So you want to buy a home but are considering a condominium because of the amenities, the community, and whatever reason you may have. But before you buy one, you should weigh the various pros and cons of owning one carefully and decide if this is really for you.
Cheaper than Single Family Homes and Town Homes
A condominium is much cheaper than the Single Family Homes (SFH). For most people, this is a very good starter home before upgrading to a single family home. The monthly payment on some of the condominium is probably just a little bit higher than the apartment making it an ideal buy for someone who just want to get their feet wet with home ownership.
Home Owners Association
The home owners association is the one responsible for the maintenance of the area. You can also resolve community dispute with them or report any violation of the policies by your neighbors without confronting the neighbors yourself.
Home Owner Association (HOA) Fees Include Utilities and Insurance
Because condominium shares the same building structure, your home ownerâ€™s association fees would include the cost of the hazard insurance. Some may actually include the cost of water and trash.
Condominium communities may include amenities such as swimming pools, club room, gated community, gym, playground, etc. Itâ€™s like joining a club but without leaving your community. You do not have to worry about the maintenance because everything is taken care of by your home ownerâ€™s association.
Homeowners are very familiar with each other and because they live in very close proximity, they can easily identify any intruders. Some condominiums are probably gated and requires visitor to call the owner first before they can come in. We all know that they can still get in by just waiting for a resident to come in and tailgate them. So, this may be a false sense of security but at least it does deter somebody from coming in immediately.
Flexibility on home remodeling
As much as having a home owner association is an advantage, it comes with varying disadvantages as well. One of them is about control and flexibility. You are very limited to what you can do to your home such as beautifying it or making any external upgrades. It may also control and affect some of the internal upgrades as well. If you need to make any changes, you need approval from the Home owner association first to ensure that you follow their guidelines and requirements.
Some of the HOA fees are ridiculously high. If you are utilizing the amenities, great! But if youâ€™re not then you are just wasting a big chunk of your money towards the HOA. So now you would try to force yourself to commit even if you did not want to. So the biggest question when buying a condominium with high HOA fees due to all these amenities is: Do you really need any of those amenities and how often would you use it? Moreover, did you know that your HOA fees would actually increase over time? If the community is brand new, chances are the HOA fees are very decent. However, as time passes by, majority of the amenities would require more maintenance and repairs. Thus, would require more funding. And where do they get the additional funding…..from the homeowners. So treat the HOA like taxes paid to your community but the only difference is that itâ€™s not tax deductible!!
Too Close With Neighbors
You are just way too close with your neighbors; In fact, it maybe just a wall separating you from them. On some of the building structures, living in a condominium is just like living in an apartment. When youâ€™re neighbors are too noisy, youâ€™re out of luck. You can keep complaining to the police or the HOA but your neighbors wonâ€™t get kicked out. However, they would probably incur some kind penalties from your HOA as part of the HOA agreement.
High Vulnerability in the real estate market
When real estate market crashes, condominiums are the very first ones to drop in price and when it drops,we’re talking about a big drop. On the other hand, during the real estate booms, condominiums are the last ones to experience price appreciation because most buyers will be looking for single family homes.
You Do Not Own Any Land
Did you know that with a condominium, you only own the building structure but not the land? This is one of the reasons why a condominium is much cheaper than single family homes.
Is a condominium right for you?
A condominium is not for everybody but if you are the type of person who:
- Does not like worrying about maintaining the outside area of home
- Wants to have living amenities like swimming pool, gym, playground, party area in the community
- Wants a starter home or cheaper alternative to single family or townhomes.
Then this type of home may be the right one for you!
Photo credit: baliboro
I say go for a condominium where it economically makes sense. This means: In an area where land is scarce or relatively scarce, land that is more valuable especially for condominiums, and land closer to the center of the city. If you buy one of those condominiums way out in the suburbs, it might be cheaper, but I believe it will be more vulnerable to price shocks and harder to rent out as well.
Ken G says
True. In places like downtown Los Angeles or New York where people want to get close to work, a condominium may be the right option. Foreign countries like Hong Kong have a scarcity of land and have high rises that a condominium becomes the norm
Great list of pros and cons dealing with Condos – I am in one right now and I am done with it forever after we move. The annoying restrictions and gossip is beyond what I can take. Downtown New York (and actually most of NYC) don’t really have condos what they have are co-ops, which are legally different.
It should also be noted that a condo can be in the form of a town house, high rise, or even single family homes that are bound by the condiminum agreement.
Mahopac Real Estate Guy says
I am not an attorney and this description was written off the top of my head as I have come to understand it. Of course, consult with an attorney before purchasing any home for a much more specific explanation. The most important thing to take away is that condo is a method of ownership and a townhouse is the type of structure. I would like you to visit and read an article from a putnam real estate broker. It will provide you insight in choosing the best home for you.