Owning a Condominium can be an, affordable substitute for owning a home, if you buy right.
I live in a condominium now and I am also the president of the homeowners association at that condominium complex. I have owned five different condos since 1992 and I am very aware of the good and the bad when it comes to condominium life.
A condominium differs from townhome, in that, with a condo you will usually have a neighbor living above or below you. You will also have a neighbor living on one or both sides of you.
When you buy your condo, you want to make sure that, when you go to sell, the condo will be easy to sell. An easy to sell, ?premium? condo will probably sell for a profit to you.
A premium condo may cost a few thousand dollars more than similar condos in the same complex or area, but this type of condominium will be worth it in the long run.
If I was buying another condominium, there are several important criteria that I would consider in my search:
Location, Location, Location, Part 1: Condos have a tendency to be built near busy streets. This isn?t always to case, but frequently is. When looking at a complex, you want to buy a condo as far away from the traffic as possible, preferably with a building or two blocking the noise.
Location, Location, Location, Part 2: I recommend that you buy a condo on the top floor. In a condominium the worst cause of noise comes from having neighbors moving around above you. You can eliminate this by purchasing a top floor unit. The condo I live in now is on the top floor and I almost never hear my neighbors.
Location, Location, Location, Part 3: If possible try to buy a condo with a view of something pleasing. My top floor condo has a great view of the pool. The windows were design to accent this view. Other condos in our complex have a view of the golf course. But, some of the condos have a view of the parking lot. Ugg. Who wants to look out onto a parking lot?
I have owned another condo that looked out over a park and another that had great views of the mountains. I lost money on the condo I owned that didn?t have a good view.
Renters: You will want to know how many of the condos in the complex are non-owner occupied (rented). You can get this information from the president of the HOA.
If there are more than 40% of the units being used as rentals, your ability to get a mortgage will be limited. Mortgage companies call condominium complexes with too many renters ?non-warrantable?. Non-warrantable = higher risk for the mortgage companies = no mortgages for condo buyers.
The other problems with having too many renters in a condominium complex are that you will encounter more domestic problems, vandalism, police visits, etc. With your home being your sanctuary after a hard day at work, you don?t need these disturbances violating your peace and quiet.
The Homeowners Association: The Homeowners Association (HOA) is actually 99.9% of the time a good thing. They pay the bills, take card of the grounds and building maintenance, and insure that your home is the ?peaceful sanctuary? you need, among other things. These services are paid for out of your monthly dues.
The thing to be careful with here is to make sure that the HOA has enough money saved to pay for expensive maintenance (called Capital Improvements). Capital improvements would include painting the buildings, roof repair or replacement, parking lot repairs, etc. Without sufficient funds in savings, the HOA will be forced to ask for special assessments if they run into an expensive unexpected repair on the property. A special assessment is a request for additional funds from the homeowners over and above the monthly dues, usually a large lump sum. Who needs this hassle?
You can ask the condominium seller or HOA president for the HOA budget figures. If the HOA only has a small amount of money in their savings account, beware! There should be an amount equal to at least three months worth of dues/ per unit in savings. Six months would be better. Any more than six months dues are proof that the HOA board has been fiscally responsible. This is a wonderful discovery, rarer than you might believe.
Four times out of five, I have made money when I sold a condo that I owned. If I was careful about location, renters, and the HOA, I have profited from the sale. I can recommend condominium living as a good, inexpensive, hassle-free way of life.
Don Glasgow is a real estate agent in St. George, Utah. Don has been selling Washington County real estate since 1999.
