By Walt Harvey (R), ABR, CRS, GRI, SRES, e-PRO
Condominiums are selling faster than single family homes and in some areas, for more money! They can be an ideal home for first time buyers entering the real estate market and they can be a lifestyle move for folks that want relief from yard work. Condos can make great investment/rental properties as well. They are not for everyone and given their popularity, a few cautions are in order.
When purchasing a condo, pay close attention to the Homeowner’s Association documentation, particularly the Reserve Account Summary, the Rules and Regulations and the minutes of the last six months of homeowner association meetings. Your purchase contract should contain a contingency that allows you to read and approve the documentation before a final commitment to close the sale.
The Reserve Account Summary will reflect the financial health of the association. It should be examined to determine if adequate funds are being set aside to make major future repairs such as roofs, fences, repainting and common area road repairs. Under funding these components can result in a special assessment down the road.
The Rules and/or CC&Rs (Covenants, Conditions & Restrictions) specify what you can or cannot do with your property and how the association enforces violations. Pay attention to pet restrictions and exterior modifications that may require approval from an association committee. Can you install a satellite dish or fly a flag?
The minutes of the homeowner’s association meeting should be read carefully to see what residents are complaining about. Are there construction issues? Is there discussion of an impending special assessment or a dues increase? If you do purchase a condo, by all means attend the meetings and get involved.
Lastly, to get a true feel for the area, we always recommend you talk with existing owners in any neighborhood you’re considering moving into.
Published in Small Business News, July 2004