Hardly a week goes by without a new condo project being announced in Saratoga County. There are many benefits to condo ownership, but is it the right type of property for you?
What Makes a Condo a Condo
Let’s start with defining what the term Condo (short for condominium,) actually means. Condos are individually sold properties within a communal living complex that offer shared common areas. Essentially you own the inside of the unit, and amenities outside your walls are collectively owned by all the complex’s residents. Typically a home owners association takes care of outside repairs and property maintenance, making condos an attractive option for those who lack the time/energy for the upkeep required of a standalone single family house. If this form of home ownership sounds appealing to you then we recommend researching answers to the following questions. Some time spent upfront can save considerable money and headaches after the fact.
How Much Are Association Dues?
Park Place Condominiums overlooking Congress Park
The mortgage payment, property taxes, homeowner’s insurance and utility costs are all standard expenses to keep in mind when budgeting for your next home. If a condo is on your list then you can most likely add homeowners association dues to those expenses as well. Depending on what amenities are available within the complex this can be a significant portion of your monthly outlay. Also keep in mind association costs typically increase over time, meaning just because it fits your budget now that may not be the case down the road.
How Does the Budget Look?
You’ll want to be aware of the condo association’s budget. This will give you a feel for what you’ll need to contribute should you become an owner, as well as how funds are currently being used. Look into any outstanding debt owed to the association and if there are a significant number of owners who are behind on their dues. Large swings in dues year to year indicates management is not properly forecasting expenses. If an association is hesitant to share their budget with a prospective buyer ask the seller to obtain a copy for you.
Will I Be Able To Obtain Financing?
Residences on Union Avenue, the latest Saratoga Springs condo project underway by builder Bonacio Construction.
Unlike a standalone property where a mortgage approval depends on the property appraisal and your ability to repay, a condo purchase takes into account one additional aspect: the association itself. FHA and conventional loan products have similar criteria when examining a condo purchase mortgage application. Restrictions on what percentage of units within the complex need to be owner-occupied (as opposed to rentals) as well as the rate in which the HOA is paid on time by members are both looked at during the underwriting process. These factors are out of your control, and therefore can prove frustrating for potential buyers. Keep in mind however that a bank declining financing due to an association not meeting their requirements should be viewed as a positive, as you just averted buying into what could turn out to be a poor investment down the line.
Wrap Up
Buying a condo offers the benefits of property ownership with less maintenance, generally lower property taxes and the ability to socialize with others within your complex. These attributes attract millennials who are first time home buyers, retirees looking to downsize, and everyone in between. Before making an offer do your research up front on not only the property you are considering, but the community as a whole. By doing this you’ll be more knowledgeable and confident when it comes time to submit that offer.
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Steven Luttman
Broker/Owner
SJLincoln Realty
35 Bath Street, Ballston Spa NY 12020
(518) 309-8584