Advice for buying a condo?

c9pilotMay 28, 2009

I'm afraid that I don't know a lot about condos, so I'm hoping to solicit some advice and warnings about purchasing one. Specifically, this will be an investment, and then possibly a retirement home in the far future.

Here are a few things I know:

- Watch out for high foreclosure complexes that will have to increase maintenance fees to make up for delinquent owners.

- Check out the rules on rentals, specifically length of rentals allowed and % of rentals (which may affect mortgage).

- Read through the rules carefully for other policies such as pets and age restrictions.

I don't understand how insurance works with condo complexes, either. Is that usually part of the condo/HOA/maint fee? Or is that partial coverage? I'm looking into places that will most likely require flood insurance, so does that only apply to the first floor?

Appreciate any help here.

R/Lisa A.

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My advice, and sorry this is not what you want to hear, is don't buy a condo! They can't give them away here in Columbus, OH. And those that are left with the depreciated properties, as you said, have to pick up the extra fees for all those who have foreclosed. I say buy a small house and use the money you would have spent on monthly assesments to do yard work, snow removal, etc. I think it pretty much averages out in the end. You will get much better appreciation too, unless you are in some sort of niche' area for condos.

just my two cents

    Bookmark   May 28, 2009 at 10:59AM
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I have been a condo owner, served on the board of both the condo association (as president) as well as the "master" board of the whole development and have owned 3 condos in 2 states.

The single most important thing you can do before making an offer to buy is get a copy of BOTH the condo association by-laws, regulations, whatever they call it AND the master association bylaws. These will rule your life and supercede any city, county and state rules (except for certain areas).

If there are rules in them that you think aren't being enforced so they don't matter--think again.
Also understand thoroughly the fee structure and what it covers and understand that fees can be raised at any time by the (elected) board of directors. Homeowners have no say at all except by election.

Also find out how the board of directors power structure affects you. For example, in the association we just left there were 8 different associations who elected 1 director each to the governing (master) board. Some associations had half the owners that others did but they had equal power in votes. What you don't want is to be is in the minority permanently, paying fees without any say in how they are spent.

There are many good reasons to own a condo. Someone else taking care of maintenance is the biggest. But you give up a lot of personal freedom for that convenience.

Your insurance question can be answered by reading the condo documents. The association (to whom you pay fees) buys insurance that covers the exterior (shell) of the building. But some associations also include the framing, plumbing, electrical, drywall, etc. Don't depend on your insurance salesperson to know what insurance you need, bring the documents to them to read so you have full coverage.

Noise intrusion is the biggest problem to investigate, coming from dogs (I am a dog lover and former owner) and upstairs neighbors (wood floors,TV's for hard-of-hearing, etc). Renters are the next biggest problem.

It's tough to do but try to imagine the worst case scenario and investigate your potential neighbors. Then you can rest easy when the worst doesn't happen.

Everything you've heard about "condo commanders" is possible and I've lived through it. Many condos are inhabited by retired people with too much time on their hands who want to control everyone else because they have nothing else to do.

Choose carefully with your eyes open and good luck.

    Bookmark   May 28, 2009 at 11:25AM
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Insurance rules are different in different states. Florida, where we own one (rental with a good tenant), has very confusing requirements.

Here's a link if you're thinking of buying a condo in Florida...

Here is a link that might be useful: Florida condo insurance....

    Bookmark   May 28, 2009 at 5:01PM
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Where are you located c9pilot? How old are the developments you are looking at?

I am heavily leaning toward "don't ever buy an attached home" due to some nasty goings-on in my development.

If you are looking to buy into a newer development in an area where condos have more intrinsic value due to space, retirees, views, all these things weigh in on the decision.

I used to have a rosier outlook on condos, but now believe that the "condominium" as an entity is a grossly flawed concept, and that due to the ages of many developments you are going to see more and more problems, lawsuits etc.

Basically, a group of unpaid, unprofessional volunteer board members cannot make the decisions and do not have the skills necessary to maintain a condo complex. That's my opinion now.

    Bookmark   May 28, 2009 at 7:11PM
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I'm looking here in Florida, where condos abound and the state has very specific regulations for the condo boards and such. (maddielee, I'll take a look at your link as soon as I get a chance)
We'd also consider a house but the upkeep will be more difficult. Our county is completely built out so almost all the homes are older, as most of the condos except those in the downtown area. Also lots of condo conversions gone awry after investors bought them all up and now can't sell them.

    Bookmark   May 28, 2009 at 7:48PM
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Our first and only experience with condos comes from a vacation rental on Maui that we bought in 2001.

It's been a profitable investment but I doubt we would ever buy a condo to live in, for the very reasons cited above, in our case: volunteer boards, 'small world' busybodies, the clash between those who rent v those who do not.

I'll add a 'minus' that some others think of as a 'plus': maintenance is handled by others. In our home *we* decide what needs doing and who *we* want to landscape, plumb, paint, whatever -- and at what cost.

If I ever thought I could adjust to living in attached housing, renting an apartment while our house was completed disabused me of the notion. Three months in a four-plex and we were begging to move into the house before it was finished.

The month we spend at the Maui condo is fine. All year? Not this chicken.

    Bookmark   May 30, 2009 at 3:39PM
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A lot of Florida condo associations did not charge high enough fees to accrue sufficient funds to handle major repairs when they came due. Roof replacements come to mind. As a result, they have had to issue large levies against the current owners at the time of the repairs.

Any condo investment requires extreme caution. I have owned and lived in a condo. I would never do either again.

    Bookmark   May 30, 2009 at 7:23PM
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The government regs don't protect you from real problems. I would NOT buy a condo in FLA, which is ground zero for the coming condo breakdowns.

    Bookmark   May 31, 2009 at 1:42AM
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I live in a high rise condo on the water. Since we are on the water, flood insurance is required from the 4th floor and below. Anything above the 4th is not required. Homeowners insurance covers the contents only. Since the building has a master policy.
We don't have a lot of issues in our building but then again we have a pretty good board. Vacation rentals are allowed in here and it amounts to about 50% of the occupancy during the winter months. Most of my ownership throughout my life here in Florida has been in Condos.
Never had any problems with it. Guess it depends on where you buy. Maybe I have been lucky.

    Bookmark   May 31, 2009 at 11:41AM
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DO NOT BUY A CONDO IN FLORIDA until and unless the Florida legislature reverses its law. Condos that were originally apartments are being converted back to apartments, sometimes against the will of owners. In 2006, the law required 100% of condo owners to agree to the termination of the association. In 2007, FL statute 718.117(3) was changed to permit optional termination if 80% of the owners agreed and fewer than 10% objected. This new law is being applied retro-actively and is being used by wealthy investment firms to increase their profits at the expense of individual owners. Under the law, owners can be forced to accept a portion of the "new" apartment complex or sell their units at current market prices. Either way, you're out of your home. I paid $166,900 in 2006. My unit is now worth $60,000. A large investment company now owns 66% of the units and is buying more. It is possible that I could eventually be forced out, losing a $100,000 or more. So far, our state representative, senator, and governor have not responded to our plea to change the law. Be forewarned, unless the law is changed, in Florida your condo is not your castle.

    Bookmark   January 25, 2012 at 6:02PM
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Ummmm... since this thread is almost THREE YEARS old, I think the OP made up their mind already....

    Bookmark   January 25, 2012 at 6:52PM
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LuAnn, you are correct. Very surprised to see this post again, completely forgot about it, in fact. We've owned the condo and had terrific renters with no gaps for three years now.

    Bookmark   January 27, 2012 at 7:18PM
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c9pilot, I am happy to know that you had a good experience renting your condo for the last 3 years.
I am about to buy a condo & I have a few questions. Would greatly appreciate a response from you, since you have had a first hand experience.

1) What's the best way to find a tenant? Craigslist, Realtors, anyone else?
2) What Property Management company would you recommend?
3) Who is responsible for fixing stuff when it breaks down? Can you manage that even though you are thousands of miles away?

Thank you in anticipation of your response.

    Bookmark   February 5, 2012 at 3:00PM
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(1) MLS. Also posted on craigslist, but very carefully because of the spamming. IOW, I put up the ad with an anonymous email reply, saying to email for more info. If it turned out to be a real person, I'd send a link to a Shutterfly website I created with lots of pictures and my real email and phone number. I didn't send real info unless I was pretty sure I was dealing with someone really interested, and I would have had to run a background/credit check if we pursued it. (Ended up getting someone off MLS about 15 minutes after I put up the listing that wasn't supposed to be active until the next day, previous tenant also MLS)
(2) I manage myself, don't have a recommendation. Definitely ask around and double-check references!
(3) I am. I am about 3 miles away. The first tenant fixed everything - in fact, the condo is much improved since he moved in - new paint, carpeting, door to bathroom, fixtures. He wanted to live in a nice place, so he made it nice. Eventually he stopped asking me permission and just did it, so I was surprised how gorgeous the place was when the new tenant was looking. Nothing has broken since the new tenant has been in. Not that much to break anyway, the appliances were fairly new when we bought it.

The worst part is that we have some major shenanigans involving the condo board. I'm going to post on another thread to see if anybody here can help with that.

    Bookmark   February 8, 2012 at 7:48AM
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My daughter lives in a condo--and I will say, loves it.

However, from going through the experience with her? DO NOT consider buying a condo is an investment. The prices of them are a lot more unstable than real homes--you won't be making a profit on one, most likely. Much more likely you'll end up selling it for less than you paid.

Insurance? Definitely check that out thoroughly. DD insures her belongings much as a renter would, the association is responsible for the building.

You want to find out things like: what maintenance does the building do? (yardwork, structural repairs, cleaning dryer vents, etc). Will you be charged an extra charge if something major (new roof, siding, repaving parking lot) has to be done? and what you're resonpsible for (probably your own heating/cooling unit, your own appliances, plumbing, etc). What happens if the neighbor 3 floors above you forgets to turn off the water in the tub and your place floods?

Is this a retirement home, you're considering? If so, you'll come out way ahead if you just rent a condo in the complex you're considering or in a regular apt. complex. It will be cheaper to start with, and you won't have the responsibilities of a condo owner (which can be pretty expensive--believe me, DD has found that out). Better yet, why not investigate subsidized senior apts, where your rent is based on your income? My mom lived in an absolutely gorgeous, well-kept building with all her friends, and it only cost her about $250/month--the same apt. in a commercial building would have cost her $1600-2000 per month. It was lovely, well-kept, clean, safe with lots of activities.

Bottom line, I think you're going to find a condo is a lot more expensive than you think, and you'll never make a profit buying one--especially in Florida.

    Bookmark   September 4, 2012 at 9:18AM
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