Ambience, Amenities, Rules, Risk And Neighbors: Things To Consider When Buying A Condo

There are many good reasons to purchase a condominium - the amenities, the community, the simplicity of not having to take care of a yard. For some, it's about easy access to urban shopping and restaurants. For others, it's a way to downsize and simplify for retirement. Whatever the reason, condo living can be a great fit for some - as long as you do your homework.

Buying a condo isn't the same as shopping for a single-family home. You're sharing walls with other residents, you're guaranteed to be part of an HOA - and bound by their rules, and your financing might follow different guidelines. Before signing on the dotted line, it's important to ferret out some key information to ensure your condo purchase is a happy one.

The Building - Many condos - particularly downtown - will fall into one of two categories: relatively new construction and renovated older buildings. While the latter often provide charm and character, they might also have older plumbing and electrical systems, so be sure to ask. An inspector will have valuable insight in that regard. The newer buildings should get a visit from the inspector as well. Just because a unit is two years old doesn't mean there wasn't shoddy construction work that will cause you problems down the line.

Be sure to ask basic questions about the facilities as well. How is parking allocated - for residents as well as guests? Get a full list of all building amenities, as well as any charges related to using them. And understand fully what your HOA fee covers and what it doesn't. Typically, it should pay for your parking, landscaping upkeep, professional management services, access to common areas and often utilities but this varies, so it pays to ask.

The Rules - While buying a condo often means having less responsibility for its upkeep, it comes at the price of less freedom in the way of HOA rules. Ask in advance what restrictions there are on upgrades and remodeling. What types of improvements can you make, and will you need approval? Are there restricted hours when contractors can work? Inquire about other common rules, such as how noise complaints are handled, and what pet restrictions are in place.

Another rule to investigate is the property's rental policy. Whether or not you plan on renting out your condo, ask about how many units are currently renter-occupied and how many can be rented out at one time. Because owners tend to take better care of their property than renters, a high number of renters might not bode well for the long-term upkeep of the property. Not to mention, a property full of renters can also be a sign that owners have had difficulty reselling their units.

The Ambience - Like any home purchase, you of course want to ensure the condo is a good fit for your lifestyle. Make a list of what's important to you - proximity to restaurants, a quiet environment, family-oriented amenities, whatever - and decide if this property fits the bill. If it's a new development, check out any marketing materials - do they seem to be targeting young families, professionals, retirees? Make a couple of scouting trips without your real estate agent to observe the area - especially at night. What's the noise and traffic like? Do you feel safe? Make sure this is the location and lifestyle you're looking for, a place that feels like home - but don't get emotionally attached, at least not until you've vetted the items below.

The Risk - Any purchase as expensive as a home carries some risk, as we've all seen in the last couple of years. Condos are often considered even higher risk, though, because of the high rate of defaults. (Many people buy them as investments and then default on them in tough times.) In order to obtain financing, particularly for new developments, many lenders will require a 20% down payment and may scrutinize the property. Is the project fully completed, and how many units have been sold? How many are owner-occupied? Are there any new developments in the area (such as a new high-rise or strip mall) which could threaten the property's value? Even if your lender doesn't ask these questions, find out the answers for yourself - It could save you some headaches in the future.

All of this isn't to suggest that condos are too risky or to be avoided. For many people, condo living is a good fit, and a stable, well-managed community can be a great place to raise a family or retire. You'll just need to do a little research, and with all the properties available these days, there's no reason to settle before finding the right one.