Jan
09

The 5 Disadvantages of Condominium Ownership

By
Nef Cortez asked:




In the past condominiums were not necessarily considered to be a good

investment for a variety of reasons, however that image has since

changed dramatically. With the high price of single family homes,

condominiums and townhouses are becoming more attractive to many

buyers such as singles, retiring couples that are downsizing and small

families that would like to purchase in excellent school districts.

However, for those home buyers that have only considered a single

family home as the definition of homeownership they may not be

familiar with what options are available in the form of condominiums.

Condominiums are buildings in which individuals separately own the air

space inside the interior walls, floors and ceilings of their unit,

but they jointly own an interest in the common areas that they share

such as the land, lobby, hallways, swimming pool, grounds and parking

lot. While many condominiums are designed to look like apartments or

are built in high rise city buildings, more and more builders are

designing them where they can be referred to as townhouses.

Townhouses are usually attached to one or more houses and can run the

gamut from duplexes and triplexes to communities with hundreds of

homes

In addition to paying a mortgage, each owner is responsible for paying

a monthly fee to the condo association, usually referred to as the

homeowner’s association which is made up of the unit owners. The fee

covers maintenance, repairs, grounds keeping and building insurance.

In the past condominium ownership suffered with a negative image for a

variety of reasons, however that image has since changed dramatically.

Once the thorn in homeowner’s sides, condominium associations have

worked hard in recent years to clean up their negative image where

disputes and lawsuits were once rampant. Homeowner’s associations have

become savvier and much more professional about property management

and have taken steps to prevent legal problems and disputes before

they happen. However, there are some disadvantages that still need to

be considered before you buy.

1) Monthly Homeowner’s Association Fee

If there is a homeowner’s association, you will usually have to pay a

monthly maintenance fee that is separate from your mortgage payment.

Many condominium owners factor this expense as similar to the costs

they would have incurred for someone to do the lawn care and other

maintenance if they owned a single family home. However, you should

watch for unnecessarily high monthly charges and ask to see a copy of

the latest financial statement from the homeowner’s association.

2) Less Privacy

There is also less privacy than with a detached single-family home.

Communal living is not always desirable for some people and the noise

level generated by living in close proximity to others can influence

some buyers to simply look elsewhere. Usually, the biggest concern is

about parking for the owners and for their guests. However, many

condominiums are being designed with their own garages and have common

parking areas available for guests.

3) CCR’s Can be Very Restrictive

CCR’s or Covenants, Codes and Restrictions are defined as the bylaws

that govern the use of the property. Most CCR’s are reasonable, but

some can be very restrictive. There usually are limits on the type of

exterior changes or improvements you will be able to make to the

property. In addition, you may find, among other things, that they

prohibit or restrict pets and the renting or subletting of units.

Make sure that you get a copy of the CCRs and review them (they

usually have a summary booklet) before you decide to make an offer.

4) High Tenant Ratio

Also, make sure you find out the owner-to-tenant ratio. Because many

condominiums are often purchased as investments, there could be a high

percentage of tenants in the building. Although this trend is also

changing, especially in condominiums which are located in urban areas

where they provide convenient shopping, access to transportation and

other amenities thereby attracting owners who intend to live in their

condos.

5) Resale Value

In some real estate markets, such as Las Vegas and Florida, builders

have overbuilt condominiums and townhouses and they are being sold at

a loss. However, in other real estate markets they have held their

value as an investment despite economic downturns and problems with

some homeowner’s associations.

While some of these factors would discourage some buyers from

purchasing condominiums, it may be just the right investment for

others because it suits their lifestyle. In spite of these

disadvantages, the high price of single-family homes in some real

estate markets such as California and the influx into the housing

market of more single homebuyers have made condos relatively hot

national investments. A professional realtor can assist and guide you

in showing you which are the great deals in your local market and

city.



Kansieo.com

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