ScaredyCatGuide to Real Estate – Part V – Items to know when buying a Condo
In the past two posts of the scaredy cat real estate guide we discussed homeowners assocations (HOAs) and property types.
One of those property types were condos. Whether it’s as a primary residence or for a rental property, we need to be aware of the environment we’re buying into with these.
Condominuim Items To Know
Noise
You must remember – a condo is the equivalent of apartment living. It’s basically the same setup except people own the units rather than one large company owning and renting them out.
The condo will likely share four walls with other units. If you get an end unit then it may only be two or three.
Noise will happen. People run washer machines, flush toilets and sometimes play music too loud. It comes with the territory. If you want complete serenity, this is not for you. A single family home may be the route.
Resolution – Only buy condos that are concrete blocks structure (CBS).
If you are going the condo route this drastically reduces the noise problem and can almost make it non existent. Wood frame buildings are the worst when it comes to sound travel.
The HOA Governing Documents
Basically all condos communities are governed by an HOA and the bylaws. No one ever reads these.
But you should!
We must know all the rules and regulations that dictate way of life for a community. Otherwise you may get surprised by one that doesn’t line up with you lifestyle or the lifestyle of your tenant.
Example #1 – Pets allowed, but breed restrictions.
Well – if you or a tenant has a pitbull and move in. You are gonna have a problem. You just bought this condo to live in and now you realize spike needs to go or you need to move.
Example #2 – No commercial vehicles allowed.
Let’s say you work as an electrician and you have typical ford econoline work van with commercial plates on it.
Seems harmless enough. It’s not a big work truck. Well, guess what. You or your tenant is not parking their work vehicle at home.
Reserve Study
This is something nearly everyone overlooks. We must remember that when purchasing a condo – all the elements that make up the “common areas” we pay for in the end.
A reserve study is based off useful life, not the current condition. A specialist will create an inventory of the common area components along with any other applicable items, such as the roof.
That study will then say – for example. The buildings roof is 15 years old. Shelf life for shingle roof of this type is 15-20 years.
Now you know going in that the roof may need to be replaced sometime within the next 5 years and can be prepared for the special assesement that each condo owner will get hit with to pay for that.
Special Assessments
Special assessments are costs outside of the normal HOA maintenace fees. Granted, there are reserves held in most communities, but many times they won’t hold enough to cover these expenses.
When this happens a special assessment is imposed. The needed funds are divided between all the condo owners and they all must pay their share to stay current with their HOA.
Knowing is half the battle
There you have it. Some key things to know when purchasing a condo – done the scaredy cat way.
We can mitigate risks by always being well informed.
Your ScaredyCat Guide,
Mitchell J
If you missed any posts of the real estate investing guide? Find them on my blog @scaredycatguide
My family bought a condo back in the day, and it turned out to not have been wrapped in Tyvek before construction was finished. My parents are still going through the process of a lawsuit over a decade later. I'll never forget the day that a man came into my room when I was playing my Gamecube so he could check out the only entrance on my side into the attic. He put on a respirator, stuck his head up there, and came back down immediately. Then he told my mother that we had to leave the house and that it needed to be condemned. The look on his face is burned into my memory; imagine being called in to inspect a house, going into a child's closet and seeing so much black mold that you, as an expert, immediately had to recommend it being condemned. A couple years earlier, I was put on the medication Advair, the highest dose available for adults, as many times a day as my doctor could legally recommend. I also had an Albuterol inhaler for emergencies. I kept taking the Advair when we moved out of that condo because it was a habit; I expected that I would always be on the medicine. 3 days after we moved into our new home, I decided I would try to stop taking the medication. I haven't taken Advair since that day and ultimately threw out my emergency inhaler.
I have gone through a lot in my life and this is one of the events I try not to talk about, but unfortunately you have given me an opportunity to complain anonymously about it, so here I am...
I guess the moral of my story is...make sure you get your shit checked out before you sign any paperwork.
Holy crap. That is no joke. Exactly why I take it upon my self to check out everything. I learned the lesson hard as well. Was living in an apartment complex 5 years ago. Show had a leak behind the wall, maintenance repaired the wall and the leak. Never thought to look on the other side of the wall, which was a storage closet I barely ever used.
Turned out that wall had absorbed water, turned into mold and just sat there. It was there for nearly a year. My desk was 12 feet from that closet and I work from home. I was moving out, which is why I discovered it, but I swear I have not been the same since then. Never ever used to get sick. Now I seem to come down with something atleast once a year.