Moving into a new home is an exciting time and usually one of those life stages that you will always remember. Be sure to research your new investment carefully before making a decision so that those memories become positive ones!
If you intend to buy a condo, keep in mind that buying a condo is very different than buying a house. With a condo, you will typically own the physical space inside your unit’s walls but nothing outside your immediate living space. The common space in the complex is owned by another entity which will have rules and regulations to which you must abide. Before you commit, be sure you do your homework on the property and make sure that you know all the details of what you are getting… and what you are not getting.
Homeowners Association (HOA) Fees
HOA fees also known as Condo Fees are intended to cover maintenance and repairs to the outside of the building, landscaping, building insurance, amenities, trash removal, water, sewage, etc. The association will manage the funds collected from each condo owner and will coordinate services and maintenance.
It is important to understand the process for how this works including whether or not the property is professionally managed or if a representative from the HOA is in control. Who determines priorities for how the funds are spent? How do you make a request?
Financials and Assessments
Look at the financials for the HOA to see if there are spikes or dips in the balance and to understand how much money is in the reserve fund. It is important to check on assessments which are one-time payments to the HOA above and beyond the normal HOA fees. Assessments are required when there are not enough funds in the HOA reserve to pay for large capital improvements such as renovating a gym, replacing the elevators, etc. You will want to know if there are any planned assessments coming up and also look at the history of the property for frequency of assessments over the last several years.
Before making a purchase, you will want to look at your unit’s tax assessmentand ensure that it is in alignment with your purchase price. If, for example, the last assessment shows a value of $400,000 and you are buying the unit for $300,000, you will be hit with a high tax bill upon closing.
Inspect the Property
Before you decide on a property, take a good, long look around. You will undoubtedly scrutinize your condo carefully, but it is equally important to inspect the common areas, your neighbors’ condos, the community, etc. Be attentive to detail as you look at your neighbors’ exteriors. Are they well-kept and clean or are there items cluttering their porches or yards? How well are the pool, clubhouse, and gym maintained? Look for any sign of water damage or leaks. Stop and talk to other condo owners to get their impression of the property and ask specific questions about how well and how quickly issues are addressed when they arise.
As you are walking the property for inspection purposes, take note of the type of people that live in your potential new complex. Are they old or young? Are there a lot of children or pets? Does your condo allow Airbnb and attract tourists?
Picture yourself living there and be sure the atmosphere is the type of space that will make you happy.
Parking is a simple and straight-forward topic, but sometimes it gets overlooked as potential new condo buyers evaluate properties. Find out how many spaces you get per unit and where they are located in relation to your unit.
Speaking of condo culture, think about your passions and hobbies and how they might be affected by condo association rules and regulations. Do you like entertaining guests late at night? If so, you will want to find out if there is a noise ordinance or cut-off time for excessive noise. Do you enjoy gardening? Some HOAs restrict the size and location of gardens or flower beds so you will want to be clear about what you are permitted to do outside. Likewise, if you intend to put a swing set in the yard for the kids, find out before you move in if that will be allowed.
Some condo associations simply do not allow owners to rent their condos out, yet many other associations do allow this option. Depending on your long-term plans, this can be a very important differentiator. If you intend to use the condo as an investment and rent it out to someone else after you move out, you need to know if that will be permissible. On the other hand, if you intend to live in the unit long-term, you may not want to have a high percentage of renters in the complex as they often do not take the same quality of care of the property. A high number of renters may mean a less attractive common space and perhaps devalued condo prices.
Enjoy your New Condo!
There are many considerations that should be carefully reviewed before deciding to purchase a condo. Be diligent about researching your condo carefully and get all questions answered to your satisfaction. As long as you know what you are getting into before you buy and move in, you will, in fact, be able to relax, enjoy the experience, and take pride in your new home.