Love Buying a Home – Week 11

Welcome to Week 11 of my Love Buying a Home series! This week, we’re diving into the essential connection between condo financing in Los Angeles and reviewing condo documents. Whether you’re considering a beachfront condo in San Pedro or a sleek unit in Hollywood, understanding the financial and structural health of the building is crucial to securing financing and protecting your investment.

Why Condo Financing in Los Angeles Depends on Document Review

When purchasing a condo, you’re not just buying a home—you’re joining a shared financial responsibility with other unit owners. That’s why reviewing the condo documents is a critical step. Lenders in Los Angeles are particularly cautious about buildings with weak finances or unresolved issues. Thoroughly examining these documents ensures you’re set up for success when it comes to securing financing.

What Happens When You’re Under Contract

Once your offer is accepted, you’ll receive a stack of condo documents to review. These documents will help you and your lender assess the financial health of the building and its management. Keep in mind that your ability to secure condo financing in Los Angeles may depend on the findings in these documents.

Key Condo Documents to Review

1. Financial Statements and Budgets
   • Reserve Funds: Adequate reserves (at least 10% of the budget) are essential for major repairs. Without this, your lender might deny your loan. Many Los Angeles condo buildings, especially older ones in neighborhoods like San Pedro, may require special assessments if reserves are low.
   • Operating Budget: This outlines how monthly fees are used. Confirm that a portion goes toward essentials like maintenance, utilities, and management.
2. Rules, Regulations, and By-Laws
   • Certain rules may affect your ability to rent or remodel your unit, which could also impact condo financing in Los Angeles. For example, some lenders won’t approve loans for buildings with a high percentage of rentals.
3. Delinquencies:
   • Lenders look closely at delinquency rates. If more than 15% of owners are behind on fees, your financing could be at risk.

Questions to Ask the Condo Associations or Property Manager

To go beyond the documents, ask these questions:

• Are there upcoming repairs or assessments, and how will they be funded?
• Are there legal disputes or pending litigation?
• What percentage of units is owner-occupied? (A high percentage of renters can complicate condo financing in Los Angeles.)

Why It Matters in Los Angeles

Los Angeles is home to a diverse range of condos, from luxury high-rises to charming San Pedro beachside units. Each comes with its own financial nuances that can significantly impact your purchase. Ensuring the building is financially sound is a crucial step for securing condo financing in Los Angeles and avoiding unexpected costs down the road.

Ready for Week 12?
Next week, we’ll cover What to Know About the Final Walkthrough—an exciting step as you get closer to your new home. Stay tuned for tips to make it a smooth experience!

Have questions about condo financing or buying a home in Los Angeles? send me an email—I’m here to help!

JDanielRealestate.com