Frustration In The Center Grove Townhouse Market
Yesterday I had a lunch meeting with a prospective client at where else but Greenstreets. The topic was his recent frustrations with the townhouse market in Center Coconut Grove. He is a smart, qualified, educated buyer who has spent quite a bit of time studying the townhouse market here in the Grove. He is looking to buy a distressed townhouse but has been having trouble with the financing.
We met because he wanted some insight into how he could buy a distressed townhouse in the Center Grove even though he is not a cash buyer.
Why is financing so hard to come by for a distressed townhouse in Center Grove?
Since most Center Grove townhouses are classified as condominiums, any person looking to get an FHA or Fannie Mae loan must have the condo association approved for its soundness. Getting approval is not an easy or timely task, and typically if 1 of the 2 townhouses in the association is either a short sale or foreclosure, approval will be denied and FHA or Fannie Mae financing unavailable. James Venney (mortgage broker with Gibraltar Private Bank and Trust) tells me that if this is the case, the buyer will have to put 25% down or be well qualified and go through a portfolio loan product (similar to a deal that James and I just completed together).
Your other options are to buy a non-distressed townhouse where 20% down is available for well qualified buyers (not guaranteed). Or, to buy a single family house where financing is available starting at 3% for FHA or 10% down for a conventional loan (these guidelines apply to distressed properties as well).
In the future:
There is a movement among mortgage brokers to try and get the townhouses of Coconut Grove exempt from the condo guidelines. Don’t hold your breath, that movement will likely take a long time to come to fruition.
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