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 […]
Originally written August 2013 · updated June 2026.
“But the listing agent said there was condo financing!”
Sure. For you — maybe. Not necessarily for the person who buys it from you.
Here’s the whole idea in one line: with a condo, the financing risk is on the exit, not the entry. We’ve written a lot about lending and warrantability — but the part people miss isn’t what makes a project warrantable, it’s why it matters.
It matters because of this: when you buy from the developer, you’d better make sure the same (or better) financing will be there for whoever buys it from you someday.
For a lender to write a loan in a condo project, the project has to clear a stack of criteria. The questionnaire your lender sends the management company checks the number of units sold, the number rented, how much is going into the reserve account, and how much of the building is commercial — plus about 15 other measurements. Answer any one of them the wrong way and the project is non-warrantable, which means conventional mortgages simply aren’t available to a buyer.
No conventional financing means a much smaller pool of people who can buy. And a smaller buyer pool means lower values. Full stop.
The old Miller & Rhoads project at 6th and Broad is the cleanest example of buyers getting burned by not understanding how finance drives condo values — and of local lenders who didn’t fully understand the risk either.
It was developed as a hotel-plus-condo with over 100 units to sell. Through a mix of private financing, cash sales, and a few lenders willing to offer some mortgage-esque products, the developer moved about 25 units before pulling the plug. The most common buyer was a medical student or resident, often using cash or debt from a local institution — one that no longer lends in the building.
So where does a buyer go for financing there now? The honest answer: they can’t get any. And what kind of demand exists for a home you can’t finance? Almost none.
Here’s the mechanism that does the damage. When a project tips into being a rental project, conventional mortgages go away — and values fall somewhere between 30% and 50%. The only money left is at higher rates, lower leverage, and shorter terms. That’s a powerful drag on value.
Buy into the wrong financing situation and, by the time you go to sell, the market for your unit is dramatically smaller. Understand why that happens, and you’ll be a far sharper buyer.
Rick
Update — August 2026: Fannie Mae’s Lender Letter LL-2026-03 changed several of the rules described above — most notably retiring the “more than 50% investor-owned” cap for established projects and raising the reserve floor from 10% to 15%. For the full breakdown of what helps Richmond condos and what hurts, see Fannie Mae just rewrote the condo rulebook.
