Real Estate Tips and Info
Condos and Townhomes – Understanding the Multifamily Market
Condo living is back in style, it seems, as the US multifamily market has improved in recent months to the extent the sector has the same importance and share of the overall housing market as it did during the condo boom of the mid 1980s. Condominium living comes with its own unique conditions and issues, however, so it's a good idea to familiarize yourself with the lifestyle before committing to it. Condo owners are subject to community restrictions and rules as set out by homeowner associations, and share walls with others, so those who value their privacy may not be good candidates for condo living.
Condo dwellers typically fall into one of three groups. Many first-time buyers making the jump from renting to owning opt for condos because you can usually get more home for your money in a condo, and retirees often trade in their luxury homes at the conclusion of their professional lives in order to take advantage of the low maintenance lifestyle a condominium affords. The third type of condo buyer s are wealthier consumers buying a second or third home to vacation in. These buyers prefer condos because they come with the benefit of a maintenance staff to take care of their condo when they are not there.
While many Americans enjoy the condo lifestyle, others view condominiums as nothing more than glorified apartments. But while apartment complexes can become condominiums, and vice-versa, there is typically a huge difference in living conditions between the two. Condominiums can be a converted apartment building, a townhouse or any updated multifamily unit once the property's owner has declared it a condominium, meaning its individual units can then be purchased. An important difference between condo-owners and homeowners is that homeowners own the plot of land their home sits on and their walls. Condo owners, on the other hand, own just the space inside their walls. The walls and common areas like stairwells, sidewalks and clubhouses belong to all the owners. Decisions regarding these areas are made by a condominium association, elected by residents.
One factor to keep in mind when shopping for a condo is expenses. Just like residents in upscale single-family subdivisions, condo owners are typically required to make monthly association dues payments. This money is used by the association for maintenance and repair of common areas. These fees are subject to change, though associations typically spread any increases to monthly dues over several months. But even if you're okay with the monthly fees, you should also look into whether the association maintains a reserve cash flow to cover any unexpected repair costs. Associations without these reserves are often required to charge tenants special assessment fees to cover emergency expenses, costing residents thousands of dollars unexpectedly. Poorly maintained complexes can also be a red flag that special assessments will be charged in the near future.
More Real Estate Advice