Whether you’re looking to purchase your first home or simply want to leave the burden of owning a house behind you, condos can be a great way to own a low maintenance home. There are, however, a few trade-offs associated with owning a condominium, so before you take the leap, ask these five questions.
1. Is the Building Insured?
One of the most important things to find out is whether your condo’s insurance coverage is adequate. Insufficient coverage can cause serious financial burdens later on or may even make it impossible to get financing. Make sure the board has maintained adequate coverage on the building and verify the amount of coverage through your own insurance agent.
2. How Many Investors Are There?
If you plan to finance your purchase, your bank may find the building an unsafe investment due to the number of investors and deny your loan. If there are too many investors, this will make it more difficult to find banks willing to offer mortgages, which can have an effect on the resale value of your home, as well. As a good rule of thumb, make sure investors own less than 30 percent of the building.
3. Will This Fit Your Lifestyle?
Condos are a great way to own a home without having to personally deal with maintenance costs, as these are usually bundled into your monthly fees and taken care of by professionals. Remember that living in a condominium also means being part of a community, so make sure you’re comfortable with the amount of activity and noise you’ll be dealing with in your building.
4. What Are the Condo Fees?
While it may feel like you’re saving by purchasing a condo instead of a house, remember that the ongoing fees must be taken into account. Find out ahead of time how much you’ll be on the hook for each month, and factor additional fees into your budget before signing on the dotted line.
5. What Are the Reserves Like?
While it may be difficult to get this information from the board before you buy, many sellers will openly offer information about the property’s reserve funds. Seeing how much a building has in its reserve funds can help determine how well the board handles the finances of the building. The reserve is also used for unforeseen costs, like broken pipes or new roofs. If the reserve cannot cover these costs, you may have to pay part of the bill.
Owning condos instead of houses can be a smart purchase because they’re a great way to get the best of home ownership without the extra work. If you ask these five questions before your next purchase, you’ll be sure to find the perfect. Welcome home!