Buying a condo is about 1000x easier than buying an apartment building. Among the things you don’t have to worry about are: foundation, roof, rent control tenants, environmental issues, etc.
But there are still some pretty important things to consider, things about which the vast (and I mean VAST) majority of agents know nothing.
1. The physical condition of the building(s)
There’s no special magic that protects condo buildings from deteriorating just like apartment buildings. Older buildings will eventually need expensive repairs (new plumbing, roof, etc.). Before you buy into a building, you need to take a look at its condition. Otherwise, you could be in for un-expected “special assessments” (one-time “taxes” charged by the Home Owners Association to pay for upgrades / repairs).
2. The financial situation of the HOA
You need to take a look at the financial situation of the condo association. I recently helped clients buy a condo in a complex with ridiculously low HOA fees (like $200 / month). I wondered, as we were putting together the offer, how the association managed to maintain a large complex for so little money. Turns out it doesn’t: There is a regular “special assessment” each year by which the association plugs the whole in its operating budget. In a typical year, this is ~$1000… so the HOA fees are 42% higher than advertised.
A well-run condo association runs at a surplus each year (in other words, the HOA fees collected exceed operating expenses). That way, the HOA builds up a reserve it can tap for major repairs like re-doing the roof, the plumbing, etc. as needed.
3. How the HOA runs
HOAs are governed by representatives elected by the condo owners. Unsurprisingly, some are run efficiently by responsible, responsive people. And others are run terribly by jerks who engage in multi-decade feuds with each other. Before buying a condo in a building, its worthwhile to get a read on how the HOA is run. Here’s a hint: Large buildings generally run better than smaller ones, because there are more people to dilute any crazies who emerge.
4. The zoning of the surrounding area
The price of real estate, like everything else, is subject to supply and demand. There’s a huge difference between a condo in a building in an area zoned for more multifamily buildings and one in an area which has been down-zoned. The first condo is going to end up competing against a lot of other ones; the second has a “moat” around it, protecting its value.
If you’re thinking about buying a condo, whether as an investment (in which case, read this first!) or as somewhere to live, Adaptive can help… send me an email at moses [at] adaptiverealty [dot] com.