Buying a condo can be a great way to dive into homeownership without worrying about all of the upkeep that comes with single-family homes and townhouses. Condo dwellers can also typically take advantage of shared amenities, plus the condo association to take care of building maintenance.
However, condos aren’t for everyone, so it’s best to figure out what your lifestyle and budgetary needs are first.
What is a condo?
Short for condominium, a condo is a single unit within a multiple-unit property, usually an apartment-style building or community. It can be one of many units in a shared structure like a high-rise building. You own your unit, and share common areas and amenities of the community with your neighbors, which can include parks, pools, playgrounds, gyms, dog-walking areas and other public spaces.
David Lee, Realtor and team leader of the David Lee Group with Keller Williams Realty in Orange County, California, says that shared areas of condos are usually managed by a condo association.
“A condo owner has the title to their individual unit but shares ownership of the common areas,” says Lee. “Being a part of an association, condo owners typically pay an established monthly fee to cover their budget and expenses set by the association.”
Condo associations can differ based on the requirements of the individual property. Some may impose additional fees to cover shared expenses, such as unexpected building repairs or new amenities approved by the condo board.
7 tips for buying a condo
Here’s a condo buying checklist to go over as you start your search.
1. Consider your lifestyle
Hate to mow the lawn and trim the hedges? What about pressure washing your driveway? Are your finances such that having to lay out $5,000 or more for a new HVAC unit or roof will be a burden? If you answered yes to these questions, condo living may be for you.
However, if the desire to have a large backyard outweighs the time you’ll need to spend maintaining it, then another type of property, like a townhouse or single-family home, could be a better option for you. Similarly, if sharing walls, ceilings or floors with a neighbor seems unappealing, a condo may not be the answer. Condos tend to work best for those comfortable with apartment living.
2. Work with a Realtor with experience in condos
If you’ve decided that buying a condo is for you, you’ll want to find a real estate agent who’ll have your best interests in mind. Ideally, you’ll want someone with a track record in condos so they can address any concerns you might have and guide you through crucial steps, like reviewing the condo association documents.
Your agent should know the condo developments in your area and what issues they might have. Things that could negatively affect your life in a condo might include community finance issues and structure or infrastructure problems within the community’s building or buildings. A good agent will be able to tell you if there’s been acrimony over community issues, and they will know which developments have fared best in resale values.
3. Decide what types of amenities you want
Condos can offer a wide variety of amenities. When working with your Realtor, make sure to address the types of amenities you want, in addition to other factors like location and budget, so you can find the perfect place. You’re buying access to these amenities when you buy your unit, so don’t be shy about putting them on your wish list.
Keep in mind, too, that amenities you don’t plan to use — a pool, for example — might still be worth having because when you go to resell, a condo that lacks the amenities of others in the area might net a lower sale price.
4. Find an FHA-approved condo
Getting a mortgage for a condo might be more involved than it is for other types of properties. That’s because the condo development itself will come under scrutiny, in addition to your personal finances.
The FHA has a list of approved condos on its website. Conventional lenders may have similar requirements to those of the FHA, but it’s best to seek the assistance of an experienced mortgage professional with condo experience to find the right financing for your purchase.
5. Research the property management company
Understanding who will be in charge of doing the upkeep for the property is crucial, since you want the condo you purchase to be well-maintained. It can be frustrating to pay association dues only to have the amenities fall into disrepair, and poor management can potentially affect your property’s value or push your HOA dues higher.
When touring condos, ask who is in charge of maintaining the day-to-day operations. You can direct questions such as who handles resident requests and community rules to the property management company itself. Consider doing your own research on the company’s reputation, as well.
6. Review association fees and regulations
Apart from your mortgage, you’ll need to pay condo association fees for the upkeep of the property and its amenities. Review those fees and ask what’s included — usually services like snow removal, lawn care and cleaning common areas are.
It’s also a good idea to ask about the community’s house rules. Are there any noise restrictions? Or guidelines for rules about booking common areas in advance? Understanding these regulations ahead of time will help you figure out whether the community you’re looking at is really a good fit for you.
7. Ask about special assessments
Special assessments are extra charges the condo association imposes to fund a significant project. An assessment is usually voted on by the HOA board, if not all of the community’s residents. They are usually imposed for a limited amount of time, but they’re a good thing to be aware of because they’ll affect your monthly budget while they’re in place.
A well-run association can usually avoid special assessments, except in extraordinary cases. Ask for copies of the association’s financial reports, and make sure your lawyer or accountant reviews them and signs off that the community’s finances are sound.
Pros and cons of buying a condo
If you’re thinking of buying a condo, it’s important to weigh the benefits and challenges. Here are some top things to consider.
- Potentially lower price – Depending on what market you’re in, a condo can be a much less expensive way to buy a home than purchasing a single-family property, making it ideal for first-time homebuyers or those with limited down payment savings.
- Lower maintenance costs – Exterior maintenance in condo communities (often with the exception of windows) is generally handled by the HOA. This includes lawn and shrub care, driveways and walkways, roofs and exterior siding. Because condos tend to be more compact and require less attention than single-family homes, they can be a more affordable way to own property. Property taxes tend to be lower, as well.
- Opportunities to be social – Some condo associations organize social events like pool parties, barbecues and doggy playdates, and you might be in closer proximity to neighbors and more likely to meet them in person.
- Amenities – Depending on the condo community, you may have access to top-notch amenities like a grilling area, business center, pool, dog park, covered parking, clubhouse and more, and the cost of enjoying these perks is shared among all residents.
- HOA rules, fees – One of the biggest complaints about living in a condo community is that HOA rules can be restrictive, regulating everything from trash pickup to what types of items can be stored on your patio, how many pets you can have and whether you can rent out your unit. Breaking the rules can result in fines or even foreclosure on unit, in severe cases. Condo association fees tend to increase over time, too.
- Investment risk – You and your neighbors all own the common property together, so if one or many owners fail to pay their dues, the entire community could suffer financially. Likewise, if one or more of your fellow condo owners go into foreclosure, the units could change hands at a steep discount, affecting everyone’s property values.
- Less privacy, possibly many renters – Because condominiums share common areas like the lobby, hallways and amenities, a condo might not be for you if you value your privacy. You’ll also be sharing walls, ceilings and floors with adjoining owners, so noise can become an issue. Keep in mind some complexes can have many renters, with a constant stream of moving vans and tenants who might not be as considerate or have as great an interest in the community as homeowners.
- Parking and storage issues – Many condo buildings don’t have assigned parking, so you might have to travel farther to get to your door. Storage is often limited to a small closet or two, and there could be no outdoor storage space at all.
Who is buying a condo best for?
Condo living can be best suited for people who don’t want to do a lot of upkeep on their own, or those who want the use of shared amenities.
Judy Chin of RE/MAX Villa in New Jersey adds that anyone, including individuals, families and empty nesters, can benefit from the condo living lifestyle.
“It can be a pretty stress-free lifestyle if it suits your current needs,” Chin says.
“If you purchase a condo in a densely populated area, it can be a convenient choice for those wanting to live in the heart of a city,” Lee says. “Not only do you have amenities within the condo, but you could be within walking distance to public transportation, shopping and dining options.”
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.