One of the big real estate trends to come from the recession is downsizing. Whether it’s to a smaller home or an apartment/condo, many people have embraced this trend as a way to eliminate unnecessary space and big utility bills. Many people want to move into condominiums because they don’t want to do yard work or exterior maintenance anymore. They want to have more time to enjoy the things that they love to do without having to worry about mowing grass, shoveling snow, or cleaning out the gutters. But is moving to a condo the right thing to do for everyone? The answer is no. Here are some things to consider before making your move from a single family house to a condo.
1. Monthly Assessments: Condominium complexes usually charge a monthly assessment to each unit owner. These fees are used to cover maintenance on the common elements of the complex (hallways, staircases, amenities, etc.), as well as snow removal, garbage removal, landscaping and lawn care. This is usually the main reason why people choose to live in condominiums. They don’t want to do these things anymore and are willing to pay money every month to have these things done for them. Monthly assessment fees can range from $100 for a building with very few amenities to more than $1,000 per month for a building with many perks. Monthly assessments also depend on the size of the unit. For example, a three bedroom unit will pay more per month than a one bedroom unit.
In addition to paying your normal assessment, you may also be required at some point in time to pay an additional “special assessment” to your condo board. A special assessment is used to pay for capital improvements that must be done right away or in the near future. If a condo reserve fund (the money saved for emergencies by condo boards) is underfunded, the board might vote to have a special assessment. This assessment will be paid by each unit owner, and there is no way of getting around this payment. These assessments can also get very expensive. I am currently paying two special assessments on condos that I own. One is only an eight month assessment at $140 per month. That’s not terrible, but it does cut into my monthly expenses. The other special assessment I have to pay on my other condo is more extreme. I pay $75 per month extra (on top of my regular assessment) for the next five years. That’s a lot of money. Older buildings are more prone to special assessments because they require more capital maintenance, but newer buildings can have them as well. Be sure to ask if there are any pending special assessments before purchasing your condo.
2. Close Quarters: Some people move to an apartment or condo from large estates or homes with large yards and few neighbors. They don’t realize how much they enjoyed their privacy until they move into a condo. A condo can afford privacy, but only within the unit. You have to come to terms with the fact that you probably will have people living above you, below you, and on both sides of you. Condo communities are built with this in mind, so they try to provide amenities to get neighbors engaged in activities together. Examples of this might be a pool, exercise room, or recreation room. But you might have to say goodbye to walking around your yard with no shirt and a beer in hand. I’m not saying you can’t do these things at an apartment or condo complex, you might just feel out of place. If you can’t get along with your neighbors, you’re going to have a hard time living in your building peacefully.
3. Rules & Regulations: There are other things you must be prepared to give up or limit when moving into an apartment or condo building. Did you enjoy playing loud music or having lots of guests over before? If you did, you might have to severely limit these things. If the decibel level gets to high for one of your neighbors, they might call the condo board on you, and you might get a warning. Do it again and you’re subject to a fine. Condo buildings have boards, and these boards have bylaws and rules. You must abide by these rules or you may be subject to fines, as well as unhappy neighbors. These are things you must consider before buying into a condo community.
Downsizing from a home to a condo can be a great move. It can provide maintenance free living, great amenities, and a great location at an affordable price. There are things that must be considered, however, before buying into a condo complex. Homeowner assessments, special assessments, rules, and close-quartered living are things that all condo owners must adjust to in order to have a successful condo experience. Failure to understand or do these things can result in a lot of money out-of-pocket and an unhappy experience.