Condo basics - what to look out for when buying a condo?
Condominiums are more popular than ever, as people across North America look for new and affordable ways to upgrade their quality of life. Condos involve a specific type of ownership arrangement, with people in control of their own unit while also paying maintenance fees for the common areas and assets of the community. In the United States, each condo community is run by the homeowners association (HOA). In Canada, this entity is known as a condo board.
Condos provide numerous advantages over detached dwellings, including lower purchase and living costs, reduced maintenance, and improved access to amenities. With condos emphasizing community values and often located in great locations, they can also be a great way to upgrade your quality of life. Despite these benefits, purchasing a condo can be challenging, with buyers needing to compare and contrast units and buildings based on a whole new set of criteria.
Like all real estate decisions, the location should always be a key concern. Whether you're looking for a new family home, a source of rental income, or a way to build equity, the location of your condo will affect your financial future and your quality of life. Many condos are located in central urban locations, which allows people to live closer to crucial infrastructure and employment opportunities than they could otherwise afford.
When comparing locations, it's important to look into employment, schooling, transportation, entertainment, and potential noise and air pollution. It's also important to think about the future, with a central location that seems exciting now possibly becoming problematic when you want to raise a family. It's also important to think about property values by analyzing supply and demand trends in the surrounding area. Like all real estate decisions, it's normally better to buy in a location that's on the way up; somewhere that's showing strong signs of movement but still has room to grow.
For many people, the condo lifestyle is all about access to amenities. While few people can afford their own tennis court, swimming pool, or fully equipped gymnasium, moving into a condo allows you to take advantage of the common areas and assets of the entire community. It's important to compare different buildings and find amenities that you'll actually use. Many new condo communities cater to specific age groups and demographics, with young people likely to be attracted by technology hubs and entertainment areas and older residents attracted to social clubs and activity areas. Along with the type of amenities on offer, you also need to analyze their age and general condition.
The costs involved with condo living can seem expensive and complex compared to standard detached houses. Along with the cost of your mortgage, you will also be responsible for monthly condo fees to the HOA or condo board. Condo fees vary widely based on a range of criteria, including the building age, building size, and number of amenities. Older buildings will often be more expensive due to an increased maintenance schedule, with smaller buildings also more expensive due to reduced economies of scale. You should always compare condo fees in relation to the amenities available and check for an adequate contingency fund in case extensive repairs are needed in the future.
Before buying a condo, it's important to analyze the physical condition and financial health of the condo building with a fine-tooth comb. You can review the annual financial statements of the corporation or association involved, review building plans and amendments, request detailed information about the physical condition of the building, look into complaints and litigation, and review historic and forecast maintenance fee increases and amendments. Whether you're purchasing a pre-construction condo or buying into an established community, it's important to use the services of a real estate lawyer who has experience with condo developments.