Whether you’re looking to buy your first home or just want to leave the burden of owning a home behind, condos can be a great way to own a low-maintenance home. However, there are some trade-offs associated with owning a condo, so before you jump, ask these five questions.
1. Is the building insured?
One of the most important things to find out is whether your condo insurance coverage is adequate. Insufficient coverage can cause serious financial burdens down the road or even make financing impossible. Make sure the board has maintained adequate coverage in 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, it will be more difficult to find banks willing to offer mortgages, which can also affect the resale value of your home. As a general 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 included in your monthly rates and are taken care of by professionals. Remember that living in a condo also means being part of a community, so make sure you are comfortable with the amount of activity and noise you will face in your building.
4. What are the rates for the condominium?
While it may seem like you’re saving by buying a condo instead of a house, remember that ongoing fees need to be considered. Find out in advance how much you will have to pay for each month and factor the additional fees in your budget before signing on the dotted line.
5. How are the reservations?
While it can be difficult to get this information from the dashboard before you buy, many sellers openly offer information about property reserve funds. Seeing how much a building has in its reserve funds can help determine how well the board manages the finances of the building. The reserve is also used for unforeseen expenses, such as broken pipes or new roofs. If the reservation cannot cover these costs, you may have to pay part of the bill.
Owning condos instead of houses can be a smart purchase because it’s a great way to get the most out of home ownership without the added work. If you ask these five questions before your next purchase, you are sure to find the perfect one. Welcome home!
