Buying a Condo is Different

There are two things that make buying a condo different:

1. You are purchasing only the space within the walls, not the land.
2. Your neighbors are your co-investors.

Living in a condo, you live in a community. You give up some space and privacy for less maintenance and some amenities, like a pool or weight room. The community is managed a homeowner's association (HOA) A group that manages a shared housing complex, establishes guidelines and provides funding for repairs, grounds maintenance and security for the building by collecting money from the homeowners in the community. that collects monthly fees Fees paid by homeowners within a shared complex to pay for building repairs and operation costs. to cover master insurance and building maintenance.

When shopping for a condo, look carefully at both the condo and the HOA.

1. Size matters
   In smaller buildings, there is a greater sense of community and the HOA fees tend to be higher. Large buildings have more amenities, powerful HOAs and more anonymity for residents.
   
   
2. Get it inspected
   Don't take the HOA's word on the condition of the condo – make sure both the condo and the building are safe and up to code.
   
   
3. Know what you'll pay in HOA fees
   HOA fees vary, but expect to pay about 0.1% of the sales price per month. For a $300,000 condo, that's about $300 in monthly dues.
   
   
4. Read the minutes from the last few HOA meetings
   From the minutes, you can learn about disputes between residents, future maintenance projects and the management style of the HOA.
   
   
5. Check the reserve funds of the HOA
   Make sure the HOA has enough money to pay for the current and planned maintenance projects
   
   
6. Read the fine print
   Read the covenants, conditions and restrictions (CCRs) for the building. Can you have a gas grill on your balcony? Are holiday decorations permitted?
   
   
7. Talk to current residents
   Get their impressions of living in the building. Is the building well-run? What are some common problems?
   
   
8. Ask about the percentage of owner-occupied units
   Stay away from buildings that are less than 75% owner occupied. Buildings with high rates of owner-occupation tend to be better managed and higher resale values.
   
   
9. Look closely at the common spaces
   Just like you can tell a lot about a restaurant by the condition of its bathrooms, the condition of its common spaces says a lot about an HOA.
   
   
10. Look for zoning changes
    Check with the city if there are any nearby projects that will block your view.

1. Negotiate aggressively
   Developers rarely drop the price, but you can haggle with them over closing costs and upgrades for the unit.
   
   
2. Research the developer
   Talk to people who have bought condos from the developer. What were their experiences like? Would they buy another condo from the developer?
   
   
3. Expect to wait
   Condo buildings are almost never completed on time. As a rule of thumb, add 50% to any completion date estimate.
   
   
4. Talk to the building inspector
   Don't rely on the builder or the management company for updates. The inspector can tell you where the building is in the permit process.
   
   
5. Know your HOAs fees will go up
   Developers often set the HOAs fees too low to attract residents. They almost always go up after a reserve study is completed.