What You Should Know About Buying a Condo
Purchasing a Condominium can be a wonderful way to live in a vibrant area with minimal hands-on maintenance! In some cases, you may even be able to afford a condo in an area that would otherwise not be an option if you were looking at single-family houses. At the time of this post in our zip code there are currently a few condominium units hovering between $245,000-700,000K on the market.
But a Buyer looking for a single-family house in this same zip code will find that the entry point into the neighborhood is currently $1,299,000….and btw that’s a one-off by a couple hundred thousand dollars. Quite a big difference.
Personally, I’ve owned several condos over the years and experienced the ease of the lifestyle as well as benefited from the community aspect of living in a building with common areas to gather and connect with neighbors. If amenities are important to you, there will often be several options that you can enjoy like a pool, grilling outside, or even a fitness studio on site. The environment seems to foster community in a way that opens the opportunity for connection in a broad spectrum.
Despite my enthusiasm for condominium ownership, there are things you want to know and ask prior to contracting on a condominium to make sure condominium ownership is for you! Again, I am a champion of condo living, but taking time to research these few items can eliminate surprises as you are considering what type of property ownership is right for you!
Top 5 on my “you should know” list!
Homeowner Associations (HOA’S) govern condo buildings and most everything you will want to know about the building is within the gilded pages. It is mandatory in Texas for a home buyer to have a designated number of days to review condo docs but typically, these are ordered by the Title Company after you go under contract. You may not be able too but ask to see if you can review them before or if there is an unofficial copy to browse prior to making an offer.
Can I rent out my unit when I am ready to move and what are the terms?
Each building is different and will have rules that pertain to terms of leasing to a tenant. My experience in Dallas, Texas will be different than someone looking in an area that is predominately a vacation rental area in a resort town. Those condo buildings will often allow for rentals and is part of the reason homeowners seek them out. Short Term and extended stay and may even have management opportunities through the HOA.
Conversely, I’ve noticed most condo buildings in the DFW area prohibit short term rentals under 6 months, with most requiring 1 year lease or longer for new tenants. If you know you are looking for a short-term rental opportunity in the future a condo in DFW may not align with that goal.
What is the pet policy?
My four-legged friend is absolutely part of the family…if she can’t live there, I can’t live there. You’ll find the Pet Policies are like the rental policies in the sense that they are individual to each building. Different buildings will have rules regarding cats, dogs , exotic animals, and weight limits and may even differ on how the rules apply to someone living in the building as a home owner rather than a tenant leasing a space from an owner. If there is any such thing as a “typical rule” it is that most HOA Boards will not allow a dog, considered to be an aggressive breed or able to be trained as an attach dog to reside in the building. Contact the HOA ahead of time to find out if your furry or feathered friend is welcome.
Is the lending process the same?
Lenders are often looking at several items on condo purchases that they aren’t when a Buyer is looking at a house. One might be …What is the ratio of renters in the building to homeowners? Is there a large commercial entity sharing space with the residential units? If it’s a new building, how far along in the sales price is the building.
The Lenders are evaluating risk on the loan. Depending on how these terms roll out you may experience a higher interest rate and or higher down payment criteria. Your lender will be approving the building as much as they are approving of your Buying potential.
Will my HOA Dues go up?
Yep, at some point they probably will. Buildings budget on current electric prices, water prices ect, labor cost…as inflation escalates in a buildings cost will as well. Those cost then have to be adjusted. BTW…If you were to buy a single-family home, this will occur too, it’s just less obvious than when a monthly static payment has an increase.
Special Assessments are also something that at some point you will most likely experience. This is a lump sum collected by the HOA at a given time to cover a larger maintenance item that isn’t being covered by the reserve fund. Again, you’ll experience similar scenarios if you buy a house, they just won’t be called Special Assessments. For example, you buy a home, and the roof has to be repaired and there is a $1000 deductible on your insurance….in a way you’ve just experienced something similar to a special assessment.
Always ask to speak to the building HOA manager prior to contracting to see if there is anything currently being assessed. Sometimes the Seller will opt to pay for this in full or in part but sometimes they are unwilling, and you’ll want to factor that into what you will be paying at the Closing table.
Will I hear my neighbors?
Again, building specific. I recommend going to a condo unit at different times of the day and a couple of times to better gauge the likelihood of noise transmission.
To be sure, condos are certainly an attractive means of home ownership for those seeking communal living , less maintenance and potentially living in vibrant locations! Just do your due diligence on any building of interest and educate yourself on the building.
P.S. Neighbors are a great resource for information…just make sure you ask several to get a broad scope of opinion.