If your version of the American dream doesn't include mowing the
lawn, think about buying a condo. Good options for both
first-time home buyers and older folks who are ready to
downsize, condos are typically smaller and less expensive than a
single family home, and can include attractive amenities as part
of a home owners association (HOA), such as pools and fitness
facilities. Bone up on both the pluses and the minuses.
Step One
Think about how long you're going to stay in one place.
Buying a condo is no different than buying a single-family
home--you need to live there at least a couple of years to
recoup closing costs, assuming the property will appreciate.
Step Two
Give some thought to what you want. If you're not interested
in the pool or sauna, understand that the condo's price and
ongoing monthly association fees will reflect their use
regardless of your interest in swimming or sweating.
Step Three
Visit various condominium or townhouse communities and
multiunit buildings so you know what's available where you
live. Get a sense of prevailing prices.
Step Four
Request a market analysis from a real estate agent regarding
the selling prices of condos in the building or area. Check
the price appreciation on the market analysis to evaluate
how quickly the condos are increasing in value; subtract the
selling price from the purchase price and divide by the
number of years the property has been held by the previous
owner for a ballpark estimate of annual appreciation, if any
(varies from state to state and place to place), in the
neighborhood.
Step Five
Get prequalified for a mortgage
Step Six
Find out if the building has a good reputation. Ask current
residents how often repairs and maintenance are required,
and how good the soundproofing is between units.
Step Seven
Check out parking, storage, security and other amenities.
Step Eight
Ask to see the minutes from a recent meeting of the home
owners association (HOA). Find out what the hot issues are
and if members are fighting tooth and nail. You may want to
keep looking-- nobody wants to live where neighbors are at
each other's throats.
Step Nine
Ask how large the HOA's reserve funds (used to pay for
maintenance and emergency repairs on the building) are. The
larger the reserve, the less a chance of an assessment or
one-time payment to chip in for an unexpected expense. The
smaller the reserve, the greater the chance you'll be billed
for an assessment in the near future. Some states require
periodic updates of reserves to be published to HOA members.
Step Ten
Check the HOA's history of assessments to see how many have
been made in the past 10 years and how large they have been.
This information will help you gauge how likely it is that
you'll be assessed in the near future, and indicate how
well-managed the building is. Better managed buildings make
fewer assessments.
Step Eleven
Talk to other members and find out how restrictive your HOA
is. For instance, some buildings even dictate what sort of
holiday lighting you can put up. Request the same
information as you would for buying a house. Read the CC&Rs
(covenants, conditions and restrictions).
Step Twelve
Budget in association dues, which are above and beyond your
monthly mortgage payment. To assist in long-term financial
planning, ask the condo association whether association fees
have increased in recent years. Also estimate monthly
maintenance costs that you're responsible for in addition to
the association fees.
Step Thirteen
Make an offer and close on the deal. See
How to Buy a House for more specifics.
