Investing in a condo with plans of renting or reselling can provide a good return. Before you sign on the dotted line, however, here are some questions to ask:
- How much are the HOA dues and what do they cover?
When buying a condo, you will be required to pay homeowners association (HOA) dues on a monthly basis. These fees vary from one condo building to the other. Just like property taxes, HOA fees increase over time.
Find out what you’re getting in exchange. HOA fees usually cover the upkeep of common areas, as well as garbage disposal. Get an estimate of how much your dues can increase each year. A portion of your monthly dues often goes into a reserve fund that covers repairs and upgrades.
- What’s their policy on pets?
Different buildings will have different policies when it comes to pets. Some developments place little or no limits on pet ownership, while others have strict rules.
For buildings that allow pets, the HOA usually sets a limit on the number of pets you can have, the size of the pets, as well as what breeds are allowed.
- What are your parking options?
Parking is a major issue, but unfortunately, too many people buy condos as an investment without any concern for the availability or location of the parking space. Make sure you know where your parking space is for the condo, whether or not it’s registered on title along with the unit, if you can buy additional parking space, and what the parking options are for your guests.
- Is there enough storage space?
Condos typically offer less space than single-family homes and so it’s crucial to know what your storage options are. Some unit owners are allowed to have storage units built near their parking slots. This is a viable option if you own bicycles, camping gear, sports gear, and other bulky items.
- What’s in the minutes of the meeting?
Before buying a condo, read the minutes of condo board meetings that took place over the last few months. The meeting minutes will supply you with information on past, current, and future issues that you may have to deal with as a unit owner.
This will give you an idea of how well the condo board and property management get along, and how the building is run. The individuals who run the board make important decisions for the building. If there’s bad blood between them, or if they cannot do their jobs well, you could end up facing problems in the future.
Pay special attention to complaints from residents, as well as persistent issues that need to be addressed.
- Is there a rental cap?
Most condo buildings have a rental cap in effect. This is a restriction set by the HOA or the condo board that limits the number of units that can be rented out. A rental cap helps protect the value of the homes in the building, based on the idea that too many renters lower the value of the condominium as a whole since owners take better care of units than renters do.
- How long do you intend to keep the condo?
In general, condos don’t appreciate as quickly as single-family homes. Therefore, you have to view condos as a long-term investment in order to get the highest returns. Ideally, you should hold onto a condo for a minimum of five years.
The National Association of Home Builders has found that more than half of all condo buyers move out within six years or less. By comparison, less than a third of all single-family homeowners leave as quickly.
Ready to make an investment move in Sebastian, Vero Beach, Micco, or any other community in Indian River County and Brevard County in Florida? Call 772.925.9587 for assistance or send an email to francine(at)francinekidder(dotted)com.