Buying Your First Condo: Smart Research Pays Off
If you’ve never bought a home before, doing smart research with the help of your REALTOR will make sure that your first condo is your perfect condo. Here is what Stephanie Chan, a top-selling REALTOR and partner at Prudential Locations, advises:
Make sure the condo meets loan requirements
If you are applying for a government loan program, such as a Veterans Administration (VA) or a Federal Housing Administration (FHA) loan, verify that the building is VA-or FHA-approved. Many condos don’t meet the minimum owner-occupant ratios needed.
Also check to see if a[notdef]single owner owns more than 10 percent of the building, or if the building has a commercial space, as “these can create issues for securing a regular loan.
If they do, there’s a chance that a portfolio loan with 25 percent down payment would be needed.”
Make sure it meets your requirements
Pets, parking, laundry, and common spaces: Don’t make assumptions about these based on what you see or are told. Read the building’s written rules and regulations.
With parking, find out if assigned spaces are included in the sale, if they are covered or secured, and if guest stalls are available. Chan recommends double-checking that your car will fit into the parking space.
Not all buildings are pet-friendly and those that are may have different rules and requirements. “(They) typically limit the size and/or weight of the pet,” says Chan. “Some only allow cats, while others allow dogs and cats. Some buildings limit the number of pets per unit and some charge a one-time registration fee or additional safety deposit.”
Ask about maintenance fees and special assessments
Condo residents pay homeowners’ association fees to cover ongoing maintenance and repairs. Big-ticket repairs for elevators, roofs and lanai railings can quickly use up condo reserve funds, so these types of projects often result in extra assessment costs to owners.
“Some assessments may last for a year or two, but assessments for up to 10 years are not uncommon either,” says Chan. Her advice is to compare the monthly fees to those at similar buildings. Fees that seem too low or too high could be red flags. Also, review the homeowner’s association budget to see if the financial reserves are sufficient.
Find out the permit status of improvements
Ask to see the condo association approval letter and permit history. (Permit history is also available online.) “Buildings often require that a licensed contractor to do the work,” says Chan. “If you purchase a unit with an enclosed lanai, check with the seller’s agent to confirm that the work was legal and permitted. Otherwise it may be in violation of the house rules and association bylaws.”
Chan also advises buyers not to lock in their interest rate until after they have confirmation of permit approvals. If permits are required but haven’t been secured, the permitting process can take longer than the anticipated closing date and you will be subject to weekly penalties on the rate lock.
Confirm the rental terms
If you plan to buy a condo unit as an investor, be aware of rental policies. “Don’t just assume you can rent out the property as you please,” says Chan. “Depending on the building, there may be a minimum number of days required for a rental. Thirty days is most common.” Other properties may be zoned “resort” and allow for day-to-day or week-to-week rental.
Read the fine print
“You’ll save yourself a lot of headaches and concern by carefully reading all the relevant documents before you commit to a purchase,” advises Chan.
Restrictions can be varied and far-reaching, from home businesses, furnishings and air conditioners to window coverings. Many buildings have policies regarding changing the type of hard flooring (wood or tile). Keep in mind that upgrades and improvements almost always need association approval before you start work.
For more information, call 377-4980.