A condo is a great way to break into homeownership. There are many benefits of living in a condo unit compared to renting, such as lower costs and greater stability due to having fewer shared spaces (i.e., no common walls with neighbors). However, Damon Becknel, an experienced entrepreneur and land developer believes that before signing on the dotted line, there are several things you should know about what buying might entail.
A condo purchase entails paying more than just your down payment. Closing costs may include professional fees, land transfer taxes, legal fees, moving expenses, and more! Make sure you have an idea of how much extra money will be required and how it can be budgeted (i.e., is it worth putting off another purchase for a year?)
Condos in your area might not appreciate or depreciate as much as houses because their values hold steady with those around them more closely than they would if they were free-standing homes (simply put). On the other hand, location plays a large part in appreciation rates as well as some special features such as recent renovations or less-than-ideal locations. Talk to your realtor for more information.
If you are planning to only be a temporary resident, you might not want to buy a condo at all because it can be difficult to sell later on. On the other hand, if you don’t mind having a stay-at-home unit that may or may not appreciate much overtime, then condos may suit you well!
Buying a condo is far different from buying a house because it will likely involve shared spaces and neighbor’s (for better or worse). Make sure that the type of lifestyle living there would fit your needs.
Because condos are more expensive to maintain, they are seen by lenders as less stable investments, which means that the money you put into your unit is not considered an asset. As a result, you might have trouble finding financing if your down payment is less than 20% of the purchase price. If this is true for you, it will mean either having to save up or looking at alternative loans such as high-ratio mortgages, which have higher interest rates and fees.
Even if you don’t own a condo yourself, there are plenty of condos in your area that you probably live near. In those cases, make sure you know what the rules and fees are around things like parking or pet rent as well as how strict the HOA is about sticking to those rules. In some places, it’s fine to walk around barefoot but not in others! Some HOAs may also have monthly fees above and beyond maintenance costs, so try to find out exactly what these entail.
Condo units typically have individual titles that denote who owns which unit exactly. If one buyer defaults on their mortgage, they can lose their down payment money and with it the ability for you to receive
The above list outlines some things you should know before buying a condo, but there are many more things about condos in general, including how maintenance works, what amenities are offered, and where to look for parking spots! For more information regarding any of these items or other questions, feel free to consult with an agent.