Making a solid investment when you make your condo purchase.
In today’s real estate market, buying a condo has become a very attractive option for both families and individuals. Some families buy a condo because they are ready to own but not maintain a detached unit, while some empty nesters want to simplify their lives and have more time to travel. A large group of buyers, however, want to buy a condo to rent out or resell in the future. Whichever group you belong to, you will want to make sure you are making a solid investment when you make your purchase. Here are some tips to consider before you take that plunge.
Get pre-approved before you do some serious shopping.
A written commitment from the lender will help you choose units you can afford because you can concentrate on getting a good deal on a unit within your budget. When you are pre-approved, sellers know that once you reach an agreement the sale will go smoothly. This may get you a good price from owners who want to sell quickly so they can purchase another property.
Work with a buyer’s agent.
Most people are content to work with a real estate agent who has the listing of properties they are interested in, and they overlook the fact that this agent actually represents the seller. You need an agent whose first responsibility is to you, the buyer. Aside from getting the best possible price for you, a good agent will check to see which units are in the Federal Housing Administration’s approved list, in case you need this for your loan. Your agent will go through the purchasing process with you – from studying the disclosure of property defects, to the inspection of the property, and the review of documents that talk about homeowners’ fees, insurance, and other relevant matters.
Look into the HOA’s financial status.
The financial status of the HOA (Homeowners’ Association and co-property act) is a critical factor in whether or not a unit is a wise buy. Before you make a purchase, find out if the HOA is successfully setting aside a reserve fund over and above its regular operating costs. The reserve fund is meant to cover future repairs and replacements. In the absence of adequate reserves, when these expenses come up, there will be special assessments or additional payments for owners on top of their regular dues. Apart from the reserve fund balance, a buyer should also look into the HOA’s balance sheet, notices of pending lawsuits, recent assessments, its yearly revenue from dues, and the percentage of delinquency in payment of dues.
Living in a condo can offer a practical lifestyle that meets the needs of many individuals in today’s busy world. Moreover, housing analysts predict that the demand for condos will rise as people in the 20 to 24 age group become first-time home buyers. A condo can indeed be a profitable investment if you take the time and the effort to make sure you are buying the right unit in the right community for the right price.
By Tim Smith
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