What Is A Condo Pros And Cons Tips On Buying Part 3 Of 3
What Is A Condo Pros And Cons Tips On Buying Part 3 Of 3
In this our 3rd post in our 3 part series on Condos we look at tips and advice in buying a condo
Tips for Buying a Condo
So, do you feel like a condo is a good fit for your lifestyle? Then consider these tips before you invest.
1. Older Condos Might Be More Expensive
As Trulia reports, HOA fees are often higher in older communities, simply because these communities require more upkeep. According to their data, sourced from the U.S. Census, buildings constructed in 2005 or later had HOA fees that were $90 per month cheaper than buildings constructed between 1960 and 1969.
2. Read Governing Documents Carefully
Not dealing with a lot of home maintenance chores is appealing to many people. But it’s important that you understand which elements the HOA covers and which are ultimately your responsibility. There are three maintenance categories to consider here.
First, you need to understand how your HOA defines the boundaries, or “units,” in your community. An important part of HOA bylaws is defining what’s included in a standard unit. Be sure to know what you own and what the HOA owns.
Typically, an HOA will define a standard unit as anything contained within the interior walls of the unit, including appliances. When you open the door to your condo, that’s your private space, so you’ll be responsible for painting the walls, fixing the drip under the kitchen sink, and replacing the carpet.
Common elements are those areas or features that are shared by all owners. HOAs are responsible for repairs and upkeep in these areas. They can include:
Recreation centers or clubhouses
Fencing around the grounds
Limited Common Elements
Limited common elements are features that don’t fall within the realm of your standard unit but aren’t exactly common elements, either. Typically, a limited common element is one you share with other owners, but not all of the owners in the community. These might be features that fall outside the interior walls of your unit, such as a patio. Or, they might be a feature that only some condos in the community have, such as a chimney or skylights.
For example, a garage you share with another owner would be a limited common element, as would a load-bearing wall you share with the person next door. Other examples can include:
Exterior doors or windows
Every HOA has different rules regarding limited common elements, so it’s important that you read your bylaws carefully to determine which additional features you’ll be responsible for. Typically, HOAs take responsibility for common elements but require that owners maintain the limited common elements that are connected to their unit. If limited common elements need repair, the HOA might pay for a portion of the costs and ask that the owners who share the element make up the rest.
3. Talk to the Neighbors
It’s a smart idea to talk to the neighbors before making an offer on a condo. It not only gives you the opportunity to see who you’ll be living near, but also to ask how well the community is run. Current residents can give you useful inside information about the board members, the vibe of the community, and the number of rentals.
Finding out the rental ratio is important for several reasons. First, units that are owned by investors and rented out means that there will always be strangers coming and going. These units might be rented yearly, like an apartment, or they might be rented out weekly for vacations. People in vacation units are more likely to stay up late, be loud, and perhaps even cause problems for the community.
Another reason the rental ratio is important is that some lenders won’t approve a loan for communities with a high rental ratio. This is typically more of a problem in big cities, such as New York or Miami, where investors purchase condos and then rent them to tourists.
4. Ask for the HOA Budget
An HOA isn’t likely to give a potential buyer a copy of their current budget. However, if you’re serious about buying a condo, you can ask the seller to provide you with a copy.
Going over the HOA’s budget gives you the chance to see where the money is going and how much they have in reserve for future projects. You should also look at their debt. How much debt is the HOA carrying, if any? More importantly, how many owners are not paying their dues? Communities with a high default rate might be in financial trouble, which could be expensive for you down the road.
It can also be enlightening to read the minutes of the last several board meetings. Yes, it’s a boring chore, but these minutes can give you some valuable insider information about how well the board, and the community, are working together. For example, you’ll be able to find out if the guy next door to the condo you want to buy frequently lodges complaints against his neighbors, or if the board is considering a special assessment for next year. This is information you want to have before you invest in the community.
There’s no doubt that buying a condo can be a great decision — for some people. Aging empty nesters, young families, and busy professionals often find it liberating to live in a low-maintenance home where major decisions are handled by other people. However, if you love your privacy and independence and don’t want to live by someone else’s rules, then condo living probably isn’t right for you.
Robert Schmalz- Broker / Founder Los Angeles Real Estate Group
An IndependentCalifornia Licensed Realty
California BrokerLic #01813025
"HelpingGuide Clients Through The Economic Complexities Of Real Estate
By Knowing TheirWants And Needs"
Author:Robert Schmalz - BRE 01813025 Phone: 310-505-5571 Dated: February 20th 2019 Views: 313 About Robert: DBA "West Los Angeles Real Estate Group"
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