Below is a list of what to consider in a condo if you are thinking of purchasing one.
What does the HOA fee cover?
Remember that not all HOA fees cover the same things. When you compare 2 condo buildings make sure you are comparing apples to apples. One condo buildling may have a higher HOA fee but it may include covering all utilities while the other does not. Or, if the condo buildling has ameneties such as a concierge desk, a pool, gym, etc., you may find that you will pay a higher HOA fee for those extras.
What rental restrictions are enforced?
Most condos have a rental restriction. Typically, I’ve seen these rental rates to be about 25%, meaning that at any given time only 25% of the total units in the building can be rented out. Rental restrictions are a good thing. It prevents too many renters from living in the building, who are most likely less interested in preserving the quality of the building, which could de-value the property.
How are the reserves?
Each condominium association should have a reserve fund. This is a fund that homeowners pay into monthly (it’s part of the HOA fee) and it goes towards future projects/renovations/upkeep of the building. Examples could include replacing of roofs, maintenance of elevators, etc. Check to see if you can get a copy of the reserve fund balance and possibly review with your local accountant to determine the strength of its reserves. The stronger the reserve fund, the better.
Are there a lot of vacancies?
If you find that there are a ton of units in a particular condo building for sale at any one time, that may signal a red flag. Try to do some further research as to why so many owners are trying to move out.