By Jamie Birdwell-Branson via ApartmentTherapy.com
Ready to leave apartment living behind, but not quite ready for the responsibility of a yard and more than 1,800 square feet of interior maintenance? A condo gives you all of the perks of homeownership but without all the tasks that come with caring for a single-family home—like raking leaves, mowing the lawn, or cleaning the gutters.
Although a condo is a great compromise for those who aren’t quite ready to take the plunge into running an entire house, there are some stark differences between a condo and a single-family home that buyers should know when getting ready to purchase one. Want to learn how to buy a condo? Here is some helpful information:
First, what is a condo?
How does one define a condo? And how is it different than an apartment? A condo is a single residential unit that an individual owns inside a multi-family building. Structurally, an apartment building and a condominium complex are the same in that there are multiple units within one building, but the key difference is that apartments are generally for rent and condo units are individually owned.
In addition to a mortgage, condo owners pay monthly or quarterly fees to a homeowner’s association, which keeps money in reserve for the upkeep of any shared spaces like the yard, common areas (a gym, pool, etc.) and shared structures, such as the roof.
And what are the pros and cons of buying a condo?
There’s plenty to consider when trying to decide if a condo is the right type of home for you.
“If you value proximity to a city center, a walkable lifestyle, want to take advantage of a building with amenities like a gym and pool and don’t want to be bothered by excessive home maintenance and repairs, a condo might be the right choice for you,” says Kristen Pollock, a real estate agent in Atlanta.
However, a condo—especially condos with associations that all residents are required to belong to—can come with some strings attached, says Jody Zink, a real estate agent in Toledo, Ohio.
“Not every condo association is alike. No two are the same. Because of that, you have to navigate different rules or potential pitfalls, or fees you might not have expected otherwise,” she says.
Now, here are 15 of our best condo-buying tips from real estate experts across the country:
1. Check the rental cap when buying a condo for investment
Buying a condo can be a way for you to break into being a landlord, but beware of any rules on renting the unit out, says Jesse Sheldon, a real estate agent in Kirkland, Washington.
“Many complexes have policies on whether you can turn your condo into a rental. Some have rules that say no rentals allowed at all, while others have a cap to the amount of rentals,” Sheldon says.
2. Prepare for politics
When any group of people live together under one roof, there’s potential for trouble. Combine that with making group financial decisions and you have a recipe for a highly charged living situation. Depending on how your association works, there could be enough in reserves (AKA the money pot comprised of HOA fees) to take care of big maintenance projects like replacing the roof, or it could be a situation where everyone has to agree to contribute when the need pops up.
“Everybody has to agree on chipping in [for projects]. But if there’s a guy in one unit that doesn’t want to, it can get kind of sticky,” says Zink. “In other words, everybody has to be on the same page.”
Before you buy a condo, go in with the understanding that you may have to negotiate or work things out in a HOA meeting with other residents to get tasks accomplished.
3. Understand the realities of buying a condo vs. buying a house
When you buy a condo, you own the interior of your space, but not the exterior, whereas when you buy a house, you get the whole kit and caboodle. (Read: Buying a house comes with much more freedom.) So there’s that, and the fact that you’re in close proximity to all of your neighbors.
“Sharing walls and common areas is not for everyone. This close community living can be a sense of aggravation or frustration,” says Bryce Fuller, a real estate agent in Glenview, Ill. “Shared garages, mailbox areas, hallways, foyers, pools, elevators, stairways, and exercise facilities are subject to everyone’s usage.”
4. Financing may be more complex
As if getting financing to buy a home wasn’t complicated enough, there are more hoops to jump through when buying a condo, Fuller says.
“Lenders tend to charge a slightly higher interest rate [for condos] and will want to see the association budgets, reserves, and maybe even the rules and regulations,” he says. “If there are many units that are being rented out, sometimes financing is even more difficult. Depending on the lender, your required down payment may even be higher.”
Though financing is more complex, it’s certainly not impossible. Talk to your agent and lender to see what extra condo-specific documents you’ll need to make the process go smoothly.
5. Not all condos will work with an FHA loan
If you’re planning on purchasing your condo with an FHA loan, you should be aware that not every single condo is eligible for FHA financing. However, the FHA rules on condos loosened up a bit in 2019, making it easier for buyers to get this type of financing.
To find out if the condo you’re looking at is FHA approved, you can head to the HUD condominiums page and look up the address in question.
6. Check whether pets are allowed
When you own a single-family home, the only rules on pets are the ones imposed by the city. But in a condo, there may be weight or breed restrictions—or even a ban on pets altogether. If owning a pet is important to you, then be sure to check the condo association’s CCRs (covenants, codes, and restrictions) for rules on animals before you fall in love with a place.
7. Look over the condo association’s documents for upcoming projects
Owning a single-family home means you have the freedom to do home improvement projects and update your space as you wish. Condo dwellers, on the other hand, are at the mercy of the condo association when it comes to upgrades on the exterior or in shared spaces. Luckily, there’s a way to see if any planned projects are coming up before you buy.
“Make sure to review the condo documents for any special assessments or projects in the near future. These assessments can cover things like roof replacements, shared space upgrades, or driving/parking area paving,” says David Stroh, a real estate agent in Frederick, Maryland.
8. Talk with the neighbors
It’s nearly impossible to know what life is really like in a particular condo complex—unless you can score some insider info.
“Strike up a conversation with the neighbors or with the condo association president to see what other people think,” Zink says. “But take it with a grain of salt: If someone says something negative, try to find a way to verify it.”
9. Factor in HOA fees
When calculating what your monthly housing costs will be, don’t forget to factor in the HOA fees if you’re buying a condo. Although it’s an added cost, sometimes they can save you money, Pollock says.
“Sometimes a buyer will be put off by a large monthly HOA fee, but look a little deeper: Does it include water, trash pickup, and even cable TV? These are costs you would be paying in a house as well but they won’t be budgeted out for you,” Pollock says.
10. No two condo associations are alike
Condo associations are all the same in that they’re a group of people living under the same roof. But the similarities end there. Condo associations are all run differently—and how they operate can have a big effect on your experience in the building.
“Some organizations are going to be well funded while other associations will say, ‘Oh, we’re just going to not charge a monthly fee.’ But when it comes time to replace a roof or exterior things, it’s got to come out of someone’s pocket,” Zink says.
To get a feel for what you’re stepping into, talk to the president of the association, suggests Zink.
11. Look at the condition of the common areas
When evaluating a condo, it’s crucial to not only look at the interior of an individual unit but also to look at the state of things in common areas, says Fuller.
“Often if the common areas are not kept well, it is a sign of a poorly run association,” he says.
While on a tour, do a quick visual inspection of the walls and floors, and check to see if the equipment is working in a gym.
12. Find out when the association meetings are
Making upgrades to a single-family house doesn’t require lengthy discussions with neighbors. But when you’re part of a condo association, meetings must be held.
“New owners should make sure they know when the annual meeting is held, and [they should] attend to take part in important decisions regarding the complex,” says Rhonda Mesenbourg, a real estate agent in North Kingstown, R.I.
13. Be your own inspector
If you get to the inspection stage of a real estate transaction, the inspector will inform you of any major problems within the unit. But before that happens, know that the first line of defense against buying a problematic (and expensive-to-fix) property are your own two eyes.
“Look for cracks in the tile and walls,” Fuller says. Poorly constructed buildings could mean there are high-cost repairs in the future.
14. Know the rules on Airbnb or other short-term rentals
Owning a condo in a tourist destination could earn you big bucks on Airbnb or VRBO—but you should check with the organization’s rules about short-term rentals first, says Todd Maloof, a real estate agent in Hoboken, N.J.
“Buildings [may] have requirements that don’t allow rentals shorter than six months, as that would fall within the hotel guidelines,” he says. “Most of the smaller sized condo buildings—10 units or less—are generally relaxed on their renting guidelines, but you should always be well versed in the event you do decide to keep the home as an investment and not an owner-occupied property.”
15. Understand the parking rules
Some condominium complexes include garages or covered parking spaces, but it’s not always clear how many spaces are allotted to each resident. Check to see if there are visitor spaces, and to see whether there are designated spaces for owners, or if it’s a free for all.
Sold on condos? Here’s a handy buying a condo checklist:
Ready to start looking at properties? Here’s a quick checklist of things you should make sure you do before buying a condo:
- Get pre-approved for financing from a lender.
- Find a real estate agent who specializes in condominiums.
- Understand the rules on renting and pets, which can be found in the condo’s CCRs.
- Check for special assessments/upcoming projects in the condo documents.
- Do a visual inspection of common areas.
- Find out how much money the association has in reserves for maintenance and upgrades.
- Check if the condo is approved for FHA financing.
- Understand how parking works in the complex.