Todd Clark inspired this post when he wrote about doing your homework before buying. Todd did some investigating and gave them the information they needed to know before buying a condo. They decided not to sell their home and buy a condo when they found out Todd's research.
10 Things you Need to Know before you buy a Condo:
1. Get a copy of the Association Homeowners Documents and read them carefully.
2. Who is in charge of the Association - Developer or Homeowners? Who is on the Board of the Association?
3. Who is the Management Company?
4. Get a copy of the Annual Budget and check closely for how much money is in the Reserve Fund and how much is being set aside annually. Is there a plan for how much it will cost to paint, landscape, replace the roof, pave roadways (if gated), maintain amenities and common areas, etc.? Know where the money is going.
5. Are there any lawsuits pending? These can be between Residents and Association, Developer and Contractors, Association, Residents and Contractors. Are there any liens against the Condominium, Developer, or individual unit for sale?
6. How many owners have defaulted on their Association dues? Over a certain number of defaults and the property will not be eligible for FHA financing.
7. Are there any Assessments at present or any in the future that are now known? If so, how much and for how long?
8. Have an attorney or title company do a preliminary title search to validate what the Developer, Association, Seller or their agent tell you. Be sure they check the Developer also if they are still in control of the property.
9. Talk to some residents to find out how they like living there and how they rate the Management Company and Homeowner's Board.
10. Be sure you understand what the owners are responsible for in maintaining the unit - and by all means, have a building inspection to determine the condition of the unit and any maintenance that needs to be done.
Condo living can be great and at today's prices, buying a condo makes sense for many people. Investors can have positive cash flow even with Association monthly dues.