5 unit with defunct HOA

I'm looking at purchasing 5 units (entire building) with a defunct HOA. Four units never sold and the the owner walked away filed BK selling them via a short sale. One unit sold and that owner is also selling via short sale. The four unit lender is playing hard ball on the negotiations and doesn't want to budge on the last $20K difference. I just received an email saying the four unit lender is planing on starting the foreclosure proceedings. I want to understand the risks of buying the single unit now and waiting out the foreclosure process on the 4 units.

Currently no HOA's are being paid and 3 tenants are living rent free out of the 4 units. The single unit is vacant. Can I buy the single unit start paying association fees and run the association then file liens on the non-paying units?

Property is in Illinois

Thanks,
Ginger

There are so many warning bells going off I can't believe your not hearing them all. First off, why are you wanting to buy these properties? Examine that answer cause profit it's NOT going to be. Owning "investment" property that is going to lose you money or break even has only a possible tax break. Not that this type of situation is always bad. It's just the measurement of "success" you want to measure it by.

First off, renters do NOT pay HOA dues. The owners are responsible for that. Dues are the money source of the HOA. No one paying them, then where is your money resource?

Do you know how a HOA works? Does not sound like you have much experience in that area. Otherwise, you would know some basics such as where to find the CC&R's, Articles of Incorporation, and if there are by-laws somewhere. You need to READ those which would provide you the information on extending it, dismantling, or making changes.

Realize now that if you buy all 4 units, your basically the "developer" role. Which means the money for repairs, maintenance, collections costs, and general management falls on your shoulders alone. Except the owner of the 5th unit could have a vote and be the ONLY one paying the dues.

If you plan on renting these units out, who did you think was going to pay the HOA dues? The dues would be considered "tax" write off to you as the owner. However, that is ONLY after you pay the dues yourself.

Do you have potential buyers for the homes if you decide to sell them? That would be your best option is to sell them off instead of renting them out. You keep ownership of one unit. Better yet, why not buy one or 2 of the units yourself FIRST? Try it out and see what happens. Bank foreclosures take awhile. So may be able to pick up the others if you are pleased.