Hey RE monkeys, I'm working on my first deal involving a condominium building that also has ground floor retail. I'm not familiar at all with condominiums or their risks and was wondering if anyone could give me a quick breakdown of the must-address factors and the why's.
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Can you provide any more details regarding your project? What will you be doing? Do you own all the condo units in the building? Do you plan on renting them or selling? Do they need to be renovated? There isn’t really much of a difference between condos and regular residential. The whole point of a condo is so that the individual unit can be sold/owned separately from the rest of the building/units and have its own unit deed
We are getting out of the residential condo piece immediately, looking to acquire the retail mainly. My main concern is how a condo association (with both commercial and residential member votes) could impact the retail portion as the condo association will control the land and any common space. Other than that, I'm just trying to get smart on condos in general and I'm sure there's questions that I don't even know I should be asking.
This is out of my expertise and sounds like more of a question for an attorney, but if you own all the condo units, can’t you draft new condo association docs to fit your needs?
What do you mean when you say condo? Individually owned residential units or an apartment building above retail both owned in separate condos?
Is this an existing building or a ground up development? Most mixed use commercial deals are condo structures that have an HOA and each of the uses (apartment, retail, office) is owned in a separate condominium. There is an HOA board that governs the entire asset and allocates common expenses according to the docs. If this is a ground up play then I would be aware of how zoning would change when building condos vs on separate parcels as condos are usually more favorable with set backs and fire codes etc.
If this is an existing asset I would just make sure you have a good attorney that can help you understand the condo docs and most importantly you want to understand the debt financing and valuation impacts to the retail portion if you were to sell the rest of the building.
If you provide more detail I can offer more insight.
By condo I mean an apartment building with individually owned units above retail. The retail portion is separate but still has votes in the overall condo association for the building. The building is also existing.
If you were a lender or buyer, what would the high-level impacts be, and how would you be sensitive to owning just the retail if the owner had sold off the above condos (and thus the majority of HOA votes)?
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