Whether you’re aiming for a smaller living space in a particular neighborhood or prefer not to deal with yardwork , a condo can be a great investment. Let’s review the differences between condos and single-family homes, the pros and cons of condo life, and five things to consider before purchasing a condo.
Buying a Condo: Quicklinks
- Condos vs. Single-Family Homes
- Pros and Cons of Buying a Condo
- Pros of Condo Life
- Cons of Condo Life
- 6 Things To Consider Before Buying A Condo
- Buying A Condo: FAQs
- Are condos good for first-time buyers and investors?
- How can I get a feel of the community before I’ve moved in?
- Do I need a special realtor to buy a condo?
- Buying a Condo: A Recap
Condos vs. Single-Family Homes
Purchasing and residing in a condo versus a single-family home can be vastly different experiences. While the sales price for a single-family home can be more expensive than a condo, the monthly HOA fees for a condominium can be very high, especially in major metro areas.
Another thing to consider is potentially restrictive HOA rules — especially if you enjoy renovations or decorating your patio to suit your personal tastes.
Pros and Cons of Buying a Condo
If you’re considering purchasing a condo, it’s important to weigh the good with the bad. Here are some top issues to consider before making a purchase:
Pros of Condo Life
- A condo might be less expensive. Depending on your location, purchasing a condo can be less expensive than a single-family property. This is ideal for first-time homebuyers or those that may not have a very large down payment available.
- Condos are fairly low maintenance. If you prefer to leave the yard work and repairs to the professionals, a condo may be the more appealing option. Most exterior maintenance (lawn and shrub care, roofs, exterior siding) in condo communities is generally handled by the community HOA.
- You may have top-notch amenities. Depending on the community, you may have grilling areas, pools, dog parks, and more all within reach.
- Condo communities tend to be more social. If you’re an extrovert or in a new city and hoping to make some friends, you’ll get plenty of opportunities to do so in a condo community. Many condo associations will organize social events like barbecues and pool parties.
Cons of Condo Life
- HOA rules can be restrictive and the fees can increase over time. This is a common complaint about living in a condo community. HOA rules can regulate everything from trash pickup to how many pets you can have. And unfortunately, breaking the rules can result in hefty fines.
- It can be a risky investment. Because you and your neighbors collectively own the common property, the entire community could suffer if someone doesn’t pay their dues. Even another unit going to foreclosure can affect property values.
- There’s typically less privacy. Condos share plenty of common areas, along with walls, ceilings, and floors. If you’re sensitive to noise or prone to being a little noisy yourself, this may be an issue.
- There’s limited space. Lots of communities do not offer assigned parking, which can be annoying. Depending on the community, storage might be limited too.
6 Things To Consider Before Buying A Condo
Your lifestyle & desired amenities
Being a homeowner is expensive, especially when you factor in upkeep, repairs, and maintenance. If the thought of yard work and surprise repairs gives you anxiety, condo life may be a great option.
On the other hand, living in a condo is similar to living in an apartment. This includes sharing walls, floors, and ceilings with neighbors in close quarters. So if you aren’t a fan of apartment life, buying a condo might not be a good option for you.
Some condos tend to also have a wide variety of amenities, like gyms, outdoor grills, and dog parks. Others may have pretty barebones offerings. Check with your realtor to cover your amenity wishlist before you begin your search. It’s also something to consider after you’ve purchased — condos that don’t offer a lot of amenities may net a lower sales price.
The property management
If you’re paying higher dues, it’s crucial to ensure that the condo has regular upkeep. Poor management can also affect your property value or even increase your HOA dues.
When you’re touring potential condos, ask who is responsible for maintenance. You’ll also want to research the company’s reputation, find out if they own other properties, and even chat with board members to gauge how they feel about the services.
Mortgage rates for condos can be higher than interest rates on single-family home loans to buy single-family homes. This is because the condition of the building and the HOA’s finances are also considered — not just your income and credit profile.
Regulations and special assessments
If a condo association is looking to fund a big project, that’s when special assessments come into play. These are extra charges that are usually voted on by the HOA board. While they are usually imposed for a limited amount of time, it’s still something to consider as it will affect your budget while they’re active.
Find out if there are any current or upcoming special assessments before you purchase. Otherwise, you run the risk of paying a down payment and closing costs, along with a surprise payment for the assessment.
Homeowner’s insurance for condos
Your condo association will carry a master insurance policy that covers the things they’re responsible for, such as the grounds, common areas, and the property’s structures. This leaves your personal property and the interior of your condo to your own policy. Your condo insurance will provide coverage for things like countertops, cabinets, and flooring, as well as personal liability coverage and temporary living expenses in the event of a covered loss.
Seek FHA-approved condos
It can be more involved to get a mortgage for a condo versus a single-family house. This is because the condo development itself will come under scrutiny (in addition to your individual profile) once the loan application is in.
The Federal Housing Administration (FHA), which insures FHA mortgages, has a list of FHA-approved condos on its website. Conventional lenders might have similar requirements, but If the condominium isn’t FHA-approved, you may not be able to be approved for a conventional loan either.
Buying A Condo: FAQs
Are condos good for first-time buyers and investors?
Yes. The lower price is an obvious perk, but if you’ve been renting and are familiar/comfortable with apartment life, you can continue that familiar experience while building equity. Remember these aren’t just for people with smaller budgets or plans to relocate in the future. Condos can be ideal long-term investments — they can serve as a rental for future tenants or even for short-term lodging with Airbnb or similar companies.
How can I get a feel of the community before I’ve moved in?
Ask the community about any house rules. Are they very strict (or too lenient) about noise after certain hours? How do they handle issues or complaints? Are they responsive on the weekends? Pay attention to how they respond and do your due diligence to ensure it will be a good fit for you.
Do I need a special realtor to buy a condo?
Not necessarily, but it does help to work with a realtor with condo experience. They’ll be able to address any concerns you may have and guide you through steps like reviewing the association documents.
Buying a Condo: A Recap
Learning the key differences and things to consider before buying a condo doesn’t have to be overwhelming. Before you start seriously shopping for your first condo, educate yourself on the key differences and schedule some time to view the potential communities. Once you’re prepared and you have a budget in place, get several condo insurance quotes, and then, you’ll be prepared to make an informed purchase on the condo of your dreams.