Buying & Selling

5 Challenges of Buying a Condo

A home of your own sounds a lot more attractive than renting, especially these days, but the idea of taking sole responsibility for the upkeep and maintenance of the roof, the plumbing, the yard and more seems overwhelming. Plus, you want to stay in an urban area, where single-family homes can be hard to come by.

Could a condominium be the right solution?

Often seen as a compromise between apartment life and owning your own home, condos offer a low-maintenance lifestyle that many busy people appreciate. They often come with amenities and perks, such as a gym, pool and community spaces that are available for residents to use.

However, purchasing a condo comes with its own set of challenges and considerations that buyers should be aware of before making a decision. These include:

1. Homeowner Association Fees

Homeowner associations (HOA) aren’t bad, especially because they help bind a community together through shared activities and preserve property values. Plus, the HOA fees cover the cost of maintaining and repairing common areas, such as elevators, hallways and parking lots, as well as all those shared amenities – but they can be a significant expense.

HOA fees can vary widely depending on the location, size and amenities of the condo. Before purchasing a condo, buyers should review the HOA’s financial records to make sure that the association is financially stable and has sufficient funds to cover ongoing maintenance and repairs.

Buyers should also be aware that HOA fees can increase over time. If the association decides to make significant upgrades or repairs, such as repainting the building or replacing the roof, the cost may be passed on to the condo owners in the form of a special assessment or higher monthly fees.

Finally, buyers should be aware that condos can be subject to litigation and special assessments. Litigation can arise from disputes between individual unit owners, between unit owners and the HOA, or between the HOA and third parties, such as contractors or neighboring buildings. It’s always wise to research the history before making a purchase, to see if the HOA is particularly litigious.

2. Covenants, Conditions and Restrictions

Along with HOA fees, buyers should also review the rules and regulations set by the HOA. These rules, known as the covenants, conditions and restrictions (CC&Rs) can cover everything from parking and the use of common spaces to the color you can paint your front door and what type of pet you can own.

Violations of these rules can result in fines or other penalties – so you need to understand what you’re agreeing to follow and make sure that the rules aren’t unnecessarily oppressive and that you’re comfortable with them. If you’re okay with a little conformity for the sake of ease, the CC&Rs are probably no big deal, but deeply independent folks may feel unhappily constrained.

3. Shared Walls and Noisy Neighbors

If one of the main reasons that you want to away from apartment-dwelling is your distaste for shared walls and community noise, then a condo probably isn’t for you. Just like in an apartment, you will end up sharing a few walls with your neighbors, so that means occasionally hearing music, footsteps and snippets of conversations.

Condo buyers can minimize the problems they might have with noise, however, by simply being a little choosey. Units on upper floors (where nobody is over your head) and units at the end of a hall are generally quieter than units in the middle of everything, and some condo owners have invested in soundproofing (which can be a huge selling point, later).

4. Financing Challenges

Obtaining financing for a condo can be more challenging than getting a mortgage for a single-family home. Lenders may have stricter requirements for would-be condo owners, such as a higher down payment or a lower debt-to-income ratio.

They may also explore the potential resale value of a condo and look closely at how many of the units are “owner-occupied” (instead of owned by investors and rented back out) before they’re willing to finance one.

Condos can be financed through Federal Housing Administration (FHA) loans via the Section 234(c) program and 30-year loans, but there are quite a few restrictions on these, including the overall number of units in a building.

All that being said, financing a condo isn’t impossible – it just requires potential buyers to be very clear about their financial situation and prepared for the scrutiny they’ll have to endure in the process.

5. Insurance Challenges

Insuring a condo can also be more complicated than insuring a single-family home. Condo owners typically need two types of insurance: a personal property policy and a policy that covers the building and common areas.

Buyers should research insurance providers carefully to find one that understands the unique challenges of condo insurance. It’s also smart to review the HOA’s insurance policy to ensure that it provides adequate coverage for the building and common areas.

What’s the Bottom Line?

Buying a condo can be a great option for those looking for a low-maintenance, urban lifestyle without the stress and uncertainty of traditional homeownership. They’re perfect for the right kind of buyer – but they aren’t for everyone.

Before you buy, it’s essential to be aware of the unique challenges that come with condo ownership, so that you go into the deal understanding exactly what you’re getting. Often, talking over the pros and cons with an experienced real estate agent can help you clarify your goals and better define your hopes for your future home.