Whatever your preferences, carefully consider your financial situation and housing needs. Consult with a real estate professional who specializes in condos to guide you in your home search and protect your interests during the buying process. How We Make Money. Zach Wichter. Written by. Zach Wichter is a mortgage reporter at Bankrate. Edited By Suzanne De Vita. Edited by. Suzanne De Vita. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters.
Reviewed By Jeffrey Beal. Reviewed by. Jeffrey Beal. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Share this page. Key Principles We value your trust. What is a condo? Read more From Zach. About our review board.
A well-run condo community will be happy to share their financial statements to a potential purchaser. Ask the community how the association fees are divided and where they are distributed too. Association fees can also impact whether a buyer can afford the condo or not. When approving a buyer, a lender is going to add the association fee into the monthly debts of the buyer.
Know What the Association Fees Include How much the condo community association fees are is a very important piece of information to know when buying your first condo.
Equally as important is knowing what the association fees include. As mentioned above, the fees generally include insurance and maintenance. Know exactly what the association fees include and what, if any exclusions apply. In addition to the insurance and maintenance, association fees also commonly include lawn maintenance, snow removal if applicable , landscaping, water, sewer services, road maintenance, and trash pickup.
In some cases, the association fees can even include the heating and electric! If a condo community has additional amenities such as pools, fitness centers, tennis courts, or a clubhouse, these are able to be kept up from a portion of the association fee.
If these additional amenities are not something that interest you, than it is important to understand you are still paying for these amenities to be offered to other residents. Review Association Rules Seeing as most condos are in close proximity to one another, the communities association will have rules and regulations.
Many communities will restrict the type of pets or if any pets are allowed period. The last thing you want to find out is your animal is not allowed in the community! Other common rules in many condo communities relate to whether a unit can be rented or not or whether there are quiet hours.
If you have ever had to deal with a bad neighbor in the past, you can understand why these rules are such an important part of a condo community! A special assessment is typically a large fee that is charged to cover a significant project within the community. An example of a significant project that would be considered a special assessment, is a structural repair to the condo. Why is this an important tip for a first time condo buyer?
Any planned special assessments should be provided to a potential purchaser with full disclosure. Research Maintenance and Management Company Knowing who maintains the property is extremely important! Who is in charge of cleaning the common areas? So, if it signed off on a building that was full of defects, you could end up paying for some of the remedial work.
Or, if your HOA is suing a developer to make it accept liability, you could have to contribute to legal costs — and bear some risks if the HOA loses in court. At face value, buying a condo may be significantly cheaper. When it comes to monthly payments, though, condo costs can shoot up thanks to HOA dues — which are often a few hundred dollars per month.
A condo might not be too much more than the other available options, and the extra amenities can sweeten the pot. Do you prefer an urban, suburban, or rural setting? With an urban setting comes grocery stores, restaurants, entertainment, and more, often just a few steps from your front door. Living in or near a city could also put you closer to work and reduce commute times. Many buyers will appreciate the convenience this offers.
In addition, many condos have patios, courtyards, or other outdoor spaces for owners to enjoy — but remember these areas are shared with your condo community. Do you prefer a low-maintenance home? If you live in a condo, you are only responsible for maintaining your interior space. That means the maintenance tasks that often burden homeowners, such as landscaping, shoveling, and cleaning out gutters, are not a concern of yours.
Though remember, you pay for these conveniences in the form of HOA dues. So there are good deals to be had for condo buyers. You just have to shop around to find your best offer. Last, a condo isn't always as easy to sell as a house, especially if yours comes with higher-than-average HOA fees or if your condo board has stringent rules for its condo community.
For example, if your complex doesn't allow young children, you lose a subset of potential buyers. When you purchase a condo as an investment, vacation home, or year-round abode, it is important to read all the condo rules via the agreement. Make sure you understand how the condo's management team operates and how the condominium complex is governed. Ask about HOA fees, as well, because when you buy a condo, you must pay for the collective amenities and their upkeep such as a pool, clubhouse, or tennis courts.
HOA fees cover reserve funds and regular maintenance and repairs, and you should be aware of separate assessed fees that could occur down the line. Condos can be a good way for first-time buyers to enter the housing market. Condo prices tend to be lower than single-family homes, and just like owning a house, there are tax advantages for condo owners.
A first-time buyer may also benefit from condo amenities that would not be affordable as part of a traditional, single-family house. They can be, but there are several factors to consider when buying a condo as an investment.
First, where is the condo located? Is it in a popular vacation spot or a town or city where condos are in demand? Does the condo come with great amenities and low fees? A condo in a highly desirable location with quality amenities will likely keep its worth and appreciate over time. Vacation condos can be excellent vehicles for earning money, especially if the amount of rent you charge covers your mortgage and HOA fees. It is important to note HOA fees must be paid and may go up every year.
These fees cover the cost of taking care of communal complex spaces and pay for maintenance like landscaping and repairs.
You should pay attention to these costs and factor them into your budget before calculating your investment's potential return.
If you want to buy a condo or a home with a conventional mortgage, you will need a credit score of approximately If you plan to use an FHA loan for your condo purchase, your score needs to be at least Historically condos have appreciated or held their value. In , the economic crisis did stall the condo market due to rising inventory in stock more people sold off their condos. Buyers were not as attracted to condos' shared amenities and close living quarters.
In fact, in , the median sales price of condos was below single-family homes, as more buyers sought stand-alone houses with more room. However, condos in desirable locations should continue to provide a good opportunity for investors. Lending Tree. Real Estate Investing. Purchasing A Home.
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