Real Estate News

Pros and Cons of Buying a Condo – Is It Worth It?

Deciding what type of home to purchase is a huge decision that ends in likely the biggest purchase you will ever make. You likely want to research all of your choices, including single-family homes, townhomes, and condominiums. Some people swear that condos are the best way to go, while others may caution you to stay away. So should you consider a condo when exploring new homes in Orlando, FL? Read on for a breakdown of these homes and why they may or may not work for you.

What Is a Condo?

There are a lot of misconceptions about what exactly a condo is- some people say it’s an apartment that you own, while others confuse it with a townhouse. These homes all share similarities but are distinct from condos in a few ways.

A condominium, commonly called a condo, is a private residence within a larger building or community. In contrast, an apartment is a leased residence within a larger building or community. A condo shares common areas with all the other units in the community, like fitness centers, pools, and manicured grounds. Unlike someone living in an apartment, a condo owner will pay monthly dues to keep these amenities operational and in good condition. This fee may also cover certain maintenance, like roof work or sidewalk repair.

Communities of townhouses can operate like a condominium, but they do not always. Townhouses often have fewer amenities and may not have shared costs like maintenance.

Condos can be structured like an apartment building, where there are multiple on one floor or in another configuration. They can also take on the townhouse structure of multiple units next to each other, sharing a wall.

Benefits of Buying a Condo

Many people love living in a condo and feel it is a superior method of homeownership. It’s true that there are many positives to a condo, some of which we have listed.

Fewer Maintenance Responsibilities

One of the biggest considerations to make when buying a home is not just the cost of a mortgage and a sales process, but also the ongoing cost of owning and maintaining a home. In a condo, much of the necessary maintenance is covered by the fees you pay and does not fall on your shoulders. You may have someone cut the grass and maintain the grounds, fix the roof, and shovel snow without having to find or pay someone on your own. First-time homeowners, those who do not have the time to take on these tasks, those in poor health, or anyone else may find this to be a huge benefit.

This is one reason you see many condominium communities being inhabited by senior citizens. The lack of maintenance allows them to avoid strenuous work while ensuring your living conditions are good.

Security

Most condos are in a community that offers gated entry, doorkeepers, or security professionals on the premises. This can be reassuring for those who live alone or have families, as your home is not as vulnerable to break-ins and other crimes. Along with these formal measures, the close proximity to neighbors can also be a deterrent to criminals and allow for quick outreach when needed.

The Amenities

Living in a condo often allows for a huge range of amenities that most single-family homes don’t have or that are very expensive to maintain. A pool and a fitness center are very common, and many condos offer events like game nights and other mixer events. This allows residents access to their neighbors and the ability to form bonds in the community, along with the benefits of amenities that others maintain.

Cost and Appreciation

In many cases, condominiums are priced lower than single-family homes in the same areas. In 2018, the National Association of REALTOR found that the average single-family home price was $260,000 while the average condo came in at around $248,000. For those on a smaller budget, this may be enticing.

In recent years, condos have begun to keep pace with single-family homes in terms of their appreciation in market value. Because they do not include the same land as other homes, condos have historically appreciated at a slow rate, but since around 2012, they have kept pace with or outpaced the rest of the market.

Location

Condos are available across the country, but they are commonly found in cities or on the outskirts of these vibrant downtown areas. This can offer access to all the city has to offer while still maintaining the benefits of homeownership. Many people will also choose a city-adjacent condo in order to take advantage of nearby public transportation and access to their workplace.

Cons of Buying a Condo

Alongside all of the benefits of a condo, there are some tradeoffs to consider.

Fees and Cost-Sharing

The amenities and security that make a condo feel luxurious are not free. Owning a condo makes you essentially a business partner in the community, and as your contribution, you pay a monthly fee, usually called a homeowners association (HOA) fee, on top of your mortgage.

HOA fees can vary widely depending on your location and the size and quality of your community, but they have been rising nationwide. The average HOA fee in 2005 was $250 per month, but by 2015 it had risen to $331. This is sometimes offset by the less expensive mortgage but should be considered during any budgeting.

Much of an HOA fee will benefit you, paying for the amenities you enjoy and potential maintenance work on your unit. But keep in mind it may also go towards things you don’t agree with or use, and you will still have to contribute. There are also communities where funds are mismanaged, so it is important to trust the community you choose.

If others are late on their fees or delinquent, you may also suffer for that, as funds are pooled and used for the whole community.

Close Proximity

Structurally, a condo will feel much more like living in an apartment than a home. Even a townhouse-style condo has shared walls with your neighbors, often on both sides and even above or below you. This can mean more noise that you hear and needing to be quiet to avoid disturbing others. It also may mean your neighbors are closer than you’d like, and you have to take care to cover windows and other openings.

Resale Potential

Because of some of the negative aspects, condos usually do not sell as easily as single-family homes, and you may find a smaller pool of buyers. If the community is not well kept or has other issues, this could be out of your hands and yet turn away potentially interested parties.

Your HOA may also need to approve any buyers or disallow investors to buy for the purpose of renting, which can add difficulty to the transaction.

Rules

Homeowners associations are notorious for the rules they impose on members. While you will own your condo, there will likely be rules you have to adhere to in terms of how it can be altered and how it can look. These can range from making solar panels mandatory to only allowing you to plant certain types of flowers in your front garden.

Some condos have extremely strict rules, limiting even the number of guests you can and cannot have at any given time. You may like some of these rules for the quality of your neighbors, but be sure you can live with them for yourself.

Tips for Buying Condos

If you decide a condo is for you, there are ways to ensure you get a great deal and find a community where you can thrive.

Age Matters

You may think that newly built condos will be more expensive, while older communities can be more affordable. This can be true of the sales price, but older condos usually have much higher HOA fees because of the necessary upkeep. Finding out when a community was built or when major renovations were made can help you understand the condition and potential costs.

Read All Documents

Be sure to understand exactly what is and isn’t covered by your HOA by reading all documents carefully. Look to understand what the boundaries of your unit are and what is considered your private space, as well as what common elements exist in the community.

Talk to Residents

It can be good to get to know your neighbors before moving anywhere. But before making an offer on a condo, it can be even more critical to get to know current residents as you will have a lot in common with them. They may have inside information about the board members, the people who live there, and other questions you have.

Ask the Rental Ratio

Finding out how many units are rented out will give you insight into a few things. First, it will tell you if new neighbors are coming in and out often or even if vacationers will be present. If you are concerned about noise, this may be important. Additionally, some lenders will not approve loans if a community has a high rental ratio, so you will need to know this upfront.

Request the HOA Budget

An HOA will usually not share its current budget with a potential buyer, but the seller may be willing to show it to you. By reading through the budget, you can understand how they spent their money and if they carry debt, as well as if there are owners not paying their dues.