Maybe it hit you when the furnace died on the coldest day of winter. Or when you threw your back out shoveling the driveway. Or the day you sprained your ankle mowing the lawn.
It’s that moment when every homeowner throws up his hands and says, “If only I lived in a condo!” The appeal of condo living is clear, but the grass isn’t always greener—even when someone else is doing the mowing.
Buying a condo: An overview
Condominiums vary considerably in style and layout—from sprawling semi-detached townhouses around a golf course to apartments in high downtown towers—but they all work the same way: When you buy a condominium you’re buying into a community.
You still own your unit, and arrange your own mortgage. But all the upkeep and maintenance of common areas—lawns, gardens, driveways, walkways, lobbies, elevators—is handled jointly by the association of owners. Of course, it’s not free: You’ll pay a monthly maintenance fee, but in return you’re off the hook for dealing with problems on your own.
Is a condo right for me?
How much do you enjoy getting to know your neighbors? If you’re a loner, condo living might be a stretch because it’s all about the community. Even though you won’t personally need to cut the grass or clean the pool—except in the very smallest associations—you’ll want at the very least to stay informed about maintenance issues, and possibly help make decisions. And there could be restrictions on what you can do with your unit—for example, you may have to give up your lavish outdoor Christmas display.
On the other hand, if you’re a social animal, you’ll probably find condo life energizing. Many condo communities host regular parties and events, from barbecues to bridge games and book clubs. If you’re recently divorced or widowed, or you and your spouse have become empty nesters, joining the right condo community can be life-changing.
Will I save money?
Compared to home ownership, almost certainly. Condos are usually cheaper to buy than single-family homes, especially when you consider the amenities. Condo communities often come standard with luxuries like swimming pools, spas, fitness centers, and tennis courts. Then there’s location: A condo could put you right on the beach or the golf course for a lot less cash than a house.
Beware of hidden costs
Your monthly maintenance fee will be determined by a homeowner’s association or HOA, typically a board of fellow homeowners elected by the community. The HOA is charged with drafting an annual budget, which determines your maintenance fee. If the property needs extensive work (like a new roof) or if the cost of regular upkeep spikes, the HOA has the right to raise your fee. Some condo bylaws and even some state laws limit those annual increases, but most don’t—and it’s obviously in your interest to keep the property maintained.
Another less transparent cost of condo ownership is diminished equity growth. Compared to a single-family home, condos usually appreciate in value more slowly, even in a hot market—and in a real estate downturn they’re the first to fall. The reason is supply and demand: There are lots of condos, and in any given community they’re all about the same, so buyers have a lot of choices. The good news: If you’re buying a condo as a vacation property, you can rent it out for part of the year and possibly make enough to cover both your mortgage and maintenance fees.