Just When We Thought The Condo World Could Not Get Any Worse!

guest blog by Nila Ridings

Lately, I’ve learned quite a lot about self-storage. It’s an interesting business where investors own steel structures with no plumbing, limited wiring, concrete slab flooring, and no overnight tenants. Generally speaking the square footage rents for far more than apartment rentals and the maintenance is amazingly less. The laws that protect those who rent these spaces are far more extensive and protective of the tenant than it is for the homeowner that buys into an HOA or COA. The process to cut the lock on a tenant’s unit and sell their contents to the highest bidder is closely adhered to. In addition, when it comes to taking bids for buy-outs the employees better closely adhere to the laws or find themselves in BIG TROUBLE for bid-rigging. (See below)

Much to my displeasure, I recently discovered this new concept called, ‘Garage Condos’ where you buy in and avoid paying monthly for self-storage. Yes, you pay monthly condo fees! There is a volunteer board of directors. They can foreclose for non-payment of dues. And once again, owners are clueless as to the risks. They see the fancy clubhouse, opportunity to customize their garage space, the scheduled social events, and never think twice about signing on the dotted line.

Just when we thought the condo world could not get any worse! Here’s just another way for buyers to take more risks for losing their life’s savings. I could write a list of all the ways I see this concept failing but I’ll let time expose the truth.

The sales representative I spoke with was very enthusiastic and excited to tell me these were already being built in California and Arizona. I’m so sorry they made their way to Kansas!

On the subject of bid-rigging…can somebody explain to me why the FTC has not been riding the backs of property managers, condo takeover investors, and HOA board members? Or have I missed something?
http://kansascity.craigslist.org/prk/4845475986.html

http://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/bid-rigging

http://garagekansascity.com/kansas-city-garage-condo/

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About

Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

5 thoughts on “Just When We Thought The Condo World Could Not Get Any Worse!

  1. Deborah Goonan

    Nila, this is why we need to keep educating and informing buyers and owners. The good news is that I am seeing more and more online comments: “I will never buy another HOA home again!”

    People either complain that the restrictions are too picky or discriminatory, or that the rules regarding neighbors that cause real nuisances are NOT enforced.

    People are sick and tired of paying good money for proper maintenance of common areas, and the HOA does NOT deliver! Deteriorating roads and parking lots, poor storm drainage, tainted private water supply, putrid lakes, leaky roofs on townhouses and condos – the list goes on. The more “mature” the HOA, the more likely there are problems with the infrastructure.

    Residents are tired of poor security, because the police department expects HOAs to be in charge of crime prevention. Owners are tired of having to pay extra for police patrols, when they already pay property taxes AND assessments!

    Reply
  2. Deborah Goonan

    I wonder, too, about bid rigging. And what about price fixing – since there is virtually NO new construction that is NOT part of an HOA? Where is the competitive market for consumers?

    Reply
  3. Cynthia

    Thank you, Nila, for this great and informative blog. I know of a horrific experience with a storage facility, in Pennsylvania, after the HOA (COA) was forced to move some contents they thought could be salvaged, after their home had been involved in a suspicious fire, that after it was destroyed by water damages, when it had been under contract for sale. The cause of the water damages was the responsibility of the condo association and another outside utility, I believe. Even though this former homeowner paid the facility, they claimed no payment, then I believe they said they had some type of flooding and water damages to the unit she was in and surrounding and had to dispose of the belongings. Good luck trying to get anyone to do anything about some of these businesses and their operations. I think they are in co-hoots with some kind of crime syndicates and do what they want to those they know are not in their area and cannot be there to protect what they own.

    Reply
  4. Nila Ridings

    Cynthia,

    I believe those in the self-storage industry are like no other; some good, some bad.

    My learning process has revealed the storage facility carries insurance on the structure and the tenant MUST carry insurance on their personal contents. That includes for water damage, fire, hurricane, tornado, or the chance that somebody cuts the locks and steals the contents of the unit.

    Many locks can be cut but the disc locks can only be removed with a grinder. They cost more but it’s less likely a thief would take the time to grind off a disc lock in a public place.

    Things to look for when renting storage would be: Is their an on-site manager who lives on the property? Is there a gate with a code to enter/exit the property for all tenants that is maintained by computer records? Do the roofs have a pitch to them for better insulation and snow and water to run off of? Flat roofs are more likely to leak. Is there plenty of lighting at night? Does the property have surveillance cameras at various locations with the ability to review that video and keeps it in archives?

    Properties that offer these features are going to cost more, but it’s worth it, in my opinion. If it’s worth storing it’s worth protecting, right? A storage place down a low traffic road with no permanent residence living there is not a place I would ever choose. I would also check for the state laws on storage before putting my stuff there.

    In many states employees of a storage facility cannot enter that unit for any reason. If the tenant fails to pay their bill the owners can overlock (place a second lock) on the unit. If the bill goes into arrears a designated numbers of days beyond the overlock the owners can cut the tenants lock and replace it with their own. After more designated days, and multiple efforts to contact the tenant via, phone, email, and certified USPS mail, the owners can open the unit and bidders can stand at the door and make a bid to purchase the contents, but they cannot cross over the threshold. At a designated time on a designated day if the payment has not been made in full the contents of the unit are sold to the highest bidder. In some cases there is no advance bidding process. The contents are sold on the sale date and time by an auctioneer. The tenant can stop that from happening by paying their outstanding balance right up to the minute before the auction begins. Reputable storage facilities adhere to these laws very closely.

    I, too have known people who lost everything in a storage facility due to water damage. Unfortunately, they chose the “cheap rent” route and learned the hard way that cheaper was not better because they ended up with nothing but trash to dispose of.

    I’ve read articles that say the self-storage industry was a 24 BILLION DOLLAR INDUSTRY in 2013.

    Many people use it for temporary storage during moves, fires, construction, or they are in the military. Others use it because they can’t part with their life long acquisition of “junk.” Still others use it for their businesses and find it’s a great option for storage as opposed to owning a building or signing a long term lease for storing tools, materials, or supplies. It gives them the options of month-to-month rental and the option to change the size to larger or smaller if needed.

    It doesn’t surprise me at all that somebody figured out a way to tie storage and HOAs together and create the GARAGE CONDO concept. Can you only imagine the nightmares that will come from those in the next ten years or less? Oh, it gives me a headache to think about it. I’m so glad I happened along an advertisement about them and followed the path to learning more. Now, we know any legislation proposed/passed should include Garage Condos as well!

    Reply
  5. Deborah Goonan

    I predict these “garage condos” will become GARBAGE condos. I can see these being rented by the owners to NASCAR fans, motorcycle enthisiasts, etc. for big seasonal events.

    And just imagine the “opportunties” for two-timing men to bring women (I guess it could work the other way around these days, too) to their “lifestyle condo,” or the teenagers and college students partying in the garage condo.

    Let’s add organized crime thugs and drug dealers looking for a place to stash the toys they buy to launder their cash.

    The possibilities are endless.

    Reply

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