1. Condos are often more affordable — but not always

There are two distinct advantages to buying a condo:  

• You may get more for your money with a condo than a typical single-family house
• There are usually extra amenities: pools, gyms, tennis courts, landscaped outdoor spaces, extra security, and so on

However, those perks don’t necessarily come free of charge.

More for your money

Condo prices are often lower than ‘traditional’ home prices, so a condo could be a more affordable starter home for a first-time home buyer. And you get those extra amenities mentioned above.

However, you’ll want to look at monthly homeownership costs as well as the upfront purchase price.

That’s because the homeowners association fees could potentially make a condo more expensive month-to-month than a comparable house.

You won’t have worry about mowing the grass, cleaning the common areas, or climbing up a ladder to paint the exterior of the building. But someone has to. And you, along with all the other unit owners, will have to pay them.

You’ll also have to chip in for other costs, such as buildings insurance.

When you add your monthly HOA or condo fees to your mortgage payment, you may well find you pay less for a single-family home, even when you account for home and yard maintenance costs.

2. Mortgage requirements are stricter for condos

You may have heard it’s more difficult to finance a condo — and it’s true, there are some unique challenges to securing a mortgage for a condominium.

Lenders look especially closely at condos to make sure they comply with special requirements. And some condos don’t.

But don’t let these challenges scare you off — again, millions of people have successfully financed homes this way.

Is your condo mortgage-eligible?

3. Condo “assessments” can cost you thousands

A well-run HOA or condo company should normally have a pile of cash saved up. It should charge each owner a bit more than it needs each month so that it builds up reserve funds. That way, it can pay for big-ticket repairs and maintenance when those become necessary.

But not every HOA or condo company is well-managed. So when the roof needs replacing or the central HVAC breaks down or the windows have to be changed out, there’s insufficient money in the bank to cover the costs.

That’s when “assessments” come into play.

When you’re buying a condo, you’ll be given a chance to look over the HOA’s books. You should absolutely do this.

These are huge bills that suddenly land in unit owners’ mailboxes demanding big sums of money for unavoidable repairs. That can be thousands or even tens of thousands of dollars.

When you’re buying a condo, you’ll be given a chance to look over the HOA’s books. This is something you should definitely do.

If you have no idea what you’re looking at, ask a friend who does or pay a professional. Assessments are no joke.

Of course, if you discover big assessments are in the pipeline, that will dramatically reduce the property value. So see if the current owner will take liability for those or get a price reduction that reflects the threat. Otherwise, walk away.

4. You’ll have to live by HOA rules

When you’re buying a condo, you’ll be given a copy of your HOA’s or condo company’s Covenants, Conditions, Restrictions and Easements (CC&Rs).

This is must-know information. To start with, they’ll tell you what belongs to you within your unit and what’s the HOA’s responsibility.

For example, windows and external doors may or may not be your property, meaning their maintenance may or may not be down to you. And central air is usually a common amenity, but individual air conditioning units often aren’t. Your CC&Rs will spell those things out.

CC&Rs also spell out the rules by which you must live.

There may be restrictions on things like pets, noise levels, hanging out laundry, parking, or even internal improvements you want to make to your unit.

Of course, these are rules and regulations you wouldn’t be required to adhere to if you lived in a single-family home. Since you’re in a shared building, living in a condo complex can sometimes feel similar to renting an apartment.

Mostly, such rules are fair and reasonable and exist to protect the majority. But occasionally, an HOA can create rules some members find oppressive.

So be sure you’re happy to go along with your HOA’s rules. They’re not optional. And some HOAs can be highly litigious.

5. You share liability with your HOA

Your shared interest (part-ownership) of your HOA may mean you share liability for its issues. So, if it signed off on a building that was full of defects, you could end up paying for some of the remedial work.

Or, if your HOA is suing a developer to make it accept liability, you could have to contribute to legal costs — and bear some risks if the HOA loses in court. Indeed, you’re effectively an unnamed party in any legal action the association gets involved in.

So you may prefer to steer clear of an HOA that’s currently involved in serious litigation or that seems to bring lawsuits at the drop of a hat.

Is buying a condo worth it?

If you like the perks of buying a condo, don’t let the potential drawbacks put you off.

Now you know exactly what to look for and what to avoid — so your chances of picking the perfect place are better than most people’s.

However, if you still aren’t sure whether you’re a good fit for condo living, you can simplify the decision by thinking about three key factors: affordability, location, and maintenance.

Affordability

Earlier we compared the cost of a single-family home to a condo.