As of today we have just learned that the complex known as Villa Cortina at 801 N Winchester Blvd. is having talks of litigation with the developer to have repairs done to the building. As many of you might already know when a property goes into litigation it usually means that lower prices are to follow. The reason for this is the fact that lending for a property in Litigation has usually been hard to find since banks will not lend on a property that is in this situation. This makes the building available to only ALL CASH buyers and as you might guess all cash buyer always want a prime deal.
We have seen prices in other litigation properties drop very fast in the past few years with Brickyard and Sonora Condos being good examples. The Villa Cortina might be hit extra hard since more than half the owners in the complex had purchased during the very peak of the real estate prices. Already we have seen prices drop to about half what they were first purchased for but the litigation is sure to add additional pressure on the values.
Buying condos during a period of pending litigation can be a wise investment for investors seeking to buy at rock bottom prices, holding them as rentals during the improvement phase, and then selling them when the “dust settles”. But the investor buyer may have to put up more cash, as lenders may not be wiling to lend.
I have talked with lenders recently that are able to loan on these type of units. They do require a higher then normal down payment. If you would like further information please do give me a call.
Just know that the values can also go down instead of up after improvements, the key being the shortfall between builder provided repairs or monies, and the cost of the improvements that the Judge decides to award the HOA.