The Pros and Cons of Condos
What is a condominium?
A condominium is a type of real estate ownership whereby the owner of a unit in the condominium complex owns fee simple title to a unit and then owns some portion of the common elements of the complex as tenants in common. The owned unit typically is said to be owned from paint to paint and floor to ceiling. This means that the owner is responsible for any and all maintenance and repairs that are inside that area and that the owners’ association is responsible for the maintenance and repairs on the common elements. Common elements include parking lots, walkways, pools, and the like that are shared among residents. In addition, there can be limited common elements that are maintained by the HOA, but for the use of an individual or limited set of condominium owners. An example of a limited common element is a fenced in back yard where the HOA trims and the unit owner is the only person entitled to use the backyard. Lastly, the owner owns a pro-rata share in the HOA or homeowners association.
How is Owning a Condo Different From Owning a Single Family Home?
Condominiums and townhouse offer an affordable option to single-family homes in most areas. You want to consider these facts before you buy.
Storage: Some condos have storage lockers, but usually there are no attics or basements to hold extra belongs.
Outdoor space: Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be perfect option for you.
Price: Typically, condominiums are available more cheaply than single family freestanding homes in locations, especially urban areas, where prices are moderate to high. Condos therefore are a great way for a person to find a home when location is more important than property type, but money is a constraint.
Amenities: Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home. This adds to the general lower cost of condo ownership due to spreading maintenance costs across many owners.
Maintenance: Many condos have on-site maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.
Security: Many condos have keyed entries and or even doormen. Plus, you’ll be closer to other people in case of an emergency.
Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity.
Resale: The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes are usually more individual, so even if there are others for sale in your area, they probably won’t be exactly like yours.
Freedom: Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws (commonly called CC&Rs) of the condo carefully before you make an offer.
Proximity: You are much closer to your neighbors in a condo than in a single family freestanding home. Look at profile of other owners be sure you’ll be comfortable. If possible, try to meet your closest prospective neighbors and see if you think you’d enjoy the composition of the owners.
Insurance: When owning a condo you don’t need to buy typical homeowner’s insurance, but you will want to buy contents insurance. The structures and common areas are covered by a policy purchased by the HOA. In addition to contents insurance (also called renter’s insurance) you’ll want to consider liability insurance. If something breaks inside your unit and causes damage to an adjoining unit you’ll be glad that you had the liability insurance.