Buying a condo can be a smart first step into the real estate investment game
For home buyers who aren't yet ready to commit to a single-family house, investing in a condominium can be a good way to get into the real estate investing game without going in over your head. If you're a first-time condo buyer, it can be exciting and overwhelming at once. But there are steps you can take to make the process easier and ultimately find the right condo and community for you.
Following these five tips will ensure you're doing everything you can to make an informed, level-headed decision about investing in a condo for the first time.
1. Weigh the pros and cons
Before you go all-in, weigh the pros and cons of buying a condo versus buying a house. Common pros of living within a building community include:
- More security (which is especially nice if you travel a lot)
- Lower cost, and thus easier to qualify
- Less insurance responsibility
- Not as much maintenance
However, there are also pros to owning an independent house, including more autonomy, more private outdoor space, and more space in general.
Because no one will have the same priorities and pros and cons list when shopping for a first home, it's important to think through whether a condo makes the most sense for your lifestyle and budget.
2. Create a list of must-haves
Once you've decided that a condo is a right direction for you, make a list of the features you must-have for your home. This is important to do before you start shopping, otherwise, you could be swayed to purchase something that doesn't have everything you want or need.
Must-haves could be anything from a shared outdoor area to walk your dog, to a communal gym, to the number of bedrooms and bathrooms.
3. Creating a sensible budget
Of course, remember that you'll also need to create a budget that is smart and realistic, and that will inform many of your must-haves. As a first-time condo buyer, you may not be aware of how much it will cost to pay for things like taxes or condo association fees, so make sure you do your research to learn how much these expenses are in your area.
It's also crucial to understand how much a lending institution will give you. You may think you can afford something more expensive than you actually can. Factors that determine what mortgage you qualify for include things like your existing debt, your income, the length of time you've been at your job, and how much you can afford to pay each month.
4. Joining a condo association
When you're looking at condos, a big factor in your decision should be the condo association that the unit or building is part of. It's crucial that the association is stable and well-run, otherwise, your living experience could become frustrating fast.
Important questions to ask the association before you put in an offer on a condo include:
- Insurance: Are the community and building covered?
- Financial details: What are the membership fees? What kind of budget does the association work with? Does the association have cash reserves? (If not, special assessments could become expensive for its condo owners.)
- Regulations: Request copies of the governing documents that the association abides by. These will show you what regulations, rules, and guidelines you would have to follow if you were to buy a condo and become part of the community.
These are no small considerations for a first-time condo buyer. You need to be doubly sure that you are joining a community that aligns with your values and can show that it is a stable organization.
5. Recognize the emotional aspect of condo-buying
Before you start your condo search, recognize that a lot of emotions will become tied up in this next big step in your life. You may become stressed out trying to find a condo within your budget that has all your must-haves, or when you realize just how much time it takes to hunt for a place and visit multiple units.
At the same time, prepare yourself for disappointment. Unfortunately, there are lots of ups and downs in the real estate game. You can't just declare that you'd like to purchase a condo and sign the paperwork on the spot. You have to put in an offer, and yours may not win. Or you could enter a stressful bidding war. The inspection phase also could bring disappointment if underlying problems with the condo are discovered.
It could help to talk to others who have purchased a condo to get a sense of what the process is like and ask them for advice. Remember, you may have to compromise on your budget or your must-haves to get the condo that's right for you.
If you're a first-time condo buyer, our attorneys at PeytonBolin can help you through the complicated process. Contact us to learn more about how we can help.