Many people who own condominiums are happy with the arrangements, but the trick is to do research before buying.
A well-located, well designed condo is probably as good an investment as any other real estate. The value of a condo should increase, remain fairly constant, or decrease with the overall market.
Some things you should know before buying a condo:
Maintenance cost or association fees.
All members want lower dues. But no member wants reduced services. Compare condo fees of other associations in the area that offer similar amenities and services.
Are there any special assessments on the horizon?
Special assessments are fees that condo associations sometimes charge owners to pay for emergency repairs, litigation, or to cover monthly dues in the event of multiple foreclosures.
What percentages of units are being rented out by their owner?
It's an established fact that owners take better care of their property than do tenants. Owners are more observant of rules, and they keep the place in better shape. If a development has a lot of tenants, you will find that overall it's a noisier place. Generally, swimming pool, spa and other amenities may be more heavily used.
Another reason for checking the tenant-to-owner ratio is that it can be difficult to resell. Any development with a ratio of 10% tenants or less should be considered good; 20% or more could be cause for alarm.
What are the condo rules?
In any shared ownership development there are going to be rules that you'll have to live by. You may not agree with all of them when you first buy the unit but find later on you want to change one or two, this may not be possible. You should get a copy of the bylaws and rules. Know the rules; you don't want any unpleasant surprises later on.
Location of the unit within the development.
Here are some areas you may want to avoid:
Are the any lawsuits pending?
The big problem with lawsuits is liability. If the association loses, the homeowners (who are the association) lose. That means that a judgment could be awarded against all the owners and each one could be required to pay a portion of it. Some states limit such loss, provided there is sufficient liability insurance.
If there's a lawsuit pending when you buy into a condo and the association loses the suit and must pay damages, you could be liable for your share of those damages. This could occur even if you bought in after the lawsuit was filed.
How much insurance does the board carry?
You need to know how much insurance the development carries. Is it enough and what does it cover? You should be particularly concerned that the development has liability coverage on:
There are many other questions that you need to know, but if you have the answers to these questions you will be closer to making an informed and intelligent purchase decision.
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