Condos are unique real estate properties. They combine the low maintenance lifestyle of apartments with the benefits of home ownership. If you enjoy apartment living, then chances are a condo is right for you. Use this short guide to help you make the best decision when purchasing your new home.
Get to know the HOA
If you have only lived in single family homes, chances are you’ve never had to deal with a homeowner’s association, or HOA, unless your home belonged to a neighborhood. Even then, the HOA for condos is a different entity than the ones for single family neighborhoods. Both enforce the rules of the area, but because all condos share the same building, these rules are often far more stringent. They can include not letting you paint your front door or keep a pet. The HOA can even not let you rent out your condo.
Therefore, before purchasing any condo, you will need to read the HOA bylaws. If you have trouble deciphering the bylaws, use the help of a real estate lawyer to make sure you understand what you are signing. Once you purchase the condo, you are consenting to abide by all the rules of the HOA. If you don’t follow the rules, the HOA can legally evict you from your home.
Check out who manages the property
Like the HOA, knowing who manages the condo property is also important. Many condo communities offer excellent amenities, like swimming pools, fitness centers and parks. However, if these properties are not kept up, the entire community will suffer, creating lower property values. Do your part to avoid any unfortunate surprises by looking into the management company. You can do this on your own or through a real estate lawyer. If the management is currently embroiled in several legal battles across the country, it’s a good bet that they have a bad track record. Don’t buy into a condo that will not be properly cared for by management.
Know how many condos are owner occupied
This is particularly important early on for financing reasons. Government mortgage companies like Fannie Mae and Freddie Mac often won’t provide financing for complexes who aren’t at least 2/3 owner occupied, meaning that the owner of the condo lives in the unit. This is done to help ensure that the property maintains its value, since owners usually take better care of their unit than renters.
Understand the rental policy
If you are buying the condo as an investment property, then you need to understand the rental policy for the units. This is often managed by the HOA. Some associations are quite strict and may not allow more than 10% of all units to be rented out at one time. Typically, a HOA made up of owner-occupiers have a more stringent rental policy than a HOA made up of owners who bought their condo for investment purposes. Again, be sure to check your HOA bylaws for the specific rental policy before purchasing the condo.