The basic real estate process of buying a condominium and buying a single-family house is relatively the same, but of course, the property is different. You won’t have to deal with a lot of maintenance, but you will have homeowner associations and you’ll have to deal with other condo owners in the building. Buying a condominium allows you to ease into homeownership without having all the responsibilities of a single-family house. Condominiums make great first time home buyer purchases because you’re only responsible for the inside of the condominium and they make great retiree options, as well as your maintenance, now gets cut in half. But, regardless of why you are buying a condominium, here are six major questions to ask before finalizing the documents.
#1. Ask about the Association.
You’re not just buying the condominium, but you’re buying into the entire Association and that means you have to agree with their rules and covenants. When you choose to buy a home in a condominium complex, you’ll receive what’s called the CC&Rs this is a list of restrictions, covenants, and conditions that all owners must adhere to when they live in the condominium complex. It’s important to go over this document to make sure you agree with it. Also, ask how the Association is being run. Do they have enough people on the board to manage situations? Are they financially stable? How do they handle repairs and complaints?
#2. What is the delinquency rate?
“Just as it’s important to find out how the Association is run, it’s important to find out what the percentages of owners who are delinquent on their dues. This may not seem like much of an issue now, but Fannie Mae, Freddie Mac, and FHA do not approve condominiums with the delinquency rate above 15%.” – Pro Tip from Orlando Buyer’s Agents
#3. Financial and cash reserves.
The lower cash reserves a condo association has and the older the building could mean that homeowners will be hit with special assessments at some point. Eventually, roofs need to be replaced, siding repaired, or the entire building needs to be painted and that’s a big expense. Make sure you’re ready for those special assessments or that the Association has enough in their reserve fund to cover it.
#4. What is the vacancy rate?
Are there a lot of vacancies or a low percentage of owner-occupied units? Some financial lenders may not even loan on a condominium in a complex where there are 50% or more rental units.
#5. Ask about insurance.
Another important factor that condo buyers often overlook is the communities insurance coverage. They may have reduced or even dropped their insurance to cover costs, but this jeopardizes the investment of all the owners. Any new buyers should ask to obtain a copy of the buildings master insurance policy and then discuss it with your own homeowner’s insurance to verify that there’s enough coverage.
#6. Ask about the Association’s budget.
Condo associations may not give a prospective buyer a copy of the budget but the owner of the unit can request a copy and then provided to the buyer. This is important to know the total amount of outstanding debt owed to the Association and the percentage of delinquent owners.
Asking these questions about a condo buildings association is imperative to finding a building and complex you love. The last thing you want when you move in is to have mountains of problems from other owners, tenants, or the Association.
Because we know all of the condominium complexes in Panama City Beach we can help you find the right building or complex for your needs and an association that approves you.