Make sure you ask these 10 important questions of a management company to avoid underwriting problems later!!
1. What percentage of units is currently on the market for sale?
2. What percentage of units are Primary vs. Secondary and Investment?
3. What percentage of units is presently occupied?
4. Does any one person own more than 10% of the condo project?
5. What is the percentage of reserves in the budget? (10% of annual income is required.)
6. How many unit owners are over 30 days delinquent on their unit?
7. Do the legal docs of the HOA contain language that protects the first mortgage rights
8. Is there any pending litigation in the association? (if yes explanations necessary)
9. Hazard insurance is to cover 100% of the insurable replacement cost of the project improvements, including indiv
idual units. The deductable should not exceed $10K or 1% of the face amount of the insurance policy.
10. Must contain $1MM bodily injury and property damage per occurrence.