We bought our condo nearly two years ago. It was our first venture into condo ownership, so we took things slowly and made sure we paid attention to some of the finer details of the purchase. Along the way, we learned that there can be some critical points to pay attention to when buying a condo. These issues can result in thousands or even tens of thousands of dollars in extra costs or additional savings depending upon how they affect condo owners, and we wanted to make sure we were on the savings side of this coin if at all possible.
Review, review, review
We received a whole packet of information regarding our condo, condo association, and the rules governing our condo and condo living after we agreed on the terms of our purchase. During our review of such information, we paid particularly close attention to what our monthly association fee was and what it covered (trash pickup, exterior maintenance, snow removal, landscaping, water/sewer services, etc.), as well as to the budget for our condo complex. We therefore entered into our purchase with a full understanding of the costs association with our living situation.
Look for outstanding special assessments or upcoming projects
While reviewing our condo information, we also paid special attention to any upcoming maintenance projects and looked for notes regarding special assessments tied to these projects. While association fees can be used to cover many major repairs – roof replacement, common area updates, tuckpoint work, elevator or swimming pool repairs, etc. – sometimes special assessments are made to cover repairs or updates outside budgeted projects.
While we didn’t have any projects outstanding upon our purchase, we’ve seen people in other complexes get hit with hefty special assessments that have reached $10,000 or more.
Reserve funds are critical
One of the critical aspects of ensuring that we weren’t hit with a special assessment soon after the purchase of our condo was having an understanding of our condo association’s reserve fund. Not every condo association has a reserve fund; however, such funds can be critical to keeping the need for special assessments to a minimum.
We took note of the nearly $250,000 reserve fund our condo association had accumulated and looked at it as a real benefit of our purchasing at this particular location. Knowing that this money could be applied to repair work or projects before our having to chip in for such work was an additional benefit. It also showed that our condo board appeared to be financially responsible and favor fiscal responsibility. Such knowledge provided us peace of mind and made us feel more comfortable and secure with making our condo purchase.
More From This Contributor:
Building a Revenue Producing Blog
I Won’t Be Waiting to Take Social Security
Preparing to Publish My First E-book
The author is not a licensed financial or real estate professional. This article is for informational purposes only and does not constitute advice of any kind. Calculations have not been verified by a professional. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.