Richmond VA Condos

  • A Must Read for Condo Buyers
  • 804.767.7566
  • The Sarah Jarvis Team
  • Big Projects
    • Ginter Place
    • GreenGate
    • Libbie Mill
    • Monument Square
    • Rocketts Landing
    • Riverside On The James
    • Vistas on the James
    • West Broad Village
  • By Neighborhood
    • Downtown Richmond
    • Fan and Museum District
    • Church Hill
    • Jackson Ward and Carver
    • Manchester
    • West End and Glen Allen
  • Around The Colleges
    • Near VCU
    • Near VCU Medical (MCV)
    • Near VUU
  • One-Click Searches
  • Blog
  • Stats
  • Rentals

Buy Now, Pay Later – Understanding Condo Financing

Miller and Rhodes is the worst example of how buyers got burned by not understanding the impact of finance on condo values. The local lenders who offered a limited number of loans also failed to understand the risks.[/caption]

‘But the listing agent said that there was condo financing,’ they said in a distressed tone.

‘For you…but not for your buyer.’

Stated in its most simple form, the risk for a buyer of a condo is on exit and not on entry.  In many of the articles which have been written for the RichmondVACondos.net site, the issue of lending (and more specifically – WARRANTABILITY) has been the topic. While what defines being ‘WARRANTABLE’ and what affects it are important, understanding why it matters is often misunderstood.

It matters for the following reason: when you buy your condo from the developer or builder, you need to make sure that the same (or better) type of financing is available to the person who will buy it from you when it is your turn to sell.

In order for a mortgage lender to do a loan for a condo project, the project needs to meet many criteria.  The questionnaire requested by your lender that is filled out by the management company checks number of units sold, numbers of units rented, amount of money going into the reserve account and the amount of space within the condo dedicated to commercial purposes (plus about 15 other measurements.)  If any one of these questions is answered incorrectly then the project is considered ‘NON-WARRANTABLE.’   Being non-warrantable means that conventional mortgages are not available to a purchaser.

So lets look at the

Miller and Rhodes project on 6th and Broad Street…

The project was developed as a combination of hotel + condo with over 100 units of condos to sell.  Through use of private financing, cash sales and lenders willing to offer a small number of mortgage-esque products for buyers, the developer was able to sell about 25 of the units before pulling the plug.  The question now for those who bought is not only who will buy it from them, but how and at what price?  The most common buyer at M/R was the medical student or resident.  Many of these were sold with cash or debt provided by a local lending institution (who no longer makes loans at this project.)

So…where does a buyer go to get financing now?  The real answer is that they cannot get any.

So…what kind of demand would you expect there to be for a property with no financing available?  The real answer is, almost none.

When a condo project becomes a rental project, conventional mortgages are no longer available and values fall by somewhere between 30-50%.  The only loans that are available are at far higher rates, far lower leverages and for far shorter terms…this has a very powerful negative impact on values.

To summarize, the developer may have arranged for mortgages to be available you when you buy, but not for the next round…the market needs to supply those.  If your project is not considered warrantable at the time you go to sell, the market for your property will be considerably smaller.  Understand why this could occur and you will be a far sharper buyer.

 

Related Posts

Filed Under: Featured Article, Finance Updates, Inside Scoop, Market Updates, Near VCU Tagged With: condo financing

804.767.7566


How Do I Schedule a Showing or Find Out More?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it's my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.
kendall@richmondrelocation.net

Working with Buyers

Working With Buyers

I am Sarah Jarvis, Broker at One South and I work with our buyers. I bring 20+ years of experience to our Buyers Advocacy program and take great pride in helping our clients understand the RVA marketplace.
sarah@richmondrelocation.net

What You Should Know About Condo Financing

Price Point Searches

  • Condos, less than $125,000
  • Condos between $125k and $200k
  • Condos between $200k and $300k
  • Condos between $300k and $500k
  • Condos over $500k

# Bedroom Searches

  • Condos with 1-bedroom
  • Condos with 2-bedrooms
  • Condos with 3-bedrooms
  • Condos with 4 or more bedrooms

By Neighborhood

  • Condos In Downtown Richmond
  • Condos In The Fan/Museum District
  • Condos In Manchester
  • Condos In Jackson Ward and Carver
  • Condos In Church Hill
  • Condos in West End, Short Pump & Glen Allen

Big Projects

  • Ginter Place
  • GreenGate
  • Libbie Mill
  • Monument Square
  • Rocketts Landing
  • Riverside on the James
  • Vistas on the James
  • West Broad Village

Find Us

One South Square Logo

2314 West Main Street
Richmond, VA 23220
804.767.7566
kendall@richmondrelocation.net

Accessibility
Copyright

Lending

Richmond Home Loans Thru Southern Trust Mortgage

We offer competitive mortgage solutions with a commitment to exceed your expectations. We’re local industry experts who are also your friends and neighbors. Whether you want to communicate online or in person, we’re just a call or click away. https://onesouthrealty.com/mortgage-financing/

Tweets

  • Just now
Our Network of Sites: RichmondVaNewHomes.net, RichmondRelocation.net, RichmondLuxuryNeighborhoods.com,
RichmondFanRealEstate.net, RichmondVaMLSSearch.net, ChesapeakeBayMLS.com
Housekeeping: RVA Condos sitemap, Listings sitemap

All of the information displayed here is deemed to be gathered from reliable sources but no warranties, either express of implied, are made part of this site. Additionally, the IDX Feed for listing information may contain descriptions of properties not represented by One South Realty, its agents or staff and any violations or misrepresentations are the sole responsibility of the listing brokerage of the subject property in violation.


Equal Opportunity Realtor Disclaimer

I agree to provide equal professional service without regard to the race, color, religion, sex, handicap, familial status, national origin or sexual orientation of any prospective client, customer, or of the residents of any community. Any request from a home seller, landlord, or buyer to act in a discriminatory manner will not be fulfilled.