9 Important Questions to Ask When Buying a Condo

condo buildingHave you been thinking about buying a condo? Perhaps the condo is in an up and coming neighborhood, and you want to buy before prices start to skyrocket. Or perhaps you’re tired of not being able to paint the walls of your apartment, and you’re ready to take the next step towards home ownership. Or, maybe you’re just ready to downsize your home.

Whatever the reason, many people very much enjoy condo living. You often get a pool and fitness center, as well as a security team and the opportunity to own a home without having to worry about all the caretaking responsibilities.

Although there are pros and cons of buying a condo, it’s not quite the same process as buying a house. There are important aspects to consider, and it’s important that you go in knowing the right questions to ask.

Questions to Ask Before Buying a Condo

So, what should you ask your real estate agent, your future neighbors, and the homeowners association before you buy your condo? Here’s an initial list that you can use as a guide to get started.

1. What are the biggest complaints?

What gripes are people airing at the condo board meetings? Get your hands on the minutes from the last few meetings, or talk to current owners. If the association isn’t quick about fixes, you want to know about it before committing to live there.

2. What’s the management team like?

You’ll want to interview the condo manager (i.e. the one who’s there full-time) personally. Also, talk to your neighbors about management. A lousy manager can make condo living a grueling experience.

Some condos manage themselves. That is, there are no property managers, and the residents meet to make decisions together. The good side to this is that it often means monthly fees are much lower than professionally managed communities. Although self-management works in some cases, think carefully before moving into a community like this. You have to live next door to all of these people…do you really want to manage a community with them too?

3. Is there storage space available?

Some condos offer residents personal storage space. Your condo will likely not have an attic or garage (unless you’re in a townhouse), so ask if you’ll be provided any extra space to store bikes, winter skis, and luggage.

4. What does the insurance cover?

Make sure you get a copy of the condo association’s insurance policy. Find out exactly what is covered, including the cost to bring the building up to code (if it’s an older building). Also make sure the estimates to rebuild are accurate, and not minimized or outdated.

If the policy is confusing, it might be worthwhile to bring a copy to your own insurance agent so you can go over it together.

It’s also important to check if their policy will cover your personal belongings if the roof leaks or the building catches fire. If it doesn’t, you’ll want to consider taking out a policy on your own (which will be yet another monthly expense).

5. Will I need to move in the next five years?

Condos usually appreciate slower than single-family homes. And with the real estate market in the dumps already, it could take a while for prices to recover enough to make a profit if you decide to sell. While it’s impossible to predict the future, make sure that you really want to live in this community before you decide to buy.

condo balcony

6. Do I fully understand the monthly association fees?

Condo association fees are calculated based on how many units there are, what it costs to maintain the property (both short and long-term), whether or not the community is professionally or self-managed, and funds set aside for litigation and major repairs.

Get your hands on a breakdown of the monthly dues you’ll be responsible for. Make sure you can truly afford this extra payment, and that you understand what you’re getting for this payment. And remember, condo association fees are not tax-deductible like your mortgage is.

You also need to look closely at the Repair Fund. Every condo association must put a certain portion of dues aside for major repairs. If the complex is less than 10 years old, the repair fund should have 10% of the cost to repair major items (i.e. roofs, tennis courts, etc.). If your community is 10-20 years old, the Fund should have 25%-30% or more on hand for major repairs. And if the community is more than 20 years old, 50% needs to be funded.

Many communities promise their residents “ultra low dues.” Be wary. Although this may seem appealing, chances are it means the community isn’t funding their Repair Fund like they should; if the roofs end up needing a replacement, you and all the residents could be hit hard with a major bill.

Find out the delinquency rates on monthly dues as well. When other owners fail to pay their monthly dues, this often leaves everyone else holding the bag. Good communities will have a delinquency rate of 15% or less.

7. What are the rules?

Does this community allow pets? Can you rent out your unit if you need to? Will you have a chance to plant a bed of flowers?

Go over the community rules line by line. Make sure the condo doesn’t have rules that you simply can’t live with.

8. Is there any litigation?

Condo communities can often be rife with drama and, yes, litigation. Owners sue other owners, as well as the management team or developer. Make sure there are no past or pending litigation in your community, since it’s often a sign of a poorly run community, or one filled with litigious neighbors.

9. Is this MY porch?

Many condos offer residents porches or balconies with their units. Make sure you look at the Unit Deed, and the Master Deed, very closely. The porch may be attached to your unit, but do you truly own it, meaning it’s your responsibility to repair it as it ages or breaks? Or, do you own it in the sense that it’s yours, but the community actually maintains it?

Final Word

Buying a condo is no small affair. There are many important aspects to consider that you don’t have to worry about with single family homes. This is why it’s important to go into the process knowing what to look for, and what to ask.

Have any of you ever thought about buying a condo? Or, do you already own one? Which questions do you wish you had asked before you bought?

  • That Girl

    I’m not ready to move into a condo but I’m reading all the pros and the CONS and the cons are very disappointing! I may choose to live in a single family dwelling.

  • Dixie Girl

    Condo living can be freeing, especially if you have a demanding job and truly want to relax when you get home. My suggestion, if you find a condo you like, is to check out the HOA, or anyone that might work for the association. Talk to the residences, attend the HOA meetings if they allow. Most everything, except this, can easily be checked out on line.

  • Donny Major

    With all the fees and taxes, it’s probably just smarter to rent! Considering all cash flows, renting costs less, which means you’ll have more money to save & invest. Over the long run, the stock market averages +10%/yr.

    So the 20% downpayment, 3-5% closing costs, 5-6% selling costs every time you move (average US home borrower moves every 7 years), property taxes, maintenance, insurance, is all money that could have been invested.

    If you look at everything (all cash flows considered), you spend less money when you rent! Between property tax, insurance, maintenance, mowing the lawn, fixing the roof, etc. etc. plus the extra utility costs you’re spending a lot of money that could be invested instead. What’s wrong with renting??

    Learn from the past people! (Of course they look at me like I’m crazy when I suggest they cut a $100+ a month cable bill. Or drive a car that is 3 years old. Or only fill up their tank from the cheapest place according to GasBuddy. Or get $25/month budget car insurance from InsurancePanda. Or cook their own food instead of spending a hundred a week on restaurant food (or far more if they like the bar).)

    Nobel Prize winning economist Robert Shiller was one of the few people who accurately called both the stock market crash of 2000, AND the real estate crash of the late 2000s.

    And he says that owning a home is a terrible investment.