5 Questions You Should Be Asking When Buying a Condo
What Are the Fees?
When purchasing a condo most buyers may not take into consideration the condo fees. These fees are typically paid monthly and are adjusted by condo depending on size and location within the building. Condo fees will be part of your monthly obligations and need to be taken into consideration when budgeting. Along with condo fees buyers may inherit assessment fees. For example residents within a condo community may have agreed to take on the cost of an improvement project and this cost may be broken into additional monthly payments. A buyer may be obligated to take over the monthly fees for the assessment. So be sure to know if an assessment has been made or if there are any upcoming assessments that you will have to deal with.
How Good is the Management Team?
One of the biggest missteps buyers make is not taking time to meet and interview with the management team. The condo’s management is ultimately the entity that will determine if you have a great experience or not as a condo owner. Don’t be afraid to take time to interview the management team. Also talk with current residents and see what are the biggest complaints or positives about living the respective condo. If you’re able to, get ahold of the minutes from a current meeting. In addition be sure there are no current of pending litigations. It’s not uncommon for the management team or the developer to be sued. Doing your due diligence can help you make the right decision.
What Does The Insurance Cover?
Although condo insurance is typically lower than that of a traditional home, be sure you understand exactly what is covered. Buying a condo you may think that damage done within your unit due to exterior issues such as a roof leak is automatically covered. This isn’t always the case. Be sure to carefully go over the condo insurance policy. The best advice is to go over the insurance with a third party agent not associated with the condo.
What are the Rules?
This cannot be stressed enough. Rules can make or break a condo deal but it’s not uncommon for buyers to neglect reading the condo rules and have to deal with lifestyle issues such as balcony rules, parking rules, storage rules, and the ability to rent or Air B&B the unit. So before you sign the dotted line make sure that you have read and understand all of the rules associated with the condo you are looking to purchase.
What is the State of the Finances?
Every condo collects fees and puts away a certain amount into a reserve fund. The reserve fund helps to cover the cost for major repairs and improvements. If a condo doesn’t have the adequate amount in their fund then the burden of the cost falls to the owners. Therefore, be sure to ask for proof of solid replacement reserves. This will allow you to gauge wether or not the condo association in question has been doing a great job or poor job of building a reserve.