The condominium. If you’re young, you’ve always known that word, but if you’re a little further up in years, you can likely remember a world without condominiums.
Though historians say there were condo-type properties built in New York City as early as the 1880s, the word “condominium” was likely not used to describe those properties. The first modern condominium complex, real estate experts agree, was one called Graystone Manor, built in Salt Lake City, Utah in 1960. It was much the same as what we still call a condo today – a collection of private living spaces in one (or more) buildings, with common spaces and amenities for all to use. Condo owners paid monthly fees to a governing body, known as a Homeowner’s Association.
Indeed, the building of Graystone Manor represented a new – and soon to grow – trend in housing that made sense for a lot of buyers.
Fast forward to today, where many buyers find that a condo is the right choice for them, whether they are searching for a reasonably-priced first home or looking for living options that include little maintenance, such as yard work.
But condo living isn’t for everyone, and it’s important to know the ins and outs of condo ownership before you buy.
Think about whether a condo is really a good fit for you
Living in a condo is a lot different than living in a single-family home. So, even if the price is super-attractive, you need to ask yourself a few questions?
- Can I live this close to others? Living in a condo means you’ll likely be in pretty close proximity to your neighbors and, depending on the size of your condominium building, you may have lots and lots of neighbors living nearby. If this is not your shtick and you need more privacy, it’s likely that this isn’t a smart choice for you.
- Can I live with someone else making the rules? Homeowner’s Associations have steadfast rules that they don’t want condo owners to break. If you don’t want to live under someone else’s guidelines and be subject to fines and assessments, condo living isn’t likely for you.
*Note that a “condo” doesn’t necessarily mean an apartment-like dwelling. Townhouses can be “condo-style” as well, which means that you only own what’s included within the inside walls and not the land on which it sits.
Know your Homeowner’s Association (HOA)
While HOAs are basically the same, each is just a little different, so it’s essential to get the scoop on the HOA for the condo you’re considering for purchase.
Condo communities often have a good number of rules and restrictions so you’ll want to review those FIRST before making an offer. The seller or the seller’s agent should be able to provide these laws for you to peruse. If, when you read them, something makes you uncomfortable or seems unreasonable, feel free to ask questions or seek clarification before you sign on the dotted line.
Some common rules include what kind of pets you can have (i.e., only dogs under 30 pounds), what kind of vehicles can be kept on your property, whether or not you can rent your home, and times for quiet hours when noise must be kept to a minimum.
You’ll also want to know how much the condo fees will be. That should be disclosed immediately and will likely be figured into your monthly payment if you are taking out a mortgage. Fees range from not so much to a whole lot, depending on the price of your unit and the amenities included with home ownership (exterior maintenance, lawn care, snow removal, pool, tennis courts, clubhouse, etc.)
Know what’s included
Speaking of amenities and the other perks of condo living, be sure to know precisely what you’re paying for when you pay that HOA fee.
While things like insurance and exterior maintenance are generally included, how about trash pickup? Water and sewer costs? Road maintenance? Water?
Furthermore, you’ll want to do some research about additional fees and special assessments. For example, if the HOA decides that your development needs street lights and there aren’t any, you – the homeowner – will be assessed a portion of the costs for new street lights. That can be a hefty sum, and you’ll be required to pay it or else face fines until you come up with the cash. That can be a huge problem if you’re low on funds!
Check out the management company
Condo associations are generally run by a management company, and just like anything else, there are good management companies and bad ones. Delve into the reputation of the one that’s managing the condo you’re considering for purchase. Are they responsive? Do they enforce the HOA rules and regulations? Do they handle finances responsibly?
Check them out by asking neighbors about their experiences, and if you’re not happy with the answers, don’t buy in that development.
Consider the future
Single homes generally appreciate much more quickly than condos, so if you think you’re going to move again in a few years, a condo might not be the right thing for you. However, if you think you’ll stay for ten years or more, the slower appreciation won’t make as much of a difference.
Remember, your real estate agent is available to help you make the right financial decisions during your home buying journey. Don’t hesitate to ask questions about condos before you buy!