We all know what oceanfront real estate prices are like, and being able to purchase a condo in Marina del Rey for less than $1,000,000 just seems unreal. You can own a 1,000-square-foot condo with a stunning view of the marina for just $569,000.
But it’s not that simple.
There are reasons why these apartments are so cheap.
Reason #1: Leand Lease – Lease of Land
The land on which these homes stand is a 50-year lease from the government. And yes, each apartment pays about $800 a month in ground rent. This means you don’t own the land underneath your home, which can cause additional costs and restrictions in the future.
Reason #2: Major renovations are required
The 2021 inspection revealed some serious problems. The homes need between $80 million and $140 million in major repairs to avoid a situation like the collapsed building in Florida. This indicates that the buildings are in emergency or near-emergency condition and require urgent intervention.
Who will pay for the repairs?
The homeowners, of course. The only way to cover the cost of repairs is to increase HOA (Homeowners Association) dues, which are already $1,000 per month, and of course they will go up in the following years. In the end, instead of the expected savings, you’ll end up with an impressive additional expense.
Mortgage and the real cost
In this case, your mortgage payment on this $569,000 condo would be about $5,400 per month. For that same money, you could have purchased a nearly $800,000 condo with a much lower HOA and better terms. It turns out that the “cheap” condo will end up costing you more than the more expensive option.
Additional risks and nuances
Opacity of terms: Leand Lease may have hidden terms that will increase your costs in the future.
Restrictions on repairs and remodeling: Leand Lease may limit your ability to change and improve your home.
Decrease in Value: Due to Leand Lease issues and the need for repairs, the value of the home may decrease in the future.
Conclusion
Therefore, never fall for a low home value. Always get to know the nuances and contact a trusted real estate professional. Thoroughly review all documents related to Leand Lease and plans to renovate the building. Do not make a purchase decision until you are sure of the full transparency of the transaction and your financial capabilities.
Contact a realtor in Los Angeles Maria Schmagliy to get professional advice and avoid unpleasant surprises when buying real estate!
Source of Maria’s video – instagram.com/reel/DFYMHEzPqqR
