How Do I Decide Which Condominium to Buy?

March 31, 2011

I was reading something the other day about how moving is one of the most stressful things in life.  Well whoever wrote that must have known a thing or two because my wife and I are going through the process right now.  For me probably the most stressful part of moving isn’t the act itself, it’s where I’m moving to.  I have lived in California my whole life and through no fault of my own (my wife went and got herself a promotion – the audacity!) we are being re-located to a bustling Midwest state.

So needless to say, I have a little bit of stress moving from climate to climate but because we are considering a condominium/townhome as opposed to a Single Family Residence (SFR) we are encountering another stress: how do we decide which dwelling we will be calling home.

Now we are very familiar in comparing SFRs but there are a few things that go into comparing condos/townhomes that I have learned and that may be of interest if you ever find yourself in the same “which one do we buy” conundrum.

Assessments (or HOA fees): Be careful of these! This can take a supposedly affordable monthly housing payment and send it through the roof.  For example, assume you have a mortgage payment of $1,500/mo and an additional $500/mo for taxes and insurance; that gives you $2,000/mo, BUT your building has assessments/HOA fees of $525/mo, so your real monthly cost is $2,525!  You need to be aware of how that impacts affordability.  And what do you get for all that money?  Often it will be landscaping, trash removal, water, common insurance and security.  However take a close look because some assessments may also include pricey utilities such as gas and air conditioning (I actually saw one that included cable!).

Special Assessments: This can be a tricky one as this type of assessment should only be implemented if absolutely necessary.  Some examples might be for fixing a leaking roof or doing some retro-fitting in an earthquake zone.  The bottom line here is that you will want to ask what special assessments have been levied in the past and what the likelihood of another is.

Association Budget: The answer to the aforementioned question often is answered by what the cash reserves looks like for the complex.  Generally more established buildings have very healthy cash reserves so that most wear and tear type improvements – new roof due to age – will not require a special assessment. Always ask not only about the cash reserves but also how long the existing Board members have been in place.

Property Taxes: This is on everyone’s favorite list and is pretty self explanatory, but be careful.  Depending on where you live, and often in the same building (the higher you go, the better the view) you can find a wide range of tax amounts.

Well this is a good start and when you factor in other non-monetary elements such as location, drive time to work, view, etc it’s easy to see why moving is stressful.  At least it sure seems that way!