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Q: I've been watching the Mammoth real estate market the past couple of years and agree with you that now is a good time to start looking for the condo I want to purchase–primarily because there is inventory to choose from and there aren't as many buyers to compete with. I'm want a place to use and I'm not buying on speculation and don't want to rent. But I'm still confused about what I should buy. Help me.
A: Congratulations on wanting to purchase in Mammoth because you want a "quality of life investment" rather than the expectation of a financial windfall. It is ironic how the one pays off so much better than the other. For you and the whole real estate market here in Mammoth, it is back to basics. The frenetic market is over (at least for now) which allows buyers to make more calculated and sound decisions.
So forget all of what has happened in the past few years and make a solid evaluation of what it is you want or don't want. Knowing what you can reasonably afford is a good place to start. Unless you have a solid working relationship with an out-of-town lender, then sit down with one of the local lenders and understand all of the options that are available today. There are lots of excellent financing options and programs and rates are, as of this writing, at six-month lows. Get pre-approved for your loan so that your approval letter can be included with your offer(s). This gives you greater credibility as a buyer.
I can't emphasize enough the using of local lenders. They are experienced, proficient and cost effective. They know how to get past the obstacles of funding loans in this market. When I represent a seller and an offer comes in from a buyer working with a local lender, it is a big plus. I know I can go "sit on their desk" (the lender's that is) if problems arise during the escrow period. Ultimately, working with a local lender can mean negotiating strength and fewer headaches.
Meeting with your accountant and/or financial advisor is a critical part of the process. What you are talking about is buying a second home. That is different from a rental property. There are different tax ramifications for Mammoth property owners depending on how they "treat" their properties. That tax planning may allow you to buy a more expensive property or may curtail what you buy. It may also determine what type of property you buy.
Once you get those answers, you have to ask yourself what it is about Mammoth that you like and align yourself to it. Are you a hard-core winter user or and all-seasons type. Is The Village appealing? Snowcreek? Do the renovations on Old Mammoth Road make that area more appealing to you? Do you have dogs?
My experience is that very few buyers every really see all the different nooks and crannies of Mammoth. They think it is a small town and basically all the same. There are lots of newer agents who still don't even know where half the condominium projects are located. Or what makes one more appealing than another. But most importantly today, now that the frenzy is over, is finding a property that has a quality location, preferably some view, is close to amenities that are attractive to you, and that makes financial sense.
Part of that financial sense is the price relative to the financial condition of the property. This is especially true with condominiums. Many of Mammoth's most popular condo projects were built in the 70's and are in need of capital improvements, and also have owners who want to keep pace with the aesthetics of the newer projects in town. Most experienced Realtors® have a sense of which projects are sound and which aren't, but the real answers can only be found in scrutinizing the Homeowner's Association documents that buyers are provided during an escrow. They include the Minutes of the Board meetings, the financial statements, and the long-term reserve study.
So part of the "financial sense" has to compare the real monthly outflow of cash of an older unit and a newer unit. Beyond the mortgage payment, taxes and monthly HOA fees, that outflow of cash needs to consider proposed and likely special assessments, utility costs, and interior maintenance and upgrades. This kind of evaluation is critical for both condos and homes in Mammoth.
Ultimately, many people spend more time deciding what pair of skis to buy than they do which condo to buy. Or they decide to buy because they like the color of the couch. It should be more intelligent than that. And once you find a property that works, make an offer! And that begins a whole new process, one for another column. But most importantly is that in this new era of Mammoth real estate, it is back to basics. Fundamentals rule. And any wise investor should be glad about that.
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