Buying a condominium eliminates many of the stresses that come with homeownership. Units usually cost less than a traditional home, shared maintenance means you can say good-bye to mowing the lawn and their amenities like a pool, work-out gym or tennis court offer plenty of health and leisure benefits.
Buying a condo, however, is trickier than buying a house. Not only do you have to find a good location at an affordable price, you also have to consider extra costs from association fees and special assessments to how well the building is maintained and how strictly it enforces rules on everything from noise to pets.
One of the biggest considerations when purchasing a condo is who manages it. That’s why, before you sign on the dotted line, you should be prepared to ask the condo board questions to make sure it’s the right fit for you. Here is a list to get you started.
1. Biggest complaints. What gripes are people airing at the condo board meetings? Get your hands on the minutes from the last few meetings, or talk to current owners. If the association isn’t quick about fixes, you want to know about it before committing to live there.
2. Management team. You’ll want to interview the condo manager (i.e. the one who’s there full-time) personally. A poor manager can make condo living a grueling experience. Some condos manage themselves. That is, there are no property managers, and the residents meet to make decisions together. The good side to this is that it often means monthly fees are much lower than professionally managed communities. Although self-management works in some cases, think carefully before moving into a community like this.
3. Storage space. Some condos offer residents personal storage space. Ask if you’ll be provided any extra space to store bikes, winter skis, and luggage.
4. Insurance coverage. Make sure you get a copy of the condo association’s insurance policy. Find out exactly what is covered, including the cost to bring the building up to code (if it’s an older building). Also make sure the estimates to rebuild are accurate, and not minimized or outdated. If the policy is confusing, it might be worthwhile to bring a copy to your own insurance agent so you can go over it together. It’s also important to check if their policy will cover your personal belongings if the roof leaks or the building catches fire. If it doesn’t, you’ll want to consider taking out a policy on your own (which will be yet another monthly expense).
5. How long will you live there? Condos usually appreciate slower than single-family homes. While it’s impossible to predict the future, make sure that you really want to live in this community before you decide to buy.
6. Understand the monthly association fees. Condo association fees are calculated based on how many units there are, what it costs to maintain the property (both short and long-term), whether or not the community is professionally or self-managed, and funds set aside for litigation and major repairs. Get your hands on a breakdown of the monthly dues you’ll be responsible for. Make sure you can truly afford this extra payment, and that you understand what you’re getting for this payment. And remember, condo association fees are not tax-deductible like your mortgage is.
You also need to look closely at the Repair Fund. Every condo association must put a certain portion of dues aside for major repairs. If the complex is less than 10 years old, the repair fund should have 10% of the cost to repair major items (i.e. roofs, tennis courts, etc.). If your community is 10-20 years old, the Fund should have 25%-30% or more on hand for major repairs. If the community is more than 20 years old, 50% needs to be funded. Many communities promise their residents “ultra-low dues.” Be wary. Although this may seem appealing, chances are it means the community isn’t funding their Repair Fund like they should; if the roofs end up needing a replacement, you and all the residents could be hit hard with a major bill.
Find out the delinquency rates on monthly dues as well. When other owners fail to pay their monthly dues, this often leaves everyone else holding the bag. Good communities will have a delinquency rate of 15% or less.
7. What are the rules? Go over the community rules line by line. Make sure the condo doesn’t have rules that you simply can’t live with.
8. Litigation. Condo communities can often be rife with drama – owners sue other owners, as well as the management team or developer. Make sure there are no past or pending litigation in your community, since it’s often a sign of a poorly run community, or one filled with litigious neighbors.
Bottom Line: Buying a condo is no small affair. There are many important aspects to consider that you don’t have to worry about with single family homes. This is why it’s important to go into the process knowing what to look for, and what to ask.