Are Portland and Tigard condos right for you?

Spring is upon us and buyers maybe considering purchasing a condo in Portland or Tigard. There is no doubt, that in the last few years, they have become a viable housing choice. They can be an affordable first home, a vacation retreat, or a desirable home for retirement. Whether you are buying a condo for your personal residence or for use as a rental, here are some issues to consider.

Condo Advantages

• A condo is usually less expensive that a similarly sized house.
• They appreciate in value, although usually at a lower rate than a single family home.
• They may offer amenities not available in single family homes.
• They enjoy all the tax benefits of homeownership.
• Exterior maintenance is the responsibility of the Condo Association.
• Condos offer more peace of mind on security issues if you are away for an extended period of time.
• A well run Condo Association, coupled with a desirable community atmosphere, will make your unit more saleable.

Condo Disadvantages

• You have to abide with the rules of the Condo Association.
• The monthly fees you pay could increase, even if you do not agree with the increase.
• Poor management may affect resale values.
• Your neighbors may make noise. Poor soundproofing is a major complaint with condos.
• Generally speaking, condos are more sensitive to trends in the real estate market than single-family homes.  They are among the first to experience stagnant or declining appreciation and the last to recover.
• High fees, compared to other nearby condos, can hold down your market value and increase the time it takes to sell your unit.

As a condominium owner you share walls with your neighbors and you are buying all the space contained within those walls.  Whatever square footage you have when you buy is what you have to live with.  You only own the space within your walls and you cannot expand it, like in a single-family home.  In addition, you share ownership of all areas outside of the walls.  The land, exterior of the building, amenities, roads and sidewalks, and all common areas are owned by the condo association.

By choosing to live in a condominium, you are choosing to live within a community arrangement.  You are living in close proximity to others and you will be sharing space with them.  Meet the people who will be your neighbors. Find out what they like and dislike about the condos.

The Condo Association

Every unit owner is a voting member of the Association.  You must abide by the majority decision.  Owners elect a Board of Directors, who enforce the bylaws, handle maintenance and deal with disputes between owners.  A well-run condo association can offer considerable benefits to owners.  Someone else takes care of maintenance issues (outside of your unit) and pays for them.  This frees up time that you would have to devote to exterior maintenance. The association may offer amenities that you cannot afford on your own, such as, tennis courts and swimming pools.  You can expect to pay monthly association fees, in addition to your mortgage, to pay for the amenities, upkeep of common areas, and the management of the Association.

Association Rules

Condos are governed by a set of rules (bylaws) called CC&R's; Covenants, Conditions and Restrictions.  As a unit owner, you are required to abide by these rules, whether you like them or not.  Some examples are:

• Number of parking spaces you have.
• Number of visitors you can have
• Color of curtains in your windows
• Noise levels
• Pet restrictions
• Limits on the interior renovations
• Landscaping restrictions
• Renting units

Other key issues

Management: Is the association well run? Does management pursue discounts on repairs? Are the tenants happy with this management?

Reserve funds: Are there adequate funds to cover operating costs and repairs.  Are there any future "special assessments", (costs in addition to monthly dues), planned for repairs or improvements. Example: If the roof needs replacing, and funds have not been previously allocated for this expense, a large special assessment can be levied on each owner. This could easily be thousands of dollars.

If you are buying a new condo, the developer may have set the monthly fees low to attract buyers. This is an indication that fees will increase in the future to cover operating costs.

Rental units: A low percentage (20 % or less) of rental units compared to owner occupied units is desirable. Also, when obtaining a loan, there may be requirements that the number of rental units be below a certain percentage.

Lawsuits: Are there any pending lawsuits against the Condo Association? Does the Condo Association have any pending or planned lawsuits against another party, such as, a builder or developer who did shoddy work?

When purchasing a condo, be sure to get it inspected, and carefully read the Sellers Disclosures. If you are buying a new condo, make the sale contingent on your approval of a professional inspection after the unit is completed.

Here is a different concern that I have had recent experience with that may be of interest to you in deciding to purchase a condo. It is quite common for new condo buildings to have retail space on the ground floor. I represented a restaurant in lease negotiations on a new, small development. After the restaurant opened, residents vigorously complained about noise and smell issues. They all bought their units knowing that a restaurant was going in. The restaurant was clean and was operating normally, but animosity developed against the restaurant. The other owners had not realized the impact a retail operation would have against their "ideal" living conditions. Also, the restaurant owners had no control over the subsequent increase in association fees after new Association management took over.

Condos are like any other real estate.  Research the neighborhood and recent sales.  Evaluate your future needs and what you can afford.  Weigh the pros and cons and make your purchase decision.

Wayne B. Pruner is a Realtor® at Oregon First, who works in the Portland and Tigard, Oregon area. He is ready to help you with all your real estate needs. His phone number is 503-891-0795. Here are links to his real estate website and his real estate blog.