Heros vs Champions, part II

It's hard to find a hero or a champion story in the world of real estate these days. Mostly there are casualties and "underwater" stories that dominate the subject.


Not so with a condo complex in Northern Virginia, although it could have been a disaster. This complex is a bit older and suffered from some sense of neglect...its hidden assets are the building and the long term owners.

The story began when my client bought a unit in this building.  I advised him to go to the Condo Board meetings to meet his new neighbors and consider running for the Board.  As a first time home buyer, he was a bit apprehensive, figuring that the members of the Board were probably all specialists and he was a novice.  The unit he was buying hadn't been updated, but at the time the real estate market was "hot", so he bought a unit and moved in and began and completed an extensive renovation.  A year or so later, he called to ask me if I would join him to look over the books of the Condo Association to discuss some concerns he was having. We met for lunch on Capitol Hill where he works. After lunch, we pored over the financials and came to a terrible conclusion: repairs to the pinhole leaks were causing the building's financial reserves to dwindle to a frighteningly low point. There was enough left to cover one more disaster, if it wasn't a BIG disaster, and then, THUD, the bottom would drop out of the Condo's world...no more money, none, nada, zilch.

Past boards had been unconcerned with the dire warnings that the outside management had proffered, preferring in Board meetings to discuss the movement of plants and chairs in the lobby. Here's a description of what happened in his words:

"Past boards here were overly concerned with paying as little as possible each month for management and upkeep, and paralyzed by personality conflicts, inability to look ahead and complacency. The place needed a crisis to wake everybody up. The pinhole leaks which depleted our limited reserve fund over 2005-06 did that and got me interested. Then after I joined, I forced issues, which pressured the two holdover board members out (they couldn't keep up) and I got to pick their replacements. One of the replacements (3 years now) is an accountant who had visited me a few days after moving in in late 2006 asking to be considered ASAP after I'd managed to swing a 52% increase in the monthly fee just one month after the previous board had raised it by 10%. She wanted to know what was up and to help fix things so that that wouldn't occur again. She's been invaluable, too. In the past, too many potentially good board members hadn't been involved. The place had had bad management, too. We fired the old company in December 2007. Now in 2010, everything and everyone is different. We've pressed the case for continued investment for actual improvements to the building and the grounds. Also, with our new management company have come new contractors and even expert consultants. Now not one contractor working for us is a holdover from 2007 - and they're ALL exponentially better. The whole thing has made everyone in the building feel more confident about the future. I even think that by the end of 2011, we'll be able to attract new buyers. At the annual meeting this month, an owner who had served on the board off and on for 19 years congratulated me on the turnaround and said before the whole group that we'd done a great job. There are no hard feelings. That's good, too."



What got my attention and caused me to write this posting are these simple truths:

1. Getting one's house in financial order is a job, but not an impossible job.
2. Being active in your neighborhood is not only being civic minded and a duty but also protective of your investment in real estate.
3. Going through a crisis successfully has a lot of pluses and it draws people together in wonderful ways.
4. Raising the condo fee was the only solution available...and it was not without pain.
5. Tackling this problem is not for everyone. But champions and heroes are created by scary and terrible circumstances.

Units in the building that were once attractive on the market suddenly have high condo fees, reducing prices to a pretty tough level (value in condos is usually a factor of the monthly payment to own).

Good news update...breaking news!

My client tells me that they now have fixed the pinhole leaks throughout all of the building, have just started trimming and removing the overgrown and dead trees on their property, have renovated the lobby and the elevator and have enough of a reserve that they are considering dropping the condo fee and lightening the load a little on their neighbors...and themselves. In short, the light is visible at the end of the proverbial tunnel. Congratulations to you all for "...seizing the day." (in this case, seizing the past 5 years!)