First time home-buyer or empty nester? Looking for rental property? Why choosing a condo over a house for investment may be the way to go if you know what to look for.
Falling real estate prices and surging gas prices make anyone uneasy about signing the dotted line on a home purchase. But if you’re looking for a condo either to rent out or live in, now may be a great time to buy. Why?
- The higher they go the harder they fall. Real estate flippers were buying condos by the masses during the height of the real estate boom...and not just in Miami. Every city had its share of investors trying to make a quick buck. Sometimes people would buy and sell units over and over again before the paint was even dry on the new construction. As a result, condo prices are depressed and ripe for savvy buyers.
- Condos make great rental properties. Whether this is your very first real estate purchase, or you’re an empty-nester looking to downsize, view your condo purchase as an investment. Say you decide to get married down the road and need a bigger place, you can always rent out your condo if you can’t get the sale price you want. Or if you’re downsizing from a house and a year or two down the road you decide condo living is not for you, you can always lease the unit and use the income to pay bills or offset the mortgage on a house.
Before you begin condo shopping, follow these tips for a better buying experience:
- Find out exactly what the maintenance fees are. Don’t even walk into an open house before you know how much you’ll have to pay to the condo association every month and what those fees cover. Dues can range anywhere from several hundred to thousands of dollars a month. Does it include trash, cable or satellite? When was the last time the association board installed a new roof? How often is the building painted? These are all questions you need to ask before you ever set foot inside a unit.
- Read the condo documents carefully. Every condo association has them and the board is required to give you a copy when you purchase the property. But don’t wait until then. Get a copy before you make an offer and read the fine print. If you decide to rent out your unit and the condo board doesn’t allow leases, you need to know that before signing a contract. The condo docs will also tell you if there are any age restrictions on tenants. They also cover rules concerning common property such as a pool or tennis courts.
- Examine the building exterior and grounds. Each condominium complex may have different associations and each one runs differently. That’s why one building may look well-kept, while another in the same community is old and tired-looking. Drive by at different times during the day to determine how often maintenance crews are working.
- Get a copy of the condo board’s financial statement. Remember, owners elect the condo board and you need to find out how well the association manages money. You pay dues every month and you want to find out where every penny is going and how it’s spent.
- Talk to residents. Walk around on a Saturday afternoon and chat up some of your potential neighbors. If you tell them you’re thinking about buying there, some may be very candid with you about life in the community. Even if they’re not, you can often read between the lines and sense any problems or discord in the complex.
- Finally, negotiate, negotiate, negotiate! Remember, this is a buyer's market. Study comparables carefully and don't be afraid to make a low-ball offer. Sure, the seller can turn it down without a counter-offer, but with a glut of condos on the market, you'll surely find another one you like just as much.
Related Suite 101 articles:
If you decide to lease your condo, why you need rental documentation.
High ratio borrower tool kit for first time home buyers.
The copyright of the article Buy a Condo or House? in Buying/Selling a Home is owned by L. Marie Dubuque. Permission to republish Buy a Condo or House? in print or online must be granted by the author in writing.
