Advice please on downtown Kelowna condo

[MKBridge]

Hi All:
I have an offer accepted on a completely redone downtown Kelowna condo. I have been meticulous in my cash flow analysis for five years, and completed much of the diligence. Satisfied with everything so far. For people who know Kelowna it is near Richter on Rowcliffe, behind the Kelowna high school empty lot. There are some great plans in the works for the empty site across the street; walkways, condos, shops and a 5 acre park that will be right across from the building. I thought this could be a good investment in an area that will be going through gentrification. It is only a few blocks to Okanagan lake and the main downtown area.
I finally got the condo docs yesterday and there were a few things that caught my attention. There was mention regarding complaints of an owner who has people over all hours of the night and disrupting many in the building. RCMP called lots of times. Oh yeah, and it is the suite below mine! However I have not read anything in the meeting notes regarding this since the December 08 AGM, but there were a couple times it was documented before this. Also, there was one mention only, again in the Dec 08 AGM regarding taking a poll to see about putting a rental restriction on the building. Currently there are none, and if I purchase the unit that will be 14 out of the 24 units that are rented out. Is this something that all the owners get to vote on, or is this something the condo board does on its own?
I am going to call the condo management group on Monday to get more information on these two issues.
These are my two concerns. If I find out the owner is still there but quiet these days (he had been getting lots of fines from the condo board) is this sufficient? And the hint of rental restriction makes me nervous. What if I have a tenant in there with a lease?
Any insights would be much appreciated, including thoughts on the park across the street. I was excited by this, but now I am wondering if this would maybe attract illegal activity at night.

Thanks Kathi

 

[ChrisDavies]

QUOTE (MKBridge @ Aug 29 2009, 07:53 AM) Hi All:
I have an offer accepted on a completely redone downtown Kelowna condo. I have been meticulous in my cash flow analysis for five years, and completed much of the diligence. Satisfied with everything so far. For people who know Kelowna it is near Richter on Rowcliffe, behind the Kelowna high school empty lot. There are some great plans in the works for the empty site across the street; walkways, condos, shops and a 5 acre park that will be right across from the building. I thought this could be a good investment in an area that will be going through gentrification. It is only a few blocks to Okanagan lake and the main downtown area.
I finally got the condo docs yesterday and there were a few things that caught my attention. There was mention regarding complaints of an owner who has people over all hours of the night and disrupting many in the building. RCMP called lots of times. Oh yeah, and it is the suite below mine! However I have not read anything in the meeting notes regarding this since the December 08 AGM, but there were a couple times it was documented before this. Also, there was one mention only, again in the Dec 08 AGM regarding taking a poll to see about putting a rental restriction on the building. Currently there are none, and if I purchase the unit that will be 14 out of the 24 units that are rented out. Is this something that all the owners get to vote on, or is this something the condo board does on its own?
I am going to call the condo management group on Monday to get more information on these two issues.
These are my two concerns. If I find out the owner is still there but quiet these days (he had been getting lots of fines from the condo board) is this sufficient? And the hint of rental restriction makes me nervous. What if I have a tenant in there with a lease?
Any insights would be much appreciated, including thoughts on the park across the street. I was excited by this, but now I am wondering if this would maybe attract illegal activity at night.

Thanks Kathi

I think you`ll see more vagrant traffic through the park, similar to down the road at Parkinson Rec center, but it won`t be bad.

The rental restriction could be a killer, and the only way to do it is see what the results of the poll were, seeing what the feeling of the building is.

 

[MKBridge]

Thanks Chris for your input. There has been no votes on rental restrictions, it has only been mentioned as a one liner in meeting notes from last December. I will discuss this more with the condo management on Monday.
Kathi

 

[Dan_Eisenhauer]

Kathi, rental restrictions are one of the hidden threats of investing in condos in BC. Many investors think they are covered by a "Grandfather Clause" if a unit was rented before the impostion of the restriction. To some degree that is true. However, it is not absolute.

If the imposition is a total ban on rentals, you may continue to rent to the original tenant for as long as they live there, be it fifty days or fifty years. Once that tenant moves out, you have one more year to either rent or sell the unit. Most investors sell, for obvious reasons.

If the ban is partial, or restricted by numbers or percentage, there is no problem for those within the limitation quantity. However, if the number of existing rental units at the time of the imposition is more than the limitation, the first units to change tenants fall into the category described in the second paragraph... until the number of units rented reaches the limit.

If you have a condo rental unit, it is important to keep that tenant very happy, so you are not required to sell.

Then we have those buildings without restrictions today. One would think you are safe to invest. Not true!!! Some smart ass owner can easily stir up emotion so that other owners will think it is in their best interest to impose rental restrictions. This is a slippery slope because investors in most building are out numbered by residing owners, and rental restrictions are next to impossible to head off at the pass.

 

[MKBridge]

Thanks for your input Dan. You are great at giving me some insight into my issues. I talked again today with the realtor. The owner of the condo is the president of the condo board. He says the issue got shot down pretty quick, and the owners who raised it have since moved. `Course he is looking to give the right answers because he is trying to sell.
However if things go through, there will be a total of 14 of the 24 units rented, so according to the president it would be impossible to pass any rental restriction with the required 3/4 of owners voting in favour. At this point anyhow. I can`t envision a total rental restriction within the next several years.

Thanks again Dan. Are you still heading to the Okanagan sometime as you previously thought? Send me an email if you are.

Kathi