Thinking about buying a condo? Rising home prices have many first-time buyers considering condos or townhomes as a less-expensive solution. However, condo complexes often come with a set of regulations and fees. Use these tips and tools to make sure that owning a condo is the right choice for you![caption id="attachment_391" align="aligncenter" width="360"]
condo complex in San Jose (Santana Row area)[/caption]1. Finances:
- Homeowners Association (HOA) dues are a monthly expense that is important to consider before buying a condo. These fees cover the cost of maintenance and repair, and are generally priced per square foot. HOA dues often help to supply the complex with amenities like pools, trash collection, or landscaping - but they can also be used to cover huge bills like new elevators. If your HOA is lax about collecting monthly dues and there is no reserve fund, you may find yourself owing a large chunk of change when the next big repair comes around.
- Make sure you compare the cost of the dues with the amenities you will receive before choosing a condo complex. Ask about your individual responsibilities as well - HOA dues don't cover everything. Also, make sure you investigate the penalties for late payment of HOA dues - you don't want to be surprised when the complex suddenly puts a lien on your home!
- Have your agent speak with the property manager, and examine any available financial documents, to get a better idea of upcoming repairs or changes that would potentially cost you extra money. Getting a good idea of the building's finances is also important when dealing with lenders; make sure that the complex makes the grade for loan qualifications.
- A condominium complex is bound by covenants, conditions, and restrictions (CC&R). It's important to read every single one of these regulations; you don't want to find out that your dog is not allowed to live there after you've already purchased your condo!
- These rules help to regulate the shared spaces of the complex, but they may also dictate what you can do with your own property. This could affect any future plans for renovations, and could also affect your day-to-day life - some complexes have rules against hanging towels over the balcony, or growing plants on your patio.
- There may also be rules against renting out your unit, which could be problematic if you wanted to move to a new home while keeping the condo as an investment property. If you are able to rent out your unit, remember that you are responsible for making sure your tenants follow all the rules and regulations of the condo complex.
- Also, make sure you ask about parking for yourself and for visitors. Having a very limited number of parking spaces might be a deal-breaker if you live in an urban area or plan to entertain at your new home. Find out if there are quiet hours for the building.
- In a perfect world, your property management team makes repairs on time and works closely with the unit owners to make the building a great place to live. In reality… this isn't always the case. See if you can find a few residents to talk to - are they satisfied with the way the complex is being managed? You can also ask your agent to get a copy of the HOA meeting minutes to learn more about the hot topics and issues with your building.
- If you are accustomed to living in a single-family house, condo living could be a major readjustment for you. Don't forget that you are sharing common areas (and walls) with other unit owners, and you will probably have regular interactions with them. Make sure that your lifestyle aligns with the community standards, or you will be constantly at odds with your neighbors and the management. Getting actively involved, by attending meetings or events, allows you to work with your neighbors to make changes and improve the community for everyone.
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the gym at the Park Townsend luxury community[/caption]Not sure that a condo or townhome is right for you? A house may still be in the cards! Increased inventory in the housing market and less buyer competition may indicate a slowdown in the aggressive pricing rates for houses. Also, you can contact a nonprofit housing counselor approved by the Department of Housing and Urban Development (or check out some free online resources) to find affordable first mortgages or programs for tax-credit certificates.