Purchasing real estate is one of the largest financial decisions one can make in your lifetime. If you are considering purchasing a condo, you will need to consider the pros and cons of the investment. We have put together some of the pros and cons to consider before investing in a condo.
Pros of buying a condo
One of the biggest pros of investing in a condo is that you are not responsible for the maintenance. The monthly fee you pay goes towards the management company to cut the grass, shovel the snow, and make repairs to common areas. A condo could be a good investment if you are a busy person who does not have time for home maintenance.
Condos tend to have more amenities than single-family homes. People who enjoy a pool, fitness center, community center, or rooftop BBQ might want to consider a condo with high-end amenities. If you like to socialize, the amenities tend to be a great place to get to know your neighbors.
Condos also tend to be located closer to downtown areas. So, if walking to restaurants, stores, and coffee shops is an important factor for you, a condo purchase would be a worthwhile investment.
Cons of buying a condo
Monthly HOA fees
While you may be enjoying those amenities, they come at a cost. When you purchase the condo, you will know the current monthly fees, but you don’t know what the future increases might be. Condos fees will increase over time. In addition, if the condo needs to do a large improvement project such as a new roof, you could be hit with a one-time special assessment to help cover it.
Slower to grow in value
A condo will typically take much more time to grow in value than single-family homes in the area. So, if you are not planning on holding the condo for a significant amount of time, you may not see your value increase.
Rules and Regulations
If you do not like following the rules, a condo purchase may not be the right choice for you. The HOA will have a rule book that you will need to follow. These rules can include the rental policy, the pet policy, and the BBQ policy. If you consider purchasing a condo, you will want to read the HOA rules very carefully to make sure they will work for you.
Difficulty with financing
Sometimes it can be difficult to sell a condo because the lender will no longer issue a mortgage for a particular condo. Oftentimes this is because the building has too many units occupied by non-owners. In other words, a lender will not lend on a building if there are too many rentals. Check with the HOA and see if they have a cap on the number of units that can be rented simultaneously.