Price. Some people love the
idea of condo ownership, and others hate it. Some who are not
at all that thrilled with the idea may opt for it for one
simple reason - in many places it's a lot cheaper than a
single-family detached home. This will be a difficult fact for
you to accept if the only condos you are familiar with are
developments with names like Country Club Haven and
Rockefeller Manor and have Jags and BMWs parked in front of
them. Statistically, however, it's true. In some markets the
average sales price of a condo will be 40 to 50 percent less
than the single-family detached option.
Variety. Remember that the word condominium
describes a form of ownership, not a type of building.
Although the apartment-style condo is common, there are an
infinite variety. They range from a very modest apartment
building that has been converted to lavish single-level units
built specifically as condos and clustered around a golf
course.
Quality of Construction. Several years ago,
as the condo concept became more accepted by homebuyers, a
conversion feeding frenzy occurred. Let's say you owned an
apartment building that with intensive management was barely
returning a positive cash flow for you. An astute developer
shows you how to convert the apartments to condos and sell
them. The profit figures he projects take your breath away.
You're convinced and you convert. So did a lot of other
apartment house owners.
Consumer abuses occurred during the period, prompting many
state legislatures to enact very restrictive rules on condo
conversions. One of the biggest complaints had to do with
quality of construction. "Paper-thin walls" was a
complaint often heard. A tenant who pays $700 a month for an
apartment might be slightly annoyed by the presence of a noisy
neighbor. A purchaser who pays $100,000 for that apartment as
a condo would likely be more than somewhat irritated by that
same inconsiderate neighbor.
New construction, built specifically as condos, naturally gets
much better marks. For example, when we moved to our present
location, a local builder was just in the early stages of
constructing a condominium project. We purchased a condo for a
relative when it was in the foundation stage. Each individual
unit had its own interior walls, separated by an airspace as
opposed to a common wall. It was clear in all the planning and
actual construction that these units were designed as homes,
not as apartments. Since it was early in the construction
process, my wife and mother-in-law could work with the builder
to customize the condo. It turned out well for us, and the
builder maintains that the nervous twitch he developed had
nothing to do with the experience.
Condominium Owners' Association: This is an
association of elected condo owners who control and manage the
overall affairs of the condo complex, including maintenance of
the common areas, such as the required periodic painting of
the exterior as well as such exotic functions as garbage
pickup. Those things obviously cost money, and they seem to
cost more money each year. You will be required to pay monthly
dues to cover these expenses. By the way, if you buy a condo,
the amount of these fees will be considered by the lender when
qualifying you for the loan. Condo associations have some
rather formidable power. For example, miss one of those dues
payments and they can put you a lien on your property - and in
a worst-case situation, actually foreclose on it.
This Homebuyers Tip was excerpted from:
The Homebuyer's Survival Guide, by Kenneth W. Edwards, Real
Estate Education Company, 1994.
ISBN# 079310906X
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