Buying your first condominium can be an exciting achievement in your life. It allows you to become a homeowner and invest in a property that fits your lifestyle and financial aspirations. Buying a condo can be daunting, particularly if you’re a first-time buyer.
The process can seem overwhelming. When it comes to buying a property, there are a few important considerations that you need to keep in mind.
These include understanding the market and financing options available to you, evaluating your needs, and finding the perfect property that meets your requirements. In this post, we will provide valuable insights and practical tips on buying your first condo, empowering you to make informed decisions and embark on this significant purchase with confidence.
Things To Know Before Buying A Condo Unit
A condo is a common part of a property with individual owners for each “unit” or condo. Condominiums usually offer amenities such as fitness centres, tennis courts, and swimming pools. Many people buy condos because they require less maintenance and prefer the condominium community’s lifestyle.
When buying a condo, prospective condo buyers must understand that each condominium community is unique. Every community will have its own set of regulations, association fees, monthly maintenance fees, management company, and amenities. Here are some tips to consider for a successful condo purchase:
1. Find What Condo Is the “Right Fit” for You
As a prospective condo owner, when buying your first condo, always consider if buying a condo is the right thing for you. A condo unit is different from a single-family home.
The proximity to your neighbours is a significant difference between a condominium and a single-family home. There is a high likelihood that your neighbours’ condo will be close to yours instead of being detached. So, will you be comfortable living in such proximity to your neighbours?
Also, know that each condo community has different community rules, management companies, association fees, and amenities.
Another thing to consider is understanding if the condo is the right fight for you. You should go through the condo amenities, the association fees, the monthly fee, and more. Check what condo communities have to offer. For example, some include grass mowing, snow removal, exterior maintenance, etc.
2. Think About Your Lifestyle
Condo living implies less effort for maintenance, so if you don’t want the hassle of maintenance. However, if the idea of sharing walls, ceilings, amenities and floors with a neighbour is unacceptable for you, a condominium may not be the best option.
3. Consider Hiring a Real Estate Agent to Buy a Condo
If you’ve decided on buying a condo, you’ll need to look for a real estate agent who knows all aspects of the process, preferably one with experience in condos. A knowledgeable agent will be available to resolve your concerns and lead you through important stages, such as reviewing the condo association documents. Hence, look for an experienced agent from the list of real estate agents.
4. Consider the Unit Size
When buying condo, it is important to consider how much space you need. Condos tend to be priced per square foot, so the larger the condo, the higher the price.
5. Know What the Association Fees and Condo Fees Include
As first-time buyers, it is vital to know what the condo’s community association fees are apart from the mortgage payments .
Likewise, you must know what the association’s fees cover. As previously stated, fees typically include insurance and maintenance. Learn precisely what the association fees consist of and what exclusions, if any, may apply.
If a condo community has extra amenities like pools, fitness centers, tennis facilities, or a clubhouse, some of the association fees can be used to maintain them and cover the costs for major repairs. If such extra facilities do not interest you, it is essential to remember that you still have to pay for them to be made available to other residents.
6. Make a Point to Review the Association Rules
As first-time condo buyers, it is imperative to understand that, unlike in single-family homes, you can’t establish your rules and do anything you want in a multifamily dwelling. In many instances, buyers are unwilling to look over the association’s rules and instead have their representative do so.
Many communities restrict the types of pets permitted or prohibit pets altogether. Perhaps the last thing you’ll want to discover is that your pet is prohibited from the community! Other usual rules in many condo communities include if or not you can rent a unit and whether or not there are any quiet hours.
7. Look for Any Special Assessments
It is essential that you understand what you mean by special assessment. A special assessment usually refers to a large fee levied to pay for a significant project. Condominium structural repairs are an example of a significant undertaking that would be called a special assessment.
If a special assessment is planned for the future, it is probable that the association fees will increase for a specific time. Any proposed special assessments should be disclosed in detail to prospective condo owners.
8. Try Looking for an FHA-Approved Condo
Condominium mortgages may be more complex than mortgages for other categories of properties. In addition to considering your finances, lenders will examine the condo development on its own when you request a loan.
Finding the proper financing for your new home is easiest with the help of an expert mortgage broker, with experience in condos. On its website, the Federal Housing Administration (FHA), which covers FHA mortgages, provides a catalogue of FHA-approved condos .
Yes, not all condos are eligible for FHA Loans. If the condominium is not FHA-approved, you may not be eligible for a conventional loan.
9. Research About the Management and Maintenance Company
The majority of condo communities have property management companies. In general, the management company is responsible for day-to-day operations. This may involve implementing the association’s rules and regulations, responding to resident inquiries, and managing the condo’s finances.
When purchasing your condo, you should contact the management company if you have queries about the community’s rules, regulations, or fees.
The condo board is accountable for hiring and supervising the property management company, which then employs the personnel (like an on-site property manager).
Undoubtedly, the property management company is key to the success or failure of a condo community. In case the management company is unresponsive or has a poor reputation, you must consider this before purchasing!
10. Be Prepared for the Costs of Owning a Condo
Condominium fees differ greatly between buildings, which might come as unexpected news to some. While maintenance fees generally include waste, water, common areas, and building insurance, maintenance fees might or might not include electricity, gas, and air conditioning.
Additionally, condominium fees typically increase annually. You can anticipate significant price increases in the initial few years when purchasing a brand-new condo. You will also be accountable for homeowner’s insurance, internet or cables and property taxes. Also, take a note of the special assessments.
11. Avoiding Condos With Problems
When buying a condo, one of the essential things you must do to safeguard yourself is to look into the HOA and attend an HOA meeting. You may also inquire with the neighbours about their satisfaction with the condo’s management. Analyse the HOA’s bylaws to figure out what is covered.
You can also request the minutes of recent board and member meetings and query about the HOA’s recent dues increases.
A second area to look into is the board’s lawsuit history for tax-related and general matters. You may discover pending litigation that you do not wish to join if you purchase the property. Due to outstanding HOA fees, a few condo associations have been pushed into bankruptcy.
If they fail to collect dues, lenders may cease financing the units, which could impact their resale value.
Related Article: Buying Condos on Assignment
Pros and Cons of Buying a Condo
When considering buying a condo, it is essential to evaluate the advantages and disadvantages. Let’s check.
- Lower price: Depending on the market, a condo can be a significantly less expensive means to purchase a home than a single-family home. Hence, it makes it suitable for first-time owners or the ones who have limited down payment funds. They are a good option for people who desire the advantages of homeownership, such as developing equity, but have a limited budget. Additionally, property taxes appear to be lower.
- Lower maintenance: Landscape maintenance, snow removal, and lawn care are typically taken care of by the HOA in condo communities. Hence, you won’t have to worry about these tasks. This includes roofing and exterior cladding. Condominiums are less demanding than single-family residences in terms of maintenance requirements.
- Access to a range of amenities: Based on the community, you may have access to high-quality amenities such as a barbecuing area, business centre, pool, dog playground, covered parking, and clubhouse. Also, all the condo dwellers contribute to all the expenses of enjoying these luxuries.
- Great socializing opportunities: You will be residing in a community if you purchase a condo, which can be advantageous if you want to be near people and have a pre-existing social network. Some condo associations host pool parties, parties, and holidays for their residents.
- Strict rules: One of the most common complaints about condo life is that HOA rules tend to be restricting, governing everything from garbage collection to the kinds of items that can be kept on a patio, the number of pets allowed, and whether a unit can be rented. In extreme cases, rule violations can result in penalties or even foreclosure.
- Fees: For your unit, your HOA or condo organization will probably impose fees, some of which may be rather substantial. These fees generally cover facilities, upkeep, insurance, and reserves but can accumulate. In addition, fees prefer to increase over the years.
- Investment risk: Because you and your neighbours jointly own the common property, everyone in the community could suffer monetarily if one or more proprietors fail to fulfil their dues. Similarly, if one or more of your neighbour condo owners enters foreclosure, the units may be sold at a severe discount, influencing the resale values of property.
- Difficult to get finance: It may be more challenging to secure a mortgage for a condominium than for a single-family residence. You might require a mortgage designed particularly for condominiums, which usually have stricter requirements.
- Less Privacy: Condos share open spaces such as the lobby, corridors, and amenities, so if you value confidentiality, a condominium unit may not be for you. Additionally, you will share walls, ceilings, and floors with adjacent owners, making noise an issue.
When considering the purchase of a condominium, it is essential to understand what the purchase involves. Regardless of the size of the structure or property, you own your individual unit.
Condominiums can be an excellent investment for a suitable buyer in a suitable location during difficult times. Yet, it can be more difficult to purchase and sell than a detached house. Also, be sure to hire a real estate agent along with a loan officer with extensive condo sales expertise, as the problems regarding a condo purchase aren’t simple. As a condo owner, it is important to be aware of the closing costs associated with the condo ownership.
If you are planning to buy a condo in the near future, it is essential to consider all the above points and engage with a reputable real estate agent. The value of a condominium typically appreciates less than that of a single-family home. Therefore, it is essential to have a solid understanding of your future plans.
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