Condo-Buying Walkthrough: Reasons To Buy A Condo
Many features of condominium ownership are attractive to people exploring different options when it comes to the purchase of real estate.
Condominium developments often provide access to certain desirable amenities that would not be practical or affordable for an individual house owner. Clubhouses, golf courses, swimming pools, tennis courts, fitness facilities and even the actual location – such as a beach front property – can be much more affordable when shared by a group of owners, rather than by an individual property owner.
Many condominium developments offer unit owners a strong sense of community, especially in developments that provide a variety of planned social events for owners. However, certain developments have a relatively high number of units on a rental program, and the sense of community in these may be less pronounced as new people (short-term renters) are in the building on a regular basis. Other condominiums boast a high number of owner-occupied units, which allows neighbors to get to know one another.
While a single-family home might be out of reach at a luxury location, such as in a ski town or at the beach, owning a condominium unit is often a viable alternative that provides owners with the lifestyle they enjoy at a fraction of the cost. Single-family homes at a popular beach location, for example, might demand prices in the millions of dollars. A condominium unit on the same stretch of beach could be half or even one-third the cost.
Equity & Tax Advantages
For people deciding between renting a property and purchasing a condominium unit, condo ownership presents two financial advantages over renting, including the opportunity to build equity and the ability to take advantage of tax deductions for mortgage interest and property taxes. If a monthly mortgage payment would be approximately the same as monthly rent in a particular market, it may be financially advantageous to purchase rather than rent.
Some buyers will be interested in purchasing a condominium unit as a type of investment, either because they anticipate the price of the unit will appreciate considerably over time or because they wish to place the unit in a rental program. Since condominium units tend to appreciate more slowly than single-family homes, many people who are interested in the unit as an investment will choose to capitalize on its rental potential rather than wait for the unit to go up in value. Beachfront condominiums, for example, may fetch many thousands of dollars per week during the summer vacation months; likewise, condominiums conveniently located at ski resorts can bring in similar rental fees during the winter months. If a unit has previously been on the rental program, the seller should be able to provide details regarding its annual rental income, including the number of days per year on average that the unit has been rented and the corresponding rental fees that have been collected.
One of the biggest perks of condominium ownership is that the individual owners are not directly responsible for performing maintenance on the building, common areas or grounds. For many people, this is desirable because it frees up time for other pursuits. For others, it is a well-earned break following many years of home maintenance. In general, the monthly condominium fees cover all expenses related to the repair and maintenance of central services, parts of the building aside from the individual units, grounds and community facilities.
Depending on the specific market, the price of a condo unit might be a deciding factor in purchasing a condominium over other types of real estate such as a single-family home. In certain areas, the houses may be predominantly larger, more expensive homes. Condominiums in the same area, however, may be smaller (either in terms of square feet and/or the number of bedrooms) and more affordable. This does not hold true in all markets, and real estate buyers need to also factor in the additional costs associated with monthly dues.
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