Know Before You Condo
Before I bought my first home, my vision of homeownership included sitting on my front porch, sipping something cold from a tall, dewy glass. I imagined holding hands with my husband in side-by-side rocking chairs while our daughter climbed a tree in a luscious yard bejeweled with flowers and leafy plants. When I mentioned this vision to my husband, he said, “I’m not spending my weekends mowing a lawn.”
His comment brought me down to reality, and I recalled the hours my own mother spent on her knees, in gardening gloves, pulling weeds in the front and back yards of my childhood home. It wasn’t a future I envisioned for myself.
“Yeah,” I said. “Me either.”
Our ideal home includes a yard (and a gardener) and a pool (and a pool boy), but we know not to make promises to ourselves that we can’t keep. The last thing we want is to be the owners of that one house on the block with a dirty green pool and a yard so overgrown and frightening that neighborhood children run past it on their way to school.
So we started looking at condominiums.
A condo can be a great way to ease into homeownership. You’re responsible for leaky faucets and water heaters but you don’t have to venture into the realms of roofing, siding, or septic systems. But even though your responsibilities are limited, condominiums do come with their own set of particulars.
Keep these in mind when you condo shopping:
When you’re shopping for a condo, the purchase price is not the only number to take into account when calculating the monthly cost. Homeowners association fees can add a considerable amount to your mortgage. These fees go toward the routine maintenance of the building and surrounding property, insurance for the building’s externals, and trash pickup.
Occasionally, condominium owners are required to pay additional fees to cover the cost of projects that lie outside the arena of routine maintenance, such as a parking lot that needs to be repaved or roofing that needs to be replaced. If the association is run well, however, these extras will be covered by reserve funding.
Financial status of HOA:
It’s not always easy to get an HOA’s financial information prior to writing an offer. It is, however, worth a try to submit a request for annual reports, income statements, and balance sheets. Otherwise, be sure to ask your buyer’s agent to write an offer that includes a set of HOA documents, paid for by the seller. These documents will contain financial information that can give you a good sense of the HOA’s sustainability. And your offer should also include a time-contingency so you can back out without penalty if you don’t like what you see.
Most owners want a high owner-occupancy rate. Lenders do, too. In fact, the FHA will only insure loans where at least 51 percent of the units are owner-occupied. Most associations will provide the owner-occupancy rates if you call or submit the request in writing. But again, you can get the information from the HOA documents before you complete your closing.
Believe it or not, although you own your condo, the association can restrict your right to rent it out. While some associations ask for additional monthly fees from owners who rent their places out, other associations allow for only, say, 10 percent non-owner occupancy. To complicate matters further, the occasional supermajority can even change association bylaws retroactively. In other words, even if you purchase your condo with the intent (and the legal right) to rent it out, you might find later yourself at odds with an HOA that suddenly changed the rules.
That said, condominium ownership certainly has its perks. You may not be able to paint your door red, but you will have more security and less expensive homeowner’s insurance. And, if you’re lucky, you might even end up with beautiful flowerbeds you don’t have to weed, a pool you don’t have to clean, and a gym you don’t have to drive to.