Hawaii Condo Red Flags 🚩 The Hidden Costs Buyers Need to Know 🏠 HOA Risks & Rising Fee

You guys want to know something that's not so secret? Condo market is on fire right now. Rising insurance rates, under-insurance, skyrocketing HOEs. All of these things in combination are bringing a lot of fear to the market, but I'm still entering it. Here's what I do to vet out condos and townhomes for myself. When I'm looking for a house, I'm looking directly on the MLS because I am a real estate agent and I'm able to have access to it. If you're a first-time homebuyer, go to KortingHawaii.com. If you sign up at the link below, we'll be able to set you up on your own personalized alerts that are going to have the same properties as the other websites that you are able to access, but you're going to have more access to us answering questions for the properties that you're seeing. I'm a local 23-year-old first-time homebuyer looking for a condo. I'm keeping my purchase price under $500,000 with the HOA, which is a big thing because HOAs do impact the total purchasing power and I'll be actively looking starting January 1st, 2025 and hopefully live in a home that I own come March. Now, a little disclaimer here. I am a real estate agent, so my process is going to look a little different from you. I'm going to walk you through that process, the red flags, green flags. Let's start. Here's what I do to vet out condos and townhomes for myself. There's two major things that I'm looking for. One is no amenities. I don't want a pool. I don't want a tennis court. What I want is homes, sidewalk, the grass, and a parking lot. Not a parking structure. I want asphalt. I want the complex that has the least amount of things that the HOA has to upkeep because that maintenance fee that you're paying for is paying for everything. That asphalt is going to have to be replaced in 20 years, so they're already accounting for that budget. The siding, the roof, all of those things, the maintenance guys that are cutting the grass in the common areas, the sidewalk at some point is going to have to get replaced. If you have a swimming pool, tennis court, basketball court, a weight room, all of these things are going to come with an increased cost for maintaining the complex as a whole. So when I'm looking at a property, I want to pay the least amount of HOA and I want to have the security that the HOA isn't going to skyrocket. The first thing I'm looking for, no amenities. Second, the insurance issues. You might have heard hurricane insurance is the big buzzword. It's the agent saying, hurricane 100%. Great, but that's one out of the seven questions that we want to get answered before we even move forward on our property. What about deductibles? What about special insurance policies specific to Oahu? These are the things that you want to dig in to make sure that you had the least amount of risk when entering a building that the HOA is going to skyrocket. Now, I'm not an insurance guy, but let's just walk through a simple scenario here. If you have, I'm pulling a Derek right now. If you have 10% coverage, you're paying an annual premium for that coverage. At some point, that building is going to need to get to 100% coverage. What happens to the premium when you go from 10% to 100%? It goes up. You're buying more coverage. So what happens with the condo market now is there's a lot of under-insurance. So when I'm looking at a property, I want to make sure that from the start, when I enter, all of these premiums are set where they need to be with the verbiage that lenders like to see. Insurance coverage is one thing, but there's six more questions that we're going to ask the insurers for these complexes before even moving forward with an offer. With that, find the list of properties that have the proper insurance and have no amenities. Now, if you want those questions, sign up at cortinghoa.com in the link below. In escrow, you're going to have these things called condo documents or association documents. So one of the contingencies within the purchase, you're going to have time to review those documents. And in there, there's going to be a reserve study. It is the projected next 30 years worth of increases for that HOA. Now, in some rare cases, we'll be able to find that document prior to escrow. Whenever I'm talking to clients, I'm trying to set the expectation that we're going to be in escrow when we have those docs. We'll try our best to get them, but expect to have them during escrow. During the escrow process, the underwriter is going to be looking at those condo docs. You will have time to review them as well. And there's a third party company that I do recommend clients to have those second set of eyes on the doc. Having a review company help you out with digesting all that information is something that I highly recommend. For me, I personally haven't had my conversation with my lender yet, but I do have all of my documents into the lender already. My 1099 form because I'm self-employed. They're just waiting on my 2024 tax return and my new updated bank statements in order to fully give me that pre-approval. I'm going to be commuting a lot. I need to be able to commute everywhere at any given time. That's the reason why I chose Mililani. It's not near anything, but it's near everything. You're 20 minutes from North Shore. You can shoot down H2 and go East or West. It's a really great commuter if you have to go everywhere. Next, who's going to be living in my house? It's going to be me and my girlfriend, just us two. So really one bedroom and another for an office. Living area, it is what it is. I'm going to be commuting or either working in that office, taking calls or doing consoles. So that second bedroom is a pretty big priority for me, just so that I have a space to do work. Speaking of two people living, we both have cars. So having one parking space could work because I could do street parking, but I would prefer having two parking stalls for two reasons. One, ease of use. I'll be able to park. My girlfriend will be able to park. And two, if and when it comes time to sell later down in the future, that two stalls will sell at a higher price than the same unit with one stall. And one of the last things is going to be condition of the property. Now, everyone has their own preferences, their wants and their needs. For me, I do not want a brand new flipped property. And I want to pay that premium for the quartz countertops, for the white shaker cabinets, the gray vinyl plank. I want an ideal world to have a renter that was living in there previously. It's now vacant and needs work. I want to be able to rip out the carpet. I want to change out the cabinets, put my own countertops. I want to be able to do that myself because I know that I can do the work and hire professionals to get my property to look like the one that flipped in a longer period of time. I can do it for a cheaper cost and reap more of that benefit on the exit. Now, I'm not going to do all the updates right away. I'm going to do what I need to do so that when it comes time, maybe five, 10 years in the future, I'll be able to do the work myself and be in a way a flipper making the property in its best form while buying it at the cheapest price and selling it for the most premium. So things are coming up next after this. And just like I'm having consoles with clients of our own, I'm putting my money where my mouth is to purchase a home for myself. So these conversations that I'm having with you about these condos, about insurance, they are personal to me as well because we're in the same boat. So stay tuned, lender things and next steps after the initial console are going to be coming up. If you have any more questions or want to talk one-on-one, the link below Kortimoe.com, fill out our contact form and we'll have a conversation about your specific process, just like what I described to you.