- Condos – Most condos are not a problem but we have continued to see problems crop up. In general, most of these issues show up in large complexes with lower end prices. That’s right where new buyers may want good financing! The problems come in places where many owners are delinquent with payments or too many units are in foreclosure. Sometimes is because one owner owns too many units. Sometimes the complex has pending litigation. Remember that it only takes one new buyer to swing the curve in the right direction.
- Vacation Rental Condos or Condo-tels – Generally, vacation rental condos have financing but require a 35% down payment compared to 20% down, 2nd home financing. A vacation rental is a condo that allows short term rentals (< 6 month lease and typically 1 night minimum). While vacation rental ability is determined by county zoning and sometimes limited by AOAO organizations, what is defined by lenders is determined by a mix of things. Is there a front desk where vacation renters can check in and out? (if yes, then usually considered a cond0-tel). The other thing is the percentage of owner-occupants. Based on this number, you can get financing with 20% , 30% or 35% down. One really interesting thing to note is that most vacation rental complexes don’t file their “owner occupant” status correctly which they file yearly. Most managers look at where the tax bill is sent to determine % owner occupancy. But for the purpose of lending, if an owner stays in their condo for 14+ days/year, they are an “owner occupant”. So a few popular vacation rentals like Kamaole Sands and Maui Kamaole have clued into this and you can now get 80% financing there. I heard about this from my friend, Rick Smith who is a lender at First Hawaiian Bank. He’s listed as a recommended lender on my financing referrals page. (Thanks Rick for that tip!) Also, always check with local banks as they often have special promotions with lower interest rates on vacation rentals.
- The house needs minor or major renovation to be inhabitable. Look for a renovation loan! In this loan, you must get a contractor prepared estimate and work with renovation specialist who makes sure you stay on schedule to get work done. It’s not easy, but it is being done all the time! The loan is based on the “after renovation value”. And you can get these loans for almost any enhancement and with a very low % down payment (5%). It’s a great way to make your new home perfect, before moving in.
- Land loans. Most conventional land loans require that you build a home on the land within a determined amount of time (1-3 years). They also require 35% or more down. But check with local credit unions for agriculture/farm loans if you don’t want to build right away.
That names a few issues. What’s yours? Let’s find a solution!