When you’re looking to buy a home, there are plenty of choices available. One of them is a condominium—a multi-unit property that is divided and sold in individual units. Compared with a single-family dwelling, ownership in a condominium includes partial ownership in shared “common property.” This presents unique challenges for condominium buyers. If you’re considering buying a condo, read on to learn a little more about this type of property and what ownership entails.
An Introduction to Buying a Condominium
What Is a Condo?
In a condominium (commonly known as a condo) some parts—such as your residence—are owned privately, while others—such as common areas—are owned collectively by all of the condominium’s owners. A less technical way to think of a condo is as an apartment that you own. In practice, condos often take the form of an apartment or a similar shared complex, such as row townhouses, but theoretically a condo could physically be any kind of shared building.
Condos are especially popular in places with high property values—vacation hotspots and urban settings are both places where you can expect to find many. This is largely because buying a single-family home can be prohibitively expensive in places where additional building space may be scarce. As such, condos can open homeownership to whole new groups of people. If you’re ready to own your own home but can’t quite afford a house, a condominium could be a way to get into the market.
Searching for the Right Condo
Looking for a condo involves the same process as shopping for a single-family home. If you have a general idea of what you’re interested in, going to a real estate agent can be a great way to find out about properties that you might not be able to find on your own.
If you’re more of a do-it-yourself person, you can search real estate websites and listings for condos in the area in which you are interested. If you have a specific building or complex in mind, many offer on-site sales offices, where you can learn more about the condominium and perhaps even view a show suite.
Beyond the Condo Sales Contract
It’s not just the sales contract that you have to think about when you’re buying a condo. There is also an agreement, or declaration, that dictates the way the condominium operates and is governed. Before buying your condo, you should request and read the documents that apply to the management of the complex.
Here's what to notice: What are the hot issues for this complex? How big is the condominium’s reserve fund? How does management deal with owners’ requests and complaints? Does the condominium impose strict rules and guidelines on owners that would make you unhappy? You need to get a sense of whether the condominium you are considering is well run, whether the rules and restrictions would allow you to live the lifestyle you’re seeking, and whether the building or complex is experiencing any problems that could hurt the value of your share of ownership in the future.
Why Choose a Condo?
There are lots of reasons why a condo might be a better fit than an apartment or a single home, and money is surely one of them. According to the Real Estate Journal, condo prices tend to appreciate at a slower rate than single-family dwellings, making them a more affordable choice in markets where prices are on the rise. And compared to renting an apartment, because you actually own your condo, you can take advantage of tax deductions such as the interest on your mortgage.
Granted, it’s not all about the money. Condos also provide attractive lifestyle choices for many prospective buyers. They’re especially popular for retirees who want to be able to socialize or take advantage of services at communities that cater specifically to seniors. Living in a condominium can also free you from some of the usual chores that go along with owning a house, such as yard and exterior maintenance. They may also have desirable shared amenities, such as pools, fitness rooms or tennis courts.
Finally, condominiums can make owning a vacation home more affordable. In the United States condos became popular as a more reasonable way to buy a little piece of paradise in places such as Florida and Hawaii. If you want to relax at the beach but cringe at the thought of buying a pricey house down in the sunshine state, condos offer a somewhat less expensive alternative. They also offer the benefit of having someone else watching your property when you're back at work in miles away from the beach. Depending on the rules and location, you may also be able to help pay for that vacation condo by renting it out when you're not there.
The Bottom Line
If you’re thinking about buying real estate—whether as an investor, a vacationer, or a year-round resident—condos are definitely something that should be on the radar. This is especially true if you’re looking at an area where real estate is expensive. Condos aren’t inherently better or worse than any other type of residence, but, depending on your situation, a condo or co-op could be a good choice for you as a home buyer.