Many buyers today looking at homes often wonder if buying a condo is a smarter move. Because home prices have decreased in recent years, they look at the lower prices of condos and wonder if it would be considered a less risky and financially smarter move.
If a buyer is set on owning property, but not sure if a home is what they need, then a condo should be considered. However, think about a condo only if you ask yourself these questions:
1. Can you afford the maintenance fee?
Many buyers are very surprised when they hear about Homeowners Association Fees (HOA). These fees must be paid every month and often include the following:
City Services: these include trash removal, water and sewage.
Insurance: This only includes insurance for damage OUTSIDE of the building and the property surrounding it. If the outside of the building needs painting, then your HOA fees would normally cover this. Same if a roof needs to be repaired, if there are leaks, driveway pavement repairs, etc.
Landscaping: This includes general lawn maintenance, snow removal, planting flowers, and costs of gym or pool maintenance if applicable.
Pest Control: Many (but not all) condo fees include a monthly inspection from a pest control company for the outside of the building.
Of course, it is necessary that you check with each contract of an HOA as they all can vary.
2. Are the majority of condos owner occupied?
If you plan on living in the condo, it is recommended that at least 90 percent of the condos be owner occupied. If you consider a condo where the majority of the units are rental, then chances are, the resale value is risky. Are owners better neighbours? Obviously, most renters are every bit as conscientious as owners, but if the majority of units are being rented out, then the value of a condo is not as high as the majority of owners living in the condos.
3. HOA fee do not rise faster than inflation.
The rule of thumb is that you do not want to purchase a condo that constantly increases their monthly payments. If they continue to rise past an average of 3 percent, then you need to stand back and ask why. Ask to see the minutes of the past several meetings and determine if there were just some high repairs that were needed, or if there are other reasons why there seems to be a short fall. Make sure that at least 10 percent of the association’s budget goes into a reserve fund. If a new roof is needed, for example, is there enough cash to cover the costs?
4. Special assessment charges:
If you see a condo that interests you, look around. How old is the roof? Does the swimming area need updating? If so, you could possibly face a special assessment charge after moving in. Ask your real estate agent if the owners of the condo you are considering are moving because of any new fees and/or repairs coming up that will end up costing YOU and not them. They may be trying to sell their condo to avoid this fee.
5. Talk to residents:
Don’t hesitate to walk around and talk to current owners about their opinions of the property. Are repairs handled efficiently? Is there a high amount of people moving in and out? Ask them what they like about the place, and what they don’t.
There are other questions a buyer should ask when considering a condo that are just not financial. Condo living may come with a cheaper price tag, but there are some concessions that need to be considered if you are debating between a home and a condo.
Limited outdoor space:
While you may have a balcony or patio, there is usually a lack of yard space. So if you enjoy going outside and playing an impromptu game of soccer with your children is there room? And of course, it is shared space.
Not all condos have garages or storage units, so if you have lots of things to store, you may want to consider renting a storage facility. Remember to add to your monthly budget.
Sharing a wall with your neighbours takes getting used to for some buyers. Chances are, you may also have people living above or underneath you. The noise factor can never really be known until you actually move in. It’s always a good idea to tour a complex at different hours during the day and evening to determine the activity level. Also, check the gym and pool to see if they are crowded during the weekends.
If you are thinking that you may eventually use your condo as a rental if you want to upgrade one day, make sure that your condo board approves. Many have established rules about renting out condos.
Finally, review the rules that the condo board has established. There are times where buyers feel the rules are a bit over the top and too strict, such as displaying decorations on your balcony or a yard ornament near your patio. Things you wouldn’t normally consider an issue, can become one. While rules vary from one Windsor condo to another, overall they are designed to keep the appearance of the buildings professional.