For the most part, shopping for a condo is a lot like shopping for a single-family home. You still want to focus on finding a home with the location you want, the number of bedrooms and bathrooms that you need, and an amount of space that works for your lifestyle. However, in addition to those criteria, there are few extra factors that aspiring condo owners need to consider. I've laid them out for you below. Read them over so that you can take them into account the next time you see a property that piques your interest.
What are the monthly association fees? What is covered under those fees?
In addition to your monthly mortgage payment, condos come with another set of fees that you should weigh in your decision-making process. These association fees can often be hundreds of dollars and may go towards a variety of factors, including common area maintenance and upkeep, amenities like a community pool or gym, or even utilities.
Your first step to figuring out if a condo association's fees make sense for you is to find d out exactly what the monthly cost is for your unit and exactly what services are covered under that cost. Your real estate agent will likely be able to answer those questions for you. From there, it's a matter of weighing whether you'll use those amenities and making sure that the fee fits comfortably in your budget.
Add it into your monthly budget, along with your estimated mortgage payment, and see how the sum total feels when combined with all of your other payments. In some cases, you may find that the fee is too high or that what it covers is not in line with how you'd like to spend your hard-earned money. In either case, it makes sense to move on to other options.
Do the community bylaws fit my lifestyle?
Aside from coming with their own set of fees, each condo association also has its own set of bylaws by which the owners agree to abide. These rules can constitute almost anything, from what type of pets owners are allowed to have, to whether or not smoking is allowed, or what sort of conduct is allowed in common areas. You'll want to make sure that you're okay with living under those particular chosen rules and regulations before you buy.
Typically, you'll be given a copy of the association's bylaws upon moving into the condo, but if you ask nicely, you should be able to see them before submitting an offer. Ask your agent to get a copy from the seller's agent or to contact the association directly on your behalf.
How are the cash reserves? Is there a special assessment coming up?
Every condo association collects what's known as cash reserves from its residents in order to cover any legal issues or major maintenance tasks. Usually, these fees are collected from each resident when they purchase the condo. However, even after you purchase the condo, you could occasionally be expected to make other payments like this. These so-called special assessments are used to cover any major improvements to the building.
Once you find a condo that you're interested in, you'll want to ask your agent to find out for you how much you'll be expected to contribute to the cash reserves and whether any special assessments are on the horizon. When you receive the response, you'll need to make sure that you have enough cash-on-hand to cover those fees in addition to your downpayment and closing costs.
What is my ultimate goal for this property?
Unless you plan on staying put in your condo for the long-haul, it makes sense to consider what your goal for the property will be before you buy. Typically, there are two ways that people go with this: Either this property will act as a stepping stone to something bigger or you'll strive to keep it in your portfolio as a future investment property.
If you're thinking of doing the former, you'll want to pay special attention to the condo's time on the market. Unfortunately, condos can sometimes take longer to sell than single-family homes. Looking at the time on the market will give you an idea of how long it could potentially take you to find a buyer once you're ready to make a move.
However, if you're looking more towards keeping the property as an investment, you'll want to pay close attention to its rental potential. If the condo is currently being rented, ask your agent to ask the seller if you can see some figures. If not, look up the condo building on some apartment search websites to get a sense of what your rental values will be. Then, compare that number to the cost of your monthly mortgage payment and condo fees to see if renting makes financial sense.
by Tara Mastroeni for Forbes.com. Click here to read the full article.