Episode 59, Segment 2: Infill Condo Requirements

As housing affordability becomes an increasingly larger issue in Austin, many people are starting to think outside the box when they start their search for a new home. Investors and developers working in Austin are now buying homes with good-sized backyards and building a new, small condo structure on the land to sell. People are considering this option because it’s cheaper than buying a whole house and lot in areas like central and east Austin - not to mention, the house in the back is usually brand new, making it possible for you to buy new construction in the center of town for way cheaper than anywhere else you may find it.

 

The simple result of all these factors: Small and cheap infill condos are becoming more and more common in the central and east Austin regions. Because infill condos are a relatively new thing, the complicated requirements for an infill condo mortgage can get a little murky.

John Schutze & Andrew Thurston explain:

 

Unfortunately, the city of Austin doesn’t allow investors and developers to sell infill condos separately from the home. When you buy a home, you’re technically only buying the land - and the home is just a structure that adds value to the land you bought.

Because of this, the mortgage requirements can get complicated as the lender and title company help you create a contract that ensures each party living in the units knows what they’re responsible for.  

Infill Condo Checklist:

1. Has it been properly filed with the county?

Infill condos must be filed with the county, so make sure this requirement is fulfilled before you go any further with purchasing the property.

2. Do you have an Articles Of Incorporation contract set up?

Articles of Incorporation are the rules for what is permissible on the property: Since you’re sharing this lot with your neighbor, you’ll want to have a lot of rules in place to help ensure that the relationship goes well. Usually, the AOI will include rules regarding maintaining the property, noise allowances, number of pets allowed, etc.

3) Who covers the insurance?

Sometimes each unit will have their own insurance policy, but sometimes you may have to share the insurance policy with your neighbor. In most cases, you’ll need to at least have a policy with the minimum coverage requirements. Before purchasing, make sure you know what type of insurance policy you’ll need and if you’ll be sharing it with your neighbor or not!

4) Is the unit under 400 square feet?

Fannie May can have strict guidelines when it comes to approving loans for properties under 400 square feet. If that’s the case for you, make sure that your lender can approve a home that is smaller than 400 square feet before you start the process. Luckily, John Schutze of Supreme Lending is one of the few lenders that can usually still approve a loan on a property that small!

If you’re considering purchasing an infill condo and have more questions for John, just email him or give him a call at (512) 524-8310.

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