49
They’re really close by so even a townhome is not exempt from noisiness Yeah, like you’re just close to each other. Okay, what did you have?
36:57
I’m still learning a little bit about this, but I had a condo listed. But the complex was now labeled as apartments. Oh, yeah. And I was like, I don’t understand why the sign says, you know, apartments, Main Street Apartments. When you’re telling me you own this condo? And then come to find out, you know, 10 years ago, someone bought the complex, which I don’t fully understand, right? Because how do you buy Oh, I guess they bought the HOA. They bought the tell me the rest of the grounds. Okay. And then they made a blanket offer to every single owner occupant, they bought the majority interest they did. That’s what they did. And then they were like, Oh, well,
37:49
let’s back it up. Okay, because I think this happens in other markets. Yes. So the few condos that we have here, typically are what are called condo conversions. So at some point in time, they were an apartment complex. They were not built like in Miami or Chicago, they build whole buildings brand new as a condo, it’s a condo, right always was a condo. It was always meant for owners to own the individual units are condos. I cannot think of too many, maybe one or two that were built as condos from the jump. And a lot of ours were condo conversions. And when I started in the early 2000s, that was happening. Someone would go or owned a whole apartment complex. And they would decide okay, we’re going to convert this to condos, we’re going to divide out the interest to each unit individually and then people could buy them and we’ll sell off the units and they’ll have their own HOA and they’ll run this condo complex. Well, in the case of the one you’re talking about, that’s what happened. Okay, it was an apartment complex. They decided to do a condo conversion they sell off units individually to individual owners everyone’s like this is my unit I own this unit and then later on someone you know little by little starts buying or that complex never sold off the brunt do you say yes, there’s still a chunk in America and while there was still the chunk they rented them like apartments. Yes. They don’t want to be empty. Yeah, I mean, they’re still a management office. Right? The lease always an apartment. Yeah. Hey, well, then when the new cars look where we are. Our units like that can be very affordable for an investor especially for an out of state or out of country investor.
39:40
So yes, then also because we are in Baton Rouge, and we have Louisiana State University. There are a lot of condo complexes around the universe that are lower price for student housing, right. So parents can buy somewhere affordable for their kids while they go to school.
39:58
Yeah, but I think what we’ll have bonus that complex had however many units left that didn’t get sold. It was a lot more than 50%. Right? And then somebody from somewhere else comes in and it’s like, whoa, by all those that looks like a great investment. And then they made the blanket offer to everyone who owned an individual unit like hey, I’m basically I’m trying to put back together this apartment complex to just be apartments. Yes. And now you’re trying to sell a condo just a random there’s only a few remaining holdouts. Yes. That were condos.
40:28
It’s very true. Now I will say I reached out to that person, okay, and was like, Hey, I’m listening. This you? Oh, yes, you own so many of them. Do you want another one? In this situation? I never heard back I had the title attorneys helped me find contact information I had the HOA helped me find it. I messaged this person and called and emailed and texted and left voicemails so many times and never heard back. Okay. They’re also out of California. So I don’t know why they bought it anyway.
41:02
But there is a never because they’re California, they could never get, you know, 80 units for this price.
41:08
Exactly. But I did have a situation earlier in my career where it was a very similar thing. I was listing a condo and heard through the grapevine of all these things that you know, these offers were going around. And so I contacted a person directly and sold it straight to an investor that was kind of there. Yes. And so it worked in that situation. Yeah. But yeah, it was just It’s again, I’m like, Wow, I’ve never encountered a situation like this where right, it was an apartment, and then it went back to condos. And then you know, it’s just trying to figure it all out. How do you
41:48
find is still listed?
41:51
We closed this week, someone bought it. Yeah, congrats. I know. And I really feel like it could be a great investment for them. Because it’s such a cute unit.
42:01
Right? Right. And so and at the end of the day, what are you buying the thing for? If you’re using it, like if you need it for a student or something like that? It’s great, great, great investment
42:11
in it. And you could walk to Tiger Stadium, right? Love it. Okay,
42:15
shall we move on to mobile homes? It’s our last our last type. Okay, the good news is these are usually less expensive, right? So more affordable properties. A lot of times they’re on nice pieces of land. Mostly they are rural. A lot of us neighborhoods don’t allow a mobile home just randomly in an eight like in a residential neighborhood. So they’re more rural typically. Let’s though talk about the cons.
42:41
Okay, financing. Let’s talk about that. This is how I was explained mobile home financing by a mortgage lender, great. Who does mobile home financing Oh, perfect. That most lenders do not look at mobile homes as real estate. They look at them as vehicles, okay. So the way that they instead of appreciating in value over time, like a house, they actually depreciate in value, like a car like a car, right? So that is why many lenders will not lend on them at all. If you have a client that is looking to buy a mobile home, there’s a few things that you need to know. One, if it’s a single wide versus a double wide, okay? Double wides are much easier to find out. Okay? Still very tricky, though, right? Very tricky. Okay. Many lenders will not do it if it is a single wide, so you would have to find some sort of creative financing. Okay. The second thing that we discover and these are like official bullet points, these are what I learned from my one transaction. Right. Okay. Does it still have wheels, right? Or is it anchored and grounded to the land? Got it? They require it for a mortgage?
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apron to Yes. Does it have the apron that’s around the bottom, the skirting if you great.
44:14
And so those were and then we had to have so like a vehicle, they have a VIN number, they have an actual identification number that was needed for that today. And then we also just had to look at how it was connected to the land for water and sewer. Right. Okay, those were the those were our main challenges in my one transaction. Got it. You took a deep breath. It’s all coming back to me.
44:44
You’re like I remember how tough it was. It was very tough, be more difficult. So a lot of times, here’s the key whether you’re a consumer or an agent, you have to always no matter what type of property you’re going to buy started financing, how you’re going to acquire the property. Is it cash? If not, is it a loan? What type of loan? Is it? What are the requirements? What properties are allowed? Like, for instance, if you’re gonna get an RD loan, this is rural development, what areas does that include? It’s not every single place. So you need to start. This is why your agent told you to start at the financing. Yes, they weren’t being difficult, but you literally don’t know what type of property to shop for until you have your financing figured out. And not everyone is eligible for every type of financing. Right, right. And so if you find that in your market, the only thing that fits your budget is a condo, but your financing doesn’t work for condos. It’s not going to work right now. Right? Like you’re gonna have to wait and save some money and try a different, you know, financing vehicle later. Okay, so that’s my number one thing I would say about that. Mobile homes, I do want to give another interesting tip that I learned that I had no clue about. They can be really excellent investments, because because they’re depreciating because they are movable and not an like we call a real estate here and movable. The taxes are based on the land with no. Right. No proper, like no home value on it. Right. Yeah, just the land value. So the property taxes can be significantly lower, like if you owned four townhomes versus if you owned four, you know, mobile homes. Well, your taxes on the townhome are way higher. Yeah,
46:31
that’s a good point.
46:32
So a lot of investors locally, I’ve known a few that loved to invest, because it really did. It was more cashflow. I had less expenses, the property tax was less, the rents were still good. They would keep their you know the mobile homes in good condition. You know, when one is in worse condition, you can sell it off and put in a brand new one, like
46:53
easy peasy, right? It’s just different. And that was another thing too. I remember when I was newer, I had someone come to me and said that they wanted to buy a mobile home and I was had never done one before. I’m doing all this research, we looked at several that were listed on a piece of land where it came with the land. That’s another thing sometimes you’ll see a piece of land listed and it’ll say mobile home on the property does not remain and it almost can’t Yeah, sometimes it can’t. If you are getting a land loan, right. There are certain types of land loans that they do not want any structure on the property at all. Yeah, not a shed. Not a mobile home. Nothing. Right. They just want to know that they are financing land only. Yeah. So interesting.
47:43
A lot of this is all fine. It’s restricted by the loan.
47:47
It is and what ended up happening in my sad story. Oh, no, was that she ended up going directly to a mobile home manufacturer. Okay, and financing one through them. Okay. And then she, for very cheap, rented some land and just put it on, they put it on? Okay. So it never really resulted in any kind of sale. And I was thinking, Wow, imagine if your client was like, Hey, Katie, thanks for your help. But I actually bought a house at Target. And I’m gonna just put it somewhere. It’s gonna go find someone like that’s what they can do with mobile. They can go and buy just the home without
48:33
the land. And then they were paying a land lease. Yeah. And I was very minimal.
48:38
I forget how little it was. But I was shocked. Yeah, well,
48:41
I mean, that’s just like any mobile home trailer park. I think a lot of times you can rent a spot. Yes. Just like if you went to an RV park camping and you rented a spot for a night, you can go to a trailer park or mobile home park and rent a spot and you could bring your mobile home in and hook it all up. And you could live there for a month or a year, however long the rents are and then you could move it on later on.
49:10
I know this is somewhat market specific when talking about price point. But what I am seeing right now in our market and with the interest rates being higher, the first time homebuyers that are trying to get into a home or if you are restricted on your budget, it is very important for you as the realtor to be able to educate your buyer on. Okay, look, because I’ve had to tell buyers, we can only look at townhomes. Right. We can’t look at condos because you don’t have 20% Right, but we can look at townhomes. We can look at houses they need and then I’ve had buyers say well, maybe I’ll just get a mobile home and I’m like, well the financing is different there too. Yeah. So really understanding and being the expert Yeah. So that you can advise your buyer Hey, based on your budget, and what you were looking for, these are are the things that we can look for? Yeah, I had a client who had the hardest time understanding that and kept sending me condos. And I just said, this one’s a condo. This one’s a condo. And I was like really trying to educate them on how to you know, cuz sometimes it’s clear in the name, it’s Main Street condos right Main Street townhome because it’s in the name wrong. Yes.
50:23
It’ll say hey, street townhomes, but it is a condo
50:26
or the sign of a Main Street Apartments. Right? Right.
50:30
You can’t trust them. So hard.
50:32
And so just understanding what is your financing options, right? Do you have the cash needed to accomplish the purchase for the type of property you are trying to buy and as the agents is important for us to be able to guide and direct the buyers so that you’re not wasting a bunch of time or showing property and writing offers when they were never going to be able to buy Oh,
50:57
right. Exactly. Yeah. Okay.
50:59
This was interesting. Right?
51:03
It’s like, that old thing that I say all the time. You don’t know what you don’t know. Right? And we’re just trying to be out here telling you what to know. Yeah, here’s what you’d like to know,
51:13
when I was presenting this topic. I was like, this is the most random. But we had this whole discussion about it in our office, and I thought, These are excellent. Well, we
51:25
you kind of forget the little things that you learn all along the way. And you know what else? This is a great point, especially if consumers are listening. This is why agents are important. Yes. I’m spending time learning and experiencing this so that you don’t have the problems that are like, Oh, I found the perfect condo, and I’m gonna buy it. And then my financing doesn’t work out and I already cancelled my lease. Like, yeah, I’m
51:48
homeless. I don’t know. Homeless, right. Don’t be
51:51
home. So scared. We’re in the business of keeping you from being homeless. Are you ready for a toast? Yeah. I’m really excited about this one. Oh, okay. Because it is from Kristin Oliver in Fort Worth, Texas. Okay. She’s toasting to Naomi to dark. I hope I said that, right. Yeah. Naomi listens every week and she has the show, and I love her post every Monday. And I’m going to tell you what Kristin said. She said I’m a fairly new realtor and Naomi is also a realtor at our brokerage RJ Williams and CO in Fort Worth, Texas. She told me y’all were her mentor when she first started real estate because she didn’t have a mentor at her old brokerage. Oh, I love listening to y’all and all the knowledge I have learned since
52:33
I feel like this is a great episode for that. We’re just here. We are here to be your mentor. Tell you what you don’t miss.
52:40
Here’s your here’s some information or some stuff. Maybe you don’t know. Or maybe you forgot, or you just need to be reminded a good revisit. I know. So cheers to Naomi. Thank you really so much. And thank you to Kristen for sending that in. Yeah. Okay, y’all have a wonderful day.
52:54
Goodbye. Goodbye. Thank you so much for tuning in to the hustle humbly podcast.
52:58
If you enjoyed this episode, please go to rate this podcast.com/hustle humbly and leave us a review or drop a comment if you’re listening on Spotify. If you have
53:07
an episode topic or someone you’d like to toast on the show, please email us at team at hustle humbly podcast.com
53:13
Find us on social media at hustle humbly podcast. Don’t forget to find all of the free resources at hustle humbly podcast.com/resources See you next week. This is the goodbye
