Before Choosing That Condo/Townhouse, Here Are Some Things You Must Know
Choosing a condominium or townhouse should look like a piece of cake but to be honest, sometimes it isn’t. There are several things you need to do before you make that payment.
With a condo, you have the freedom of a nice pad that is suited just for you. It is different from a single-family home and irrespective of its size, you can finally join the league of homeowners. However, you must note that having a condo incurs several dues that should be paid to a condo association. This association is responsible for handling exterior building maintenance and landscaping. For those who are too busy to take care of the exterior parts of their condo, the association has got you covered. With this arrangement, you no longer have to worry about peeling window frames or moving your lawn.
Utmost care should be taken when buying a condo. Make informed choices always and the only way to do this is to ask questions from other condo owners in the area. The price may be a fantastic offer but making an informed choice is key.
Here are six other things you need to take care of before making that payment:
Contact the Association and know what they offer
How the Condo association is run is very important. Make enquiries and attend a few meetings if you can. Purchasing a condo is a long-term business investment. You are buying into a project, so you need to be in the know. Like every other business venture, learn the rules and regulations of the association, how the condo is run and its financial stability.
When asking questions, you have the right to request for the budget of the association. Ask for a copy and if they cannot give all prospective buyers their budget, you can obtain one from the owner who is a member of the association. What you are looking for in the budget should the outstanding debt owed to the association and the percentage of owners not keeping up to their bargain. This includes those who do not pay their dues. This is important because you need to know if the condo is in trouble or if the purchase is a good financial move.
If the owners of a condo are defaulting on their payments (dues or any other financial obligations), then there are higher chances of them not keeping up with the building. Check if the building is also insured. You may wish to see an expert instead of believing mere word of mouth. Most lenders do not approve condos with high delinquency rates so it can be a bit of a challenge to get a mortgage or refinance. This is important for FHA approval.
If you are a buyer and you are paying cash, the delinquency rate may not be a bother especially if you have no intentions of selling the condo anytime soon. Nevertheless, keep in mind that if the association lacks enough funds to function, it will make cutbacks that may generally affect every condo owner. This can lead to infrastructural decay or deployable state of living. Things like the pool and lawn may no longer be clean. Depending on the association, new charges may be drawn. This can be assigned to all unit owners in order to generate new funds for the running and maintenance the common areas or for supplementing the budget shortfalls.
Cash Reserve Vault
Due diligence requires that you look into the cash reserves of a condo before making a purchase. This is because if the cash reserve vault is empty or vastly depleted, then that is a sign of trouble. If the cash reserve of a condo association is low and the building is old, there is every chance that the owners of the condo or townhouse have been going through money problems. (Or may be on their way there). You do not want to get caught in that maze. Ordinarily, associations are required to set aside 10% of their annual earnings in cash reserve especially for emergency cases and capital expenditures. Ensure there are appropriate reserves in the budget for old and new buildings. Buildings with finance issues lose value quickly because they end up selling for cash and exchanging owners before people are aware.
No matter the kind of real estate investment you want to make, always ensure the property is insured. Condo buyers ignore this fact and end up with avoidable problems along the way. The community’s insurance coverage should not be overlooked. Some condo association ignore this fact or reduce their community insurance coverage in order to save costs. This is a wrong move because in the long run, it jeopardizes the investments of the owners of the condo. New buyers like you, need to ask the seller to provide proof of the building’s original insurance policy. Once you have that on your hands, take it to an expert and ask the right questions. The expert will inform you about the suitable coverage for that kind of building. If the insurance coverage is insufficient, it can hurt a buyer’s prospect for financing. It can also hurt the condo in the case of acting as a collateral and not just your unit.
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After a successful run in managing real estates, we are finally here to help you make informed choices now that you are ready to buy a condo.
Our real estate agents are professionally licensed and seasoned. With a clear-cut knowledge of the world of real estate buying and selling, we survey the market and present our clients with the best deals they would not get anywhere else. Our realtors are equipped with relevant training thereby making it easy for them to study trends and know the best time to buy and sell properties.