There is a theft of property going on around America today. Real estate values are being depressed even further by legal manipulators of condo home owner’s associations (HOA). High-jacking a HOA is an inexpensive way to crush a project’s value.
Who wants to buy into a condo project where the owners are fighting, or are in litigation? If you wanted to buy up condos on the cheap, what better way to lower prices? Get the HOA to start infighting, or fighting a developer. The HOA pays the legal fees as a group and people start dumping condos just to get out of the legal expenses or the emotions of ownership with neighbors they can’t stand.
If you’re a condo investor, you can sit back, flame the anger and make ridiculously low offers to buy the distressed condos.
This is the simple plan A being employed by some predatory or “vulture” buyers. See Vultures can’t feed until something is dead or near death. Vultures don’t have the energy to kill their prey, they leave the heavy lifting to other stronger creatures.
This is not a dirty little secret, vulture funds openly brag of their wisdom to lazily wait for the better deal.
Now on to the game plan that is being employed by some hotel developers/operators. Step 1, find a ‘fractured’ or partially sold condo hotel project. If the developer is still in control of the HOA it is much easier. He can raise the HOA dues by inflating management fees and grossing up costs.
With crippling high dues, the condo owners begin to default on mortgages, or stop paying the dues and revenue of the hotel rises by taking more revenue to cover the unpaid dues. The hotel operator wins. With the additional hotel revenue, the hotel operator can buy back rooms from the banks who have foreclosed.
Because the HOA dues are so high, the value of the condos plummet, lowering the developer’s buy price to drastically below ‘key’ value - a bargain buyer’s paradise! One giant fraud to steal property from unsuspecting consumers.
Ask yourself, who benefits from lower property values? Is this a conspiracy theory or a brilliant and devious chess game playing out every day?
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