Condo investments have the potential to provide you with fantastic ROI, however when you're purchasing a condo there are several things you should keep in mind. Buying a condo is vastly
different than buying a house and you should be aware of the additional considerations you should take into account during your purchase. Here are several tips on how to successfully navigate your next condo purchase.
Think Like a Businessman
When investing in condos, you need to think like a businessman, not a resident. By purchasing a condo, you are entering into a business agreement with all others who own the project, any companies that help to manage it, and any current or future tenants,
whether they are you or someone else. Depending on the size of the condominium, that can be quite a bit of people. And with that ownership comes shared responsibilities and less power, depending on the percentage of the condo you own. For some owners,
this is great because you have a lesser burden on your shoulders. However, for others, owning a condo can be a delegating nightmare. Before you purchase the condo, it’s important to decide what kind of authority you want to have as well as get to know
the people you are entering this agreement with.
Know Your Fellow Owners
A great way to gain some insight about the other owners is to ask for a copy of the association’s budget. Most associations will not provide one to a buyer. You can, however, ask that the seller to provide one and the association should oblige. This budget
will give you a behind-the-scenes look at the debts of the association as well as reveal who is and is not paying their dues. This is extremely important information to know because their behavior as an association may affect your ability to purchase
that condo. Some investment properties for sale will not qualify for loans if there’s a number of delinquencies on dues, a lack of sufficient cash reserves, or if they don’t have a certain amount of insurance coverage. For example, many condos in Austin,
Texas are required to have the entire building approved for purchase, not just the unit you’re considering. If their budget seems skimpy or lacking, that may be a sign to step away. If it looks great, then you can move forward, confident that you’re making
a great investment. It’s always good to be an informed buyer.
Know the Condominium
Another thing to consider is all the rules and regulations of the condo that are beyond your control. Does the complex allow pets? Smoking? How are community areas kept up and what companies do they use? Can you rent your condo out to third-party tenants?
You need to know everything you can and cannot do before signing. You do not own the land or the building itself, so if you want complete and total control, you either need to reconsider the purchase or reevaluate your involvement. This seems like a pretty
obvious suggestion, but this has led to disgruntled owners in the past. 100% full disclosure is always the best method to use, both as a buyer and a seller.
Know Your Intentions
If you are purchasing the condo with the intent to rent it out, closely study the areas surrounding. The proximity to other necessary locations is extremely important. Areas surrounding grocery stores, gas stations, schools, downtown areas, restaurants,
and public transit are among the most commonly sought after. Know that your potential tenants may have plenty of other options to reconsider their rental with, so make sure your purchase is one that appeals directly to your target tenant.
If you have all this information in front of you, you will have a better idea of when to move forward and when to walk away. An investment property you are not completely invested in is not worth the hassle or potential loss. Owning the perfect condo
for you can be an incredible investment; finding that condo is the challenge.