Condominiums are a great option for first-time homebuyers and active adults looking to downsize. A condo is a single home that is part of a larger property complex with shared spaces. When you buy a condo, you do not own the land, and there is an HOA (homeowners association) that runs everything. There are many benefits to owning a condominium. There is no yard to maintain, it costs less than a comparable single-family home, there are often quite a few amenities included (like a pool, gym, reserved or covered parking), and there is a sense of community among the residents.
Shopping for a new condo is similar to shopping for a single-family house, but with a few special considerations that we’ve outlined below.
The HOA or Condo Association
The condo property is likely run by either a condo association and a management company or an association of all the homeowners that decides (by majority) what can and can’t be done. Sometimes, a condo board will interview you and either allow or prevent your condo purchase.
- The Rules – Before buying a new condominium, find out what all the rules and regulations are, because you will have to abide by them (now and in the future) or pay hefty fines.
- The Fees – To properly run and maintain the property, condo owners must pay monthly or quarterly fees. Find out beforehand how much they are and what the fees cover
Amenities and Responsibilities
Condo amenities like a gym or pool or a concierge may be a big draw from some buyers. So find out what is included, what’s not, and what may be an additional cost (like parking or extra storage). It is also important to find out who is responsible for different kinds of maintenance, like window replacement or porch repair. Believe it or not, not all porches and balconies are included in condo ownership.
Because condominium ownership means you do not have complete control over your living situation, find out about the reputation of the condo association and the management company that oversees the property and its maintenance. Pay attention to any warning signs, like poor online ratings and reviews.
With a new building, you do not need to worry about long-term upkeep right away, but how the building holds up over time definitely has an impact on your investment. Do your research on the real estate developer that built the property and find out if they generally do work that withstands the test of time.
If you’re looking at a new condo in a high-rise, you’ll probably be partial to the view. But prior to investing in any particular view, take a look for vacant lots or parking lots nearby that may be developed in the future. Of course the future is impossible to predict, but you can check with zoning authorities and the city’s master plan to find out what the future may hold.
Securing financing for a new condominium depends on a number of unique factors. In addition to the individual borrower, the condo project itself must receive lender approval and this is the responsibility of the developer. So find out from the developer what kind of financing approvals they have received. Some of the factors that go into lender approval (for both project and individual) include: the percentage of units pre-sold by the builder, the percentage of units that will be vacation or rental homes, the percentage of units owned by any one investor, various types of property insurance, etc. For more on this topic, check out our How to Finance a Condo article.
If the condo project is not approved, loan options are much more limited with higher thresholds. Rather than thinking of project approval as another hurdle, it should actually give potential condo buyers confidence. Bill Gassett, a Real Estate Agent in Massachusetts, points out, “The ability to get a mortgage on a property is not only important when you are a buyer, but also later, when you are trying to sell your home. The last thing you want is to own a non-mortgage property in the future.” Lenders hate risk, so if they have approved a project, it is financially sound. If they haven’t, it may be a risk for you, too.
One More Tip
Ready to start shopping for your own new condo? To get started, the NewHomeSource website allows you to search just for condos in the area you want to live in. Kyle Hiscock, a Real Estate Agent in Rochester, New York, recommends working with an agent who specializes in condo sales. He states, “A real estate agent who has experience selling condos will know how to guide you through the process and ensure important documents are not overlooked.” We agree! The process of shopping for and buying a new condominium is different from buying a single-family home or other type of property, so it’s best to work with someone who knows the ins and outs of condo buying.
For the last 16 years, Rachel Kinbar has been a writer of articles, blog posts, white papers, essays, infographics, web copy, sales copy, scripts, poetry, lyrics, and more. She has keen research skills that she applies to a wide variety of topics, and she especially loves topics related to design, history, and sustainable living.