Condo Buyer Report
First time home buyers
need to consider some basic guidelines before condo hunting and negotiating
their first real estate contract.
New construction versus existing
New construction condos usually go up in value quicker and they have
lower association dues since the project is new and little maintenance is required.
New condo projects in "up and coming" areas offers greatest
chance for increase in value, but you need to be aware that if the area doesn't
continue to develop you could see little appreciation on your condo. Existing
condos usually offer greater stability in value and marketability.
Deciding on 1 bedroom versus 2?
Most first time home buyers want a 2 bedroom condo but they find out that
the monthly payment is much higher than anticipated for the 2 bedroom condo. A 2
bedroom is more marketable and you can get a roommate to pay for half the
mortgage but remember you can't use your roommate's rent to qualify for a
mortgage. Also, what happens if your roommate leaves? I tell homebuyers if they
are not sure what to do, go ahead and buy a 1 bedroom condo and keep it for 2-3
years and build up some equity and move up to a bigger condo, single family
home, or even a multi-unit.
Owner Occupancy
Make sure if you are buying an existing condo please ask about the owner
occupancy in the building. The magic number is 60% which means that 60% of
building owners live in the units. If the building is less than 60% owner
occupied, it can hurt your resale value. Also, buyers will have more trouble
finding mortgage financing for less than 20% down in buildings with less than
60% owner occupancy.
Association Dues
If you want a condo in a hi-rise building with a beautiful lakefront view, you
need to be aware that association dues are generally much higher for a high rise versus
low rise and they have a greater chance of a special assessment being levied
against you which is a "special tax" for building improvements. Ask
the management company of the building if they have enough reserves to meet
future obligations such as building repairs and improvements.
Finally, you should
choose a local real estate agent to help you find a good condo project. A good real
estate agent knows the area you are looking in and they have access to all the
information you need to make a decision about buying a condo in a
particular building. Find yourself the best real estate broker and go get
the condo you want. What are you are waiting for?
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