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What to Look for When Buying a Condo
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While the real estate market has come back in most markets, it doesn’t mean that buyers can’t look for the best deal.  This includes when you are buying a condo.  However, the trick is to know what you are looking for as condo tend to be a different animal than buying a house or a co-op.  For one thing, you will need additional documentation to finalize the loan but that is not the only issue.  As such, this article will give you some tips on what to look for when buying a condo.

Get to Know the Management

Unlike a home where you are the key determiner of how the property will be maintained, with a condo it is the management who will have the biggest say.  Their job is to look after upkeep, ensure that common areas are clean and accessible, and to take care of any capital improvements.

This is important.  If the management and the people who live in the building can’t agree on how to best take care of the building, then this is a big red flag that you shouldn’t buy.  However, if the building is well maintained and everyone seems to get along, then you might have found the right environment.

(Really) Look at the Numbers

This can be difficult, especially for first-time buyers but you need to think like an owner when it comes to determining whether this ‘investment’ is worth it.  As such, you want to ask yourself what are the prospects for the condo appreciating in value over time.  Even if you don’t plan on moving anytime soon, you want to make sure that you will get a decent return on your investment.

Choosing among all the condos for sale in your market is not meant to be easy.  Let’s face it is, this is a big investment and you want to sit down and look at the numbers before deciding to move forward with the purchase.

Set up a Budget

In many cases, the seller or their agent might not have this information available.  But it is important that you know the fees are for the condo that you are considering.  In some cases, the fees might be equal to 1% or 2% of the condo’s value, so the cost can really add up depending on the market.

Another thing setting a budget will do is help you to determine whether you can afford the condo or not.  As such, you want to find out how CAM (Common Area Management) Fees are determined, including how they will increase over time.  Also, make sure you know how garbage is handled and the cost and the where the money for the capital improvement budget comes from. 

The answers to these questions will give you a better idea of the total cost of ownership and this go a long way to helping you determine if the condo in question one you can afford.

Ask the Tough Questions

Ok, you don’t want to seem rude but if you are buying a condo, then you are becoming a part owner in a development.  As such, you want to know if the building has a problem with delinquencies. 

You might not think that this would matter, but it does.  If a development has a high incidence of mortgage delinquencies, then it might be harder to get a loan at a good interest rate as the underwriting agencies will view your loan (even if you have perfect credit) as a default risk.

As such, you want to get the low down before you apply so ask the committee if they have any information on delinquencies over the previous twelve to twenty-four months.  While they might not know about the exact status of every mortgage, they will know if owners have been behind on their CAM fees or if they are facing foreclosure.

Owners or Renters

Research shows that condo developments with a higher percentage of owners living onsite tend to be better maintained than those largely occupied by renters. As such, you will want to get this information when you perform your due diligence.

One Last Thought

Insurance, while you might assume that every condo is properly insured, you would be surprised by how many aren’t.  As such, you want to check out the insurance policy to know what is covered and to what amount.

Latest Activity: Jun 23, 2017 at 11:31 AM

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