A condominium is a great investment choice for a variety of reasons: condos are less labour-intensive and, generally, less costly than single-family homes to maintain, they're often within walking distance to amenities, pose fewer mobility issues for seniors or people with young children, can be safer and friendlier, and they're often loaded with community amenities like a pool, party room, and/or fitness space. Depending on whether the community allows it, a condo can also be rented out for additional income. With all these benefits, of course, there are some pitfalls to condo-ownership. Below, you'll find some tips and tricks for ensuring your first condo-buying experience is a great one.
Do the Dues
On top of your mortgage, you can expect to pay condo fees or HOA dues (which vary widely). These go into a reserve to cover the cost of exterior maintenance and repairs to your complex, insurance for common areas, and landscaping. You may also be required to contribute to special assessment fees, which are requested when an unplanned-for repair crops up, or when an expected repair exceeds the reserve from condo fees. To prevent surprises, it's a good idea to ask for the minutes from past meetings of your would-be condo's council. These will help you determine whether there might be plans for additions that will spike your fees, whether the finances are up to par, whether there are legal issues or disputes between owners/other parties, and whether there are any upcoming repairs that will increase your fees.
The HOA Has Sway
Your condo association has a set of rules, called CCRs. No, this does not stand for the name of a '60s rock band, it stands for Covenants, Conditions, and Restrictions. These rules govern renting, noise levels, pets, renovation restrictions, and other factors. Before you settle on your new home, it's a very good idea to request and read a copy of these regulations to ensure that they are in line with your lifestyle. If they're not, you will not be happy with your new living arrangements. Your HOA will also have rules about arrears, which you will likely have to pay if the past owner of your unit has neglected them.
Taxes & Tariffs
Just because a condo may not be on its own parcel of land doesn't mean you will not have to pay property taxes. Insurance, too, is an important thing to consider. The outside of the residence is, very often, protected by insurance which is almost always covered in your HOA fees. However, the interior of your home is not included in this. In the event of theft, fire, or other mishaps like plumbing accidents, it's a good idea to have home insurance for your condominium. Sometimes the property taxes are included in HOA fees. Ask your agent.
Home inspections are not just for single-family houses! Before you buy, you'll want to have a licensed inspector give your prospective place a once-over. Make sure he/she inspects the entire outside of the complex for potential issues that may arise, requiring extra condo fees from you. An inspection report not only gives you an idea of whether or not the condominium is a good investment for you, it will also give you an idea of the items that need repair or replacement, acting as a to-do list, should you choose to buy the unit. This is a fairly run-of-the-mill practice for homebuyers, but ensuring that your inspector is thorough might save you more money than you think down the road.
The number one rule, above all else and no matter what kind of real estate you're buying, is to use your resources. Nobody can be an expert on everything, not even you, but almost everyone is an expert in something. That's why we seek out mortgage brokers and real estate agents, who are experts in their field. These two valuable resources will help you decide on a budget that works for you, help you get pre-approved, show you homes that fit your budget and preferences, help you make an offer, and negotiate your terms. Remember, when you're a buyer, neither your REALTOR® nor your mortgage broker will add to your expenses. The REALTOR® is paid by the seller and the mortgage broker is paid by the lender. What's more, if you know a great REALTOR®, but you don't know a mortgage broker (or vice versa), chances are pretty good you they can steer you in the right direction. It's a win-win-win situation!