What to consider in a condo

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.

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