Orlando Condo Conversion Community Goes Downhill…

I received this email recently and asked the sender if I might share it since her story isn’t unusual given all that has happened in the last couple of years. Names have been removed to protect the innocent, yada yada…

“I am a condo owner at …… Condominiums. I purchased my condo back in December of 2006. My husband and I bought in to this beautiful community believing that it was going to be exclusive to condo owners. As the real estate market took it’s fall the owners of this property started to rent out the remaining units. Now our once beautiful property is turning into a Apartment community again filled with people that do not take the care in their community as owners do. I have noticed that this property is heading on a downward spiral. There is no security at night and anyone can just come in to the property. The property itself is poorly lit at night. I counted over 10 street lamps out and this does not include some of the hall way lights that are in each building. Just in the last weeks some of these events have taken place.

The property manager was threatened by a renters son. He was trying to hit her on the head after she reprimanded him for causing havoc to the property.

HOA cartoonMy husband and I were shot at by something while helping my brother move into a unit.

Just the other night I watched a drug deal go down right in front of my home, I am fairly certain that the condo underneath me is being used to store some type of drug.

After listing what has happened in my neighborhood you would think that I live in a not so nice part of town. But I don’t. I live on ……… 5 minutes away from Windermere.

It is very disheartening seeing my investment go down the drain. To make matters worse the owners of this property do nothing but send me a bill every month for 135.00 for my HOA. They say I have no say in the budget until 100% of these units are sold. My question to them is, How can you sell condo’s when the place looks like an apartment community?

I have tried many times to make contact with the property owners and request a meeting. To date I have met with them once in October of 2007 when they appointed me as “community director” of the HOA.. Which what I feel is a nothing title they gave me to try and shut me up. I feel as if my hands are tied and have no one to help me work these problems out.

As of now my husband and I just want out. We plan to refinance our mortgage in December and rent out the condo. It is just a shame because we put so much heart into our condo by re-modeling it just to turn it over to renters. We would appreciate any advise you could give us. Thank you for your time.”

Thanks for taking the time to write. I wish I could do more to help, but the truth is that this is happening all over Orlando. So many condo developers, be they involved in new construction or conversion, are finding sales so difficult that they are resorting to renting out unsold units in order to help pay the bills. You can’t blame them, but the effect is often that the community begins to decline as a result.

Believe it or not, the problem is not so much to do with renters per se, rather the fact that owners are being allowed to rent out themselves without reference to anyone but themselves. If units are going to be rented out then it might not make immediate sense, but it’s actually better if the old managment company stays onsite and takes care of the rentals properly just like they used to (in the case of conversions). This is because companies like Zom generally do a pretty good job at vetting applicants, doing credit checks and criminal background checks etc. If you don’t make the grade, then as Heidi Klum says “you’re out”. Contrast this situation with the initially more appealing idea that the entire community is successfully sold out – but to who? In most cases, however the developers, who need every sale they can get, have not put a cap on the number of investors that may purchase and are unwittingly causing the future demise of their property. Because, when all those out-of-state, cash-strapped investors want to rent out their property, too many of them decide to do the “management” themselves in order to save a buck and take a check from the first person who slaps one in their hand without doing their due diligence. As a result, these communities wind up with bad tenants who don’t pay their rent – and wind up being evicted.

So what can you do? Well if the condo docs don’t effectively limit the number of investors then it’s an uphill battle to change the language – although it can be done. At my own condo community, we faced exactly this problem and the best we could do was pass a motion so that all investors who wanted to rent out their units would have to be current on their HOA dues to do so. It was a round about way of doing things but with so many of the investors behind or delinquent on their dues, it forced those absentee owners to pay up or lose their tenants. And with all that extra badly needed cash, we were able to hire some security guards, who soon put a stop to drug dealing renters.

Unfortunately, if the developer hasn’t sold enough units yet to turn over the Association to the owners, then the developer has control of the HOA and makes all of the decisions him (her)self. And that can be a problem. If you got a good deal on the unit and you can make it cashflow or break even with the hope of future equity, then it might still be worth hanging on to – otherwise, you might want to sell it before matters get worse. If you owe more than it’s worth and your credit is already in the toilet, you might even consider a short sale – and I’d be happy to explain what that involves if you’re interested.

Meanwhile, call the police every time something you don’t like is happening – and encourage others to do the same. And if you think the condo below you is being used for drugs – the same applies. We posted an article on this not so long ago and you can read about condo meth labs etc. here.

2 Comments

  1. Marcus,

    Are there any condo or townhome communities in the Orlando area that are 100% owner occupied? It seems the problems with investors renting condos/townhomes would be eliminated if the condo CCRs had strick rules prohibiting leasing/renting units.

  2. Hi Craigg, I think 100% is stretching it but certainly there are places that have an ‘investor cap’ which prevents investors from owning more than say, 25% of property in the development. This makes for a more stable ‘homeowner’ environment.

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