For many aspiring homeowners, buying a condominium is an affordable way to transition from being a renter to a homeowner without a lot of the added costs involved in maintaining a house. Condos also may come with perks many first-time home buyers might not be able to afford in a starter home, including a swimming pool or security guards. But condo life requires owners to give up some freedom they would enjoy if they owned their own detached home, all while being exposed to maintenance fees ANDmortgage payments. Still, there are steps buyers considering a condo can take to ensure they know what to expect.
- Find out how much the maintenance costs or monthly homeowners association fees are.
-Check for special assessments on the horizon. (Special assessments are fees that condo associations sometimes decide to charge owners to pay for an unexpected cost, such as an emergency repair, litigation or a shortfall in monthly dues in the event of multiple foreclosures.)
Do your research
-You may be happy with a building's looks, the size of the unit and location. But the value of a condo will rise or fall largely based on how comparable units sell. Buildings with high proportions of unsold, empty units can send the wrong signal to buyers and can hurt comparable resale prices.
-A condo complex that has too many investor-owned units being rented rather than occupied by owners can make it tougher to obtain financing.
-Find out what the occupancy rate of the building is and what percentage of its units are being rented out by their owners. Ask the homeowners association, or in the case of a new building, the developer.
Study the rules
-Go over the building's condo rules, sometimes known as the covenants, conditions and restrictions documents.
-The condo documents are typically handed over to buyers when the contract is signed, but depending on the state where the condo is, buyers have several days to look over the documents and back out of the contract, experts say.
-The documents are crucial because they spell out all the rules on everything from how parking spaces are assigned to what types of restrictions owners must heed for remodeling and decor.
-Too often, buyers don't look through these documents thoroughly and end up in a bind after it's too late.
-One other big reason to plow through the condo documents closely: to find out what the condo association's financial picture looks like and whether it is involved in litigation. Although the homeowners association will typically have some insurance coverage for litigation, it may not completely shield owners from liability.