If you are a first time home buyer or an experienced home owner, a condo can be a good or bad option depending on your individual needs. Debating buying a condo?
Below are some quick tips that will empower you to make a better decision.
What Is A Condo?
“Condo” is short for condominium and describes a type of real estate ownership. You are essentially buying an apartment. Both look identical in appearance and you cannot tell an apartment complex from a condominium development simply by looking at them. The differences are legal and reflect a different level of interest in real property. From a technical point of view, you are the owner of the airspace within the boundaries of the condo unit only. All other property in the development is considered to be common and an individual condo owner will only have a fractional interest in this.
Pros Of A Condo
Condos are generally more affordable than single family detached houses and require less money to purchase. This will result in less cash a buyer has to come up with for a down payment and a lower monthly mortgage payment. There are many condos in Raleigh, NC that can be bought for about $100,000. These are a common choice for younger, single professionals who are buying their first home. The utility costs will generally be lower in a smaller condo as compared with a larger detached home.
- Less Maintenance
Generally you will only be responsible for the maintenance of the items in your apartment. Examples include: appliances, plumbing fixtures, cabinets, light fixtures, doors and locks etc. For this reason, many retirees move into condos because they can no longer maintain a single family home. I worked with someone who needed to sell a home fast because they could no longer maintain a detached house. It is critical to get a copy of the restrictive covenants from the HOA and read every last word before buying a condo.
- Major Repairs
You will not be responsible for most of the major repairs like roofs, siding, landscaping, etc. This is less exposure to risk that is felt by the owner of a single family house that has to replace a leaky roof. Check the restrictive covenants to see who will be responsible for your HVAC unit. More often than not it will be the homeowner. Overall, this will be the item that is the most expensive to replace.
Cons of A Condo
- Minimal Appreciation
Generally speaking, condos show little appreciation when compared to their detached home counterparts. Generally, condos that are located in hot urban areas show large amounts of appreciation but are less affordable.
- HOA Dues & Assessments
HOA dues and fees can be very expensive relative to your mortgage payment. There will be a home owner association where most matters are put to a vote and you should have a say in the voting process. However, if dues are raised you will have to pay them regardless. They can also “assess” large one time fees to fund certain project such as replacing roofs and siding. These assessments can be expensive. HOA can foreclose on your property very rapidly, so not paying these dues is not an option.
- Rules & Restrictive Covenants
There are many rules and restrictive covenants regarding condos. What you can and cannot do with your balcony is a hotly debated topic. Forget about grilling out on your balcony.
Ultimately you have to decide what’s most important to you. Condos can be great to a retirees who cannot maintain single family homes but do not want to rent. Condos are becoming more common in urban environments as the downtown areas of cities are becoming more attractive to professionals. This is especially true of the area in downtown Raleigh close to Glenwood Ave and Fayetteville St where some are selling for over half of a million dollars. Their proximity to work and nightlife is very appealing to the younger generation that isn’t interested in suburban living.