I am interested in purchasing an HOA's interest in a property. There's 1st for 323K. However, the HOA foreclosed for 5700.00 I can take over this property by paying. The property is worth 450K. Is it worth it to do it? The property is in CA.
2 Answers from Attorneys
Lawyers are cautioned to give legal advice, not business advice. So, I'll defer attempting to answer the specific question (Is it worth it?) and mention a few things you, the prospective investor, should research before making your decision:
(1) In addition to the 1st, what other loans and liens would your equity interest be behind? Is there a second? A third? Mechanic's liens? Judgments? Assessments? etc.?
(2) Who says the property is worth $450K? Zillow? the HOA? A licensed appraiser with recent local experience?
(3) Deals like this draw experienced speculators like flies. Maybe you should investigate why it's being offered to you while the foreclosed-property speculators aren't buzzing around.
Maybe it's a good deal, but it's a tough business, full of experienced risk-takers who have been around the block a few times. Get good advice, do research, and act thoughtfully.
You need to be aware that you will still be subject to the first deed of trust on the property, which is not wiped out by the HOA's foreclosure.
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