What to Look for When Condo-Shopping?

L

LitGal

Full time employment: Posting here.
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With all due respect-- and appreciation-- to the kind folks that responded to my "New Widow" thread, I still want to learn more about one of my dreams: buying a condo for when I downsize out of this 3,000 sq. ft. house.

I searched for the topic in a couple ways in the forums, but couldn't find the right threads. I'll bet it's been talked about a lot here; so, if someone knows which thread that would be, could you please let me know? I need to know what good questions to ask, especially about how the HOA's are run.

Are there books anyone would recommend?

I'm adept at buying a single-family home (have bought FSBO's and sold my own house as a FSBO); but I've heard condos can bring their own set of nightmares. (As with one acquaintance who could not sell hers for years, until she paid off a multi-thousand dollar assessment.)

Once again, thanks to all who know about this. I appreciate everyone's wisdom and experience!

LG
 
I started typing into google "Issues in buying a" and the first suggested search was "condo." :) So a frequent question.

I have not bought one, but have had a few cases in the area. I'd look at the following: First, the usual real estate issues: How old is the building, how well maintained, what are the other owners like, what % rentals (if it is allowed), and location, location, location.... Second, read and understand (or pay someone to do so) the covenants, restrictions, and the HOA documents. THIRD, check the financials of the association--particularly if they have a sinking fund established for the proverbial "new roof," or the like. I'm sure there is more, but that would be a start.
 
Know how the Association is run, who is in charge, how elections are conducted, and ask to see meeting notes and financial statements from at least several months to a year back.

I'm in the market myself.
 
I have owned three condos in the past, and we are currently looking for another. Currently in a SFH and it will be the last.

One thing I've found is that there are so many varieties of condo available that it can become overwhelming and confusing, not to mention time wasting to look at them.

What I do is try to visualize exactly what I want in terms of the type of location (nearness to what kind of shopping, transportation, etc.), type of architecture (what rooms on what floors, etc.), amenities (garage, pool, clubhouse, etc.), size of community, neighborhood, and any other factors you personally consider even somewhat important.

Once you have your ideal place firmly pictured in your mind, you can start looking (realtor.com has a pretty good search engine), and/or you can give your agent some detailed guidance as to what you might be interested in seeing.

When I actually go to a place and look at it, I can tell whether I'm interested within two minutes. The first time or two, I'll tell the agent (and I always like to use a buyer's agent) why it didn't pass muster, so there won't be more disappointments in the future.

It may take a long time before your ideal place comes on the market, so patience is useful. Best of luck!
 
Spend some time walking the property and talk to the other walkers (they live there) and you will find out the relevant information.
 
I think the comments so far hit the nail on the head. We downsized 4 years ago and do not regret it. To reemphasize:
Use a realtor!
Check the fees, history, one time assessments, and what they include.
How does the place look now? Well kept and maintained?
Do you want amenities? (For us an indoor and outdoor pool were a big draw)
How much room do you need / want? (We have one level with all we need, but could add two rooms in the lower level, if we want).
How will your furniture fit? With less area you may need to be creative.
Do you want a community? Or to be left alone? Either is OK, but some places lean one way or the other.
We went for an attached town home. With a 2 car garage. We have most everything we had, just a little less area all around.
Good luck!


Sent from my Nexus 7 using Early Retirement Forum mobile app
 
Once you think you have found a good property review the Reserve Study carefully. Our reserve study really only addressed maintaining existing condition but ours is an old building so the study developer should have addressed replacement. Assessments indicate either inadequate reserves or an unexpected expense.

Building envelope issues are common (roof, siding, flashing of windows and decks), EFIS has a high failure rate in our area. When you hire an inspector of your unit do not overlook common areas.
 
LitGal said:
With all due respect-- and appreciation-- to the kind folks that responded to my "New Widow" thread, I still want to learn more about one of my dreams: buying a condo for when I downsize out of this 3,000 sq. ft. house.

I searched for the topic in a couple ways in the forums, but couldn't find the right threads. I'll bet it's been talked about a lot here; so, if someone knows which thread that would be, could you please let me know? I need to know what good questions to ask, especially about how the HOA's are run.

Are there books anyone would recommend?

I'm adept at buying a single-family home (have bought FSBO's and sold my own house as a FSBO); but I've heard condos can bring their own set of nightmares. (As with one acquaintance who could not sell hers for years, until she paid off a multi-thousand dollar assessment.)

Once again, thanks to all who know about this. I appreciate everyone's wisdom and experience!

LG
Click to expand...
I am on my condo board. Seattle is an expensive city, but for very urban, close in neighborhoods mine is a mid market building. My opinion is that the condo legal structure is fundamentally flawed. For a multifamily building, IMO a high quality well managed apartment building is best. Right next to me are some town homes that were built maybe 10 years ago, and are fee simple deeds. My guess is that these have many of the same problems as condos, but fewer formal structures for dealing with them. All cities are different, but if I had the money my best idea would be to purchase a newer townhome that occupies an entire normal city lot, with setbacks similar to the SFHs that were previously on these lots, but maybe 100 years old. The only downside from my POV is that these townhomes are tall, and so are going to require fairly expensive work for roofing or painting, etc. Another downside is cost. These are expensive! Finally, I like the relative break-in proof structure of an upper floor flat in a good building with well controlled entry.

If you like your neighborhood, it may be best to find a good gardener, a good handyman, etc, and stay put. Otherwise, if your city is not going crazy with rents, check out quality apartments that cost too much to attract sketchy tenants.

Ha
 
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Another thought about the HOA:
If the development is reasonably new, I wouldn't worry too much about it, beyond the obvious checks on solvency.

I bought a condo nearly 30 years ago in Virginia. It had been recently built and I was one of the last persons to buy a unit. Everything was great, and I sold it two years later for a profit.

I found out a year later from a friend who still lived there that I got out just in the nick of time. An inspection found that the builder used substandard materials and the entire roof had to be replaced in the whole development. Unfortunately, the builder had gone bankrupt in the meantime, so there was a huge assessment to everyone. Nothing that could reasonably have been foreseen, and no recourse.

These things just happen, and you can't plan for everything.
 
You did a great job in titling your thread, LitGal. Searching the forum can be a challenge and your topic is of general interest (along with the replies).
 
haha said:
I am on my condo board. Seattle is an expensive city, but for very urban, close in neighborhoods mine is a mid market building. My opinion is that the condo legal structure is fundamentally flawed. For a multifamily building, IMO a high quality well managed apartment building is best. Right next to me are some town homes that were built maybe 10 years ago, and are fee simple deeds. My guess is that these have many of the same problems as condos, but fewer formal structures for dealing with them. All cities are different, but if I had the money my best idea would be to purchase a newer townhome that occupies an entire normal city lot, with setbacks similar to the SFHs that were previously on these lots, but maybe 100 years old. The only downside from my POV is that these townhomes are tall, and so are going to require fairly expensive work for roofing or painting, etc. Another downside is cost. These are expensive! Finally, I like the relative break-in proof structure of an upper floor flat in a good building with well controlled entry.

If you like your neighborhood, it may be best to find a good gardener, a good handyman, etc, and stay put. Otherwise, if your city is not going crazy with rents, check out quality apartments that cost too much to attract sketchy tenants.

Ha
Click to expand...


Dear Ha--

Thanks for your candid assessment from your experience. So, am I understanding that the flaws in an HOA legal structure could be enough to make one avoid condo living?

Where I live, rents for high-end apts. are often way more than a monthly mortgage on a mid-range house or condo. I had thought about renting (for the reasons you mention); but that would meaning "throwing away" about $1500/mo. on a nice 2BR/2BA 1,100 sq. ft. apt, when I could own such a place and pay about $250/mo. HOA and about $2,500/yr. in property taxes (which I could write off).

I understand the real estate prices of Seattle, as I used to live near San Francisco. But moving to Ohio put us in this huge colonial on 3/4 acre, with a lot of upkeep (especially now that DS is grown and gone, and DH passed away recently). I do love this place, but just don't need it (and do like the idea of locking a door and walking away from outside maintenance).

I don't mean to be justifying this dream, necessarily, I'm just curious about your preference for a SF townhouse or apt. Can HOA's truly crimp one's style in a serious way?

You are making me re-think this.

Thanks.

:confused:
 
(1) HOA Fees.
(2) How much can the HOA fees go up a year?
(3) Are you responsible for damage in the common areas?
(4) How militarist is the HOA board?

I rented a condo 15 months in Ohio (new build - a flipper got caught and I rented on the cheap). There was 38 very high end condos, while I lived there 18 (11 of them owned by 2 real estate agents) of them were foreclosed on, and they still split the same HOA pot so instead of 1/38 share it was 1/20 share. A retaining wall the protected a hill from sliding into a group of 8 condos was not up to code and the cost of repair was $225K - which was split 1/20 owners left. That forced the condo I was renting to be foreclosed on too, because he could not afford a $11K+ hit to repair the wall, carry the mortgage, mortgage on his house and 2 other condos he bought (elsewhere) that he could not sale. When I moved in the HOA was responsible for snow removal and grass cutting, to decrease costs the tenants became responsible when the foreclosures started. They were such jerks; the HOA president (a 5' 250 + pound chain smoking "lady") was in charge. It would be 7am on a Saturday and she would bang on your door that she was going to charge you for not removing your snow by 8:30am so the mail truck could get to the mail boxes, if your grass was not too high for her liking she would bang on your door and give you a warning. 3rd warning she would get a company to cut the grass and add the fee to your next HOA. I am so glad to get out of there.....HOAs are a nightmare.
 
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Thanks, Everybody!

I knew I'd get a straight scoop if I asked the question here. I'm reconsidering renting for awhile. IF I seriously consider a condo, I've made a list of your questions on which to insist I get answers.

This forum can surely save one a lot of headaches, if important questions are asked.

Thank you, thank you!

LG

:flowers:
 
We sold our 2 rental condos last year after both having leaks which were in the wall and the slab. S. CA and both built in the 70's. HOA boards were not fun to deal with either.
 
By all means review the Association rules, dues and how they handle BIG expenses.

Was the place built as a condo or is it converted apartments? Some conversions are not that great. Homes built as condos usually have things like double walls to limit noise, and independent utility service.

You are buying into a way of life. Many people are quite happy letting a condo association deal with various problems and issues and don't mind giving up some rights concerning how they deal with their property. Other owners would be better off buying a single family house, on five acres, out in unincorporated county land with few building codes. These people do not do well in a condo.

In regards to paying for big expenses there are two lines of thought. The best and fairest, IMHO, is to keep the dues high enough so that the money is in the bank waiting for the next paint job, new roof, etc. House wear out over time, so money to fix them should come out of owners pockets over time. But.....

There are those who prefer to keep dues low so as to boost property values (I am not sure that really works!) or help with their monthly budget problems. Often these are people who don't plan on staying long so they might as well shift the costs to the next owner who ends up paying a large special assessment. They use up the roof and wear out the paint, and the next owner get's to pay for it. Not so good, IMHO.

My current board kept monthly dues flat for two years. Part of it was cutting back on certain expenses. But, part of it was letting our repair reserves lag behind future costs. This will cause a big special assessment the next time we paint. Since I have lived here a long time and plan to continue, it doesn't make a difference to me. But, I can't help wondering how people who are complaining they can't afford an extra $25 a month will suddenly come up with $500 to $1000 for painting.
 
Condo living isn't worse or better than living in a house; it's just different. The lock and leave aspect is great, as is the shared maintenance (from my POV). But you have to understand that you are living in a community, a tight neighbourhood. If you play drums all night, have wild parties, and want to paint your patio purple, a condo is not for you. If you are intolerant of the sound of children playing, choose an adult community. HOAs are not all bad. They have a job to do, and some do it better than others. The most important job that the HOA needs to do is to maintain the complex and keep it on a sound financial footing. Over time, maintenance costs will increase, just as they do in a house.

I own several condos and am involved in several HOA boards. My go-to tips would be:
1. Read the strata property act or similar legislation for your jurisdiction.
2. Read a guide for condo buyers (mine is old and not relevant to the U.S.).
3. Research the local property market. Condo prices and resale values generally lag SFH.
4. Make a list of your must haves and nice to haves. Remember, location, location, location! Conventional condo or land strata? Swimming pool? Gym? Clubhouse? Remember, you will be paying your share to maintain these common properties.
5. Decide on your budget and how you want to finance the condo.
6. Now you can start looking! Employing a buyer's agent is helpful, particularly for an older condo.

When you find a condo that you really like...

7. Look for the best location within the complex/building. For example, in a wood frame building, the top floor is quietest.
8. If buying a new condo, try to see one under construction and research the reputation of the developer. Does an older building meet current building codes, e.g. sprinklers?
9. Read the disclosure statement in detail. What is the history of the building?
10. Review financial statements. How much money is in the reserve fund? Have there been any special assessments?
11. Has a depreciation report (aka reserve fund study) been done? In many jurisdictions these are required and must be updated every several years. Read it to get a sense of how much maintenance and repair is anticipated over the next decade or two.
12. Is there a management company in place? Talk to the managing broker. Ask for a copy of the bylaws and rules. How many pets are permitted? How is parking managed? What are the most common issues in this complex? Are rentals allowed?
13. Is there a building manager on site? Talk to him or her. Ask what is in his or her job description, common maintenance issues and complaints.
14. Talk to some residents and HOA members if possible to get a sense of the culture of the community. How often does the Board meet? Is there a good mix of skills on the Board?
15. Visit at night. How many lights are on? Loud parties? Are there drug deals going down in the parking lot?
16. Visit the local government website to see if there are any major changes planned for the area, e.g. a new rail line just outside your window.

By the end of this process (which I confess I have not followed religiously myself) you should be able to make a fully informed decision. If you do buy a condo, read the meeting minutes, attend the AGM and get to know your HOA chair, building manager and property management firm, if applicable. Your community will thrive only if a critical mass of interested owners commit to making it so. You can be one of them if you choose.
 
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urn2bfree's post was a little disconcerting.

The article talks about Florida law, but I wonder if other states have some similar provision and if a realtor would be informed about that type of thing.

Another thing it made me think about is "know your neighbors", is relevant information readily available?

(I know nothing about condos, but wouldn't rule them out in the future)
 
steelyman said:
urn2bfree's post was a little disconcerting.

The article talks about Florida law, but I wonder if other states have some similar provision and if a realtor would be informed about that type of thing.

Another thing it made me think about is "know your neighbors", is relevant information readily available?

(I know nothing about condos, but wouldn't rule them out in the future)
Click to expand...

Yes, that is why my #1 item was "read the strata property act or similar legislation for your jurisdiction". I should also have mentioned privacy legislation. Where I live, you don't have a right to see a full list of owners' details. Even Board members only have access to this information on an "as needed" basis.
 
I lived in a condo for a few years and loved it. I would take it over my SFH anyday now that the kids are gone. But it was an ideal situation, six unit place all owner occupied. And I think thats one key, how much is owner occupied and how much rented out. May have a conflict of interest between resident and nonresident owners. A small number units can be well owner managed and really large units have professional management but mid size places may try to manage it themselves with suboptimal results.
 
Condos and townhouses come in many shapes and sizes
Most people call all of them condos, but there are differences

Condos usually have a shared door, then a private door (like an apartment)
a townhouse usually has it's own door to the outside world.

How much ambient light do you like? Most townhouses only get light from 2 sides (front and back). Many condos may only have windows on one side.

Do you want somebody living above or below you? Once you buy the property you may find night time habits annoying. One person in my townhouse complex lets her son play drums at 11pm.

Here are what I would look at...

1) What units are easiest to sell? END UNITS. Everything else is ordinary. The people trying to sell a condo and having a problem likely "over valued it" or own something in high supply.

In my complex, I am the ONLY townhouse for sale, but there are 10 condos for sale.

2) HOA- what are the fees, and when was the last time they increased? I see some complexes here which have very well valued homes, but $400/mo HOA fees, it is tough to sell the house because the HOA fee is that high.

3) Drive through in the winter, see if the roads are plowed

4) drive through in the summer and check the landscaping

5) drive through at night and see what is going on outside.

6) I would suggest renting a condo/townhouse or going in on a land contract you can walk away from.

I love my townhouse. I doubt I will live in a SFH unless I can outsource the yard work. I'm downsizing the TH I own, and planning on buying some condos to rent out, so know there is a niche they fill.

I would also tell a realtor to take you outside the box on townhomes and condos. In my complex you can get all of the following at 1800 sq ft

3 BR single floor (top floor) with living room, dining room and kitchen (meaning two tables fit).
3 BR 2 floor plus finished basement with 2 living areas and 2 eating areas
3 BR 1 floor under the 3 BR single floor with a finished lower level too
2 BR 2 floor with a finished lower level

then see the same floor plan as an end unit and interior unit- small things make a big difference.
 
Well, another very negative review of condo ownership was posted on the Living Stingy blog today: http://livingstingy.blogspot.com/ basically he argues- in regards to that Florida situation to which I referred in my earlier post -that it applies to ALL condos everywhere:
"How can you avoid such a financial fiasco? Well, to begin with, Never buy a Condo! As I noted in that posting, you are not buying real property, just the right to occupy. And you are not buying control of your property, just membership in a half-assed and poorly run corporation. You have little in the way of rights and a lot in the way of responsibilities. Free-standing properties are always a better value as a result."


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