When my mother bought her first condo, she didn’t listen to anyone, not even to me, her own son. She was all by herself. Three years later, unable to keep up with the payments, she was forced to move out and recovered less money than she’d expected. I was crying inside because I couldn’t help her. Hopefully, you will let me help you avoid the same pain she is passing through right now. So I will consider you my friend and by the end of this article, I will have given you the best tips for buying a condo. The same tips my mother should have listened to...
There are two sets of questions you should answer when putting a condo buying checklist on paper, especially if it is your very first real estate transaction. Right up front are the questions you should ask yourself. Once answered, you can move on to the questions for the seller. All these answers can save you a lot of time and money.
What should you ask yourself when buying a condo?
- Are you ready?
On your mark, get set, go! But no! This is not a competition. Nobody is counting how many properties you own. Buying your first condo is a great accomplishment, no matter your age.
Though it may sound strange, it is all right to talk to yourself and ponder over this step in your life. Since you are here, let me ask you: are you sure this is the right time to buy a condominium?
Whether you want to move alone, or just want to buy a condo for investment, you must understand all the financial aspects of buying this type of property. However, nobody expects you to know what questions to ask when buying a condo for the first time, even more so if you’re buying a home as a Millennial. I’ll be honest with you from the beginning. Diving into debt too young can increase the risk of foreclosure, especially when you carry student debt and credit card debt. Sharing the burden of debt is always a good idea, so consider buying a condo after marriage. In the meantime, focus on maintaining a good credit score, avoiding late payments and keeping a low number of fixed monthly expenses.
- Are you on the safe side or on the risky side?
Like my mother, some people feel the desire to privately own a house more intense than others. And some people are willing to risk more than others. In the end, how far would you go to buy a condo?
Unless you have enough savings to pay for the condo in cash, can you afford the cost of a mortgage? By contracting a mortgage, you may end up paying twice the price of the condo over the years. Not to mention the fact that you become the owner with full rights only after the payment of your last installment or after paying the remaining balance in full. It may take 10 years or 25 years, depending on your incomes and financial wisdom. If you don’t like this perspective, you are not on the risky side, so maybe you should consider waiting a few more years.
What if it would be cheaper to live in a rented condo and save money over the next years in order to purchase your own condo later, paying the full price in cash? If this thought sounds more comforting, then you are on the safe side. In retrospect, my mother would have been far happier today should she’d chosen this path.
You don’t have to fear the risk of foreclosure while living in a rented condo. You don’t have to fear that you might lose your job one day. When you live in a rented place, you can move any time and find lower rent, if the sky gets cloudy. Of course, there is the risk of lowering your credit score, but at the end of the day, all that matters is to make ends meet and live life fully on any budget.
Unfortunately, you must have heard stories like my mother’s before and you might even know people who could no longer pay their mortgages and ended up losing a huge part of their investment, if not everything. Be aware of this reality while looking for your first condo. Be well informed and assess all risks.
- Will you spend less time commuting?
Do you waste too much time to get to and from your workplace? Is traffic driving you crazy? Would you spend money on coffee rather than gas? Buying a condo should increase your free time while keeping your car expenses low. Look for an accessible building that is close to your workplace, even within walking distance. Your first property should translate into a positive change in your daily routine. Pin this advice on your condo buying checklist right now!
Besides this, consider the proximity of a good school or kindergarten for your kids. You don’t want your kids to spend too much time commuting either. Make sure there are parks and sports fields nearby where your kids can practice outdoor sports safely. And speaking of education, why not look into buying a condo for investment near a college? Student accommodation is a huge business and will always be!
Don’t get too excited if you see many shopping centers, stores, and restaurants around the condominium. If you won’t keep track of your daily expenses, high monthly spendings can threaten your long-term financial stability and your ability to repay debt. This could well be number one on the list of tips for buying a condo.
Feel free to leave in the comments below any other questions you should ask yourself when buying a condo. Now it is time to go through a condo buying checklist and see what questions you should ask the seller or the real estate agent.
What to look for when buying a condo
- Size of the condo
My mother made the mistake of buying a 1200 square feet condo all for herself at a huge monthly cost! Now, let me be honest with you. You will be surprised at how little space we need to live a happy life! However, if you plan to grow your family, think ahead and take this into consideration.
Look for a condo that provides intimacy all the time, and privacy when you need it. Find how much you pay for every square foot and take this criterion into consideration when preparing to make an offer.
According to rentcafe.com, the average size of a condo in the USA is 1200 square feet. Considering that the American households are shrinking (2,58 people/household in 2015 compared to 4,54 in 1910), residents enjoy more living space, even though real estate developers tend to build smaller apartments. Seattle has the tiniest apartments in the country, at an average size of 711 square feet.
Another advice I picked from my mother’s experience is not to let yourself be seduced by huge balconies! Out of the 1200 square feet, the balcony was 30%. You want to pay for living space, not for recreational space. A balcony is a great feature, but a very expensive one, relative to the time you spend enjoying the views from it.
- Year of construction
Usually overlooked on the condo buying checklist, the year of construction hides valuable information. The older the building, the higher the maintenance fee. Request the Resale Certificate from the seller and find as much as you can about the property you are about to purchase.
Check also the seismic activity of the area. What was the biggest earthquake the building has withstood?
- Interior design
Does the condo come completely refurbished or will you have to redecorate the place? It’s unlikely you will find a condo that fits your tastes perfectly. Is it nice? Is it inhabitable? Then you can move to the next point.
But wait a little! What about the smell? If the previous owners were smokers, you will feel it from the doorway. Consider this among the reasons not to buy a condo! Your lungs will thank you later.
- Maintenance costs
Dig deep into the HOA (Home Owner Association) of the complex and find out everything you can about past and future special assessments that can increase your monthly bills. Find what the association fees include. How much will you pay every single month for the right to live in that complex? This should be one of the questions to ask when buying a condo for the first time. You may also find that there is a pet policy in place. Some associations allow only dogs, while others will tax every pet that lives in your home. For example, in my mother’s complex, owning the first dog would cost $2 a month, $10 for two dogs and $20 for three dogs. Of course, some details will not affect you, but be prepared for many bullet points that ensure the peace of the complex.
Location is also to be taken into consideration. Maintenance costs skyrocket for condos located in a sought-after neighborhood or for those that have a beach view. This could make the apartment harder to sell in the future.
Parking is an ever-increasing problem in our cities. Having a parking lot reserved is pure gold. Ask if it is included or not, or whether you can purchase one or more. Or maybe you will have to lease one from a neighbor who doesn’t use it.
- Financing options
Great! You want to buy a condo, but where do you get the money from?
My mother was so impatient, that she borrowed even the money for the down payment! When I’ve found out about this, I knew something was not right. But it was too late... So if you don’t have any savings or at least a lump of money for the first down payment, read on but postpone the purchase of your first condo until you have a more stable financial situation. Don’t try to lie to yourself as my mom did!
Credit regulations have limited the number of lenders who accept to finance the purchase of a condo. However, when buying your first condo with the help of a lender, make sure you get pre-approved. Keep in mind that not all condos are FHA (Federal Housing Administration) approved so if you want a loan through FHA your list of condos will shrink.
If finding a lender proves difficult or almost impossible, don’t worry. Wait until your income grows, or save money constantly and steadily for the goal of buying your own place. It will happen sooner or later, but it will happen at the right time, for sure.
Buying a condo for investment
If keeping your savings home or in your bank account doesn’t bring you the same satisfaction as it used to, maybe it is time to invest in real estate. Buying a condominium is a good start. This investment pays off especially if you want to rent it and the rent covers your monthly installments fully.
If you are young and your credit score allows it, buy condos to rent them later. It’s another way to save money for the future. Moreover, buying a condo for investment may turn into a side business that brings you another stream of income. I’m sure you’ve heard about Airbnb; but is Airbnb renting better than traditional renting?
As you grow older, you will want to reduce the risks of your investments and buy condos with cash. Condos that are owned by the banks (REO properties) may appeal to you at this point as well.
The best part is that your children and grandchildren will be over the moon when they’ll find out they inherit your real estate investments and they will reap the fruits of your labor for many years...
5 reasons not to buy a condo
You’ve reached the end of the condo buying checklist and you’re still not sure if it is the best choice for you? Take some more time and try to understand yourself better. Look at your needs and your plans for the future. You may find that a condo is not right for you if:
- you are an outdoors person
All those walls will feel like a straitjacket.
- you want a backyard for your kids
Kids are full of energy and you want them to play freely under your supervision.
- you like to throw parties
Condos are not the best place to have more than 4-6 guests at a time. And where would you place that barbeque grill?
- you own two cars or more
Parking two or more cars close to your condo will prove nerve-wracking at some point. Buying a condo is not an option.
- you want to work from home
Working and living in a small space is a challenge in itself. Unless you can establish a very tight daily schedule, you will want something bigger than a condo.
Oh, how I wish my mom had listened to me! She shouldn’t have bought that condo alone. And I hope, my friend, that you will not be alone when purchasing your first property, be it a condo or something else. There are people like me and many real estate agents with years of experience behind who want you to be happy.
With all these tips for buying a condo, you can be sure that you will pick the right condo at the right time.