In the past two posts of the scaredycat real estate guide we discussed homeowners assocations (HOAs) and property types.
One of those property types is condos. Whether it’s as a primary residence or for a rental property, we need to be aware of the environment we’re buying into with these.
Condominuim Items To Know
You must remember – a condo is the equivalent of apartment living. It’s basically the same setup except people own the units rather than one large company owning and renting them out.
The condo will likely share four walls with other units. If you get an end unit then it may only be two or three.
Noise will happen. People run washer machines, flush toilets and sometimes play music too loud. It comes with the territory. If you want complete serenity, this is not for you. A single family home may be the route.
Resolution – Only buy condos that are concrete blocks structure (CBS).
If you are going the condo route this drastically reduces the noise problem and can almost make it non existent. Wood frame buildings are the worst when it comes to sound travel.
The HOA Governing Documents
Basically all condos communities are governed by an HOA and the bylaws. No one ever reads these.
But you should!
We must know all the rules and regulations that dictate way of life for a community. Otherwise you may get surprised by one that doesn’t line up with you lifestyle or the lifestyle of your tenant.
Example #1 – Pets allowed, but breed restrictions.
Well – if you or a tenant has a pitbull and move in. You are gonna have a problem. You just bought this condo to live in and now you realize spike needs to go or you need to move.
Example #2 – No commercial vehicles allowed.
Let’s say you work as an electrician and you have typical ford econoline work van with commercial plates on it.
Seems harmless enough. It’s not a big work truck. Well, guess what. You or your tenant is not parking their work vehicle at home.
This is something nearly everyone overlooks. We must remember that when purchasing a condo – all the elements that make up the “common areas” we pay for in the end.
A reserve study is based off useful life, not the current condition. A specialist will create an inventory of the common area components along with any other applicable items, such as the roof.
That study will then say – for example. The buildings roof is 15 years old. Shelf life for shingle roof of this type is 15-20 years.
Now you know going in that the roof may need to be replaced sometime within the next 5 years and can be prepared for the special assesement that each condo owner will get hit with to pay for that.
Special assessments are costs outside of the normal HOA maintenace fees. Granted, there are reserves held in most communities, but many times they won’t hold enough to cover these expenses.
When this happens a special assessment is imposed. The needed funds are divided between all the condo owners and they all must pay their share to stay current with their HOA.
Knowing is half the battle
There you have it. Some key things to know when purchasing a condo – done the scaredy cat way.
We can mitigate risks by always being well informed.