A condo or townhouse (a.k.a. "attached dwelling") can be a good choice for a first time homebuyer or someone who is downsizing, as they are generally less expensive than a detached home in the same area. They have perks that apartments don't have, such as being able to make your own changes to the interior and having someone else take care of the exterior, not to mention the appreciation on your investment. However, there are important considerations that you should be aware of before purchasing an attached dwelling.
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| Do parties spill into the hallway? |
- Sharing walls,
floors and ceilings can sometimes be a challenge, and certain units are
better constructed and insulated than others. Ask current residences
about their experiences, and consider your own lifestyle preferences to
determine if being in such close proximity to other people would be a
bother.
- Do you own any
associated parking or storage, or do you just have use rights?
Sometimes garage or reserved parking spots are included in the deed and
sometimes they are deeded separately. If separate, there may be a list with the homeowners' association of residents who are waiting to
buy or rent one.
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| The Board may not approve |
- Like many
neighborhoods these days, condos and townhouses will have a homeowners'
association with rules and restrictions that dictate what you can and
can't do to the property. These may include items that affect the
exterior, such as the type of replacement windows you can use, whether
you can add openings, even what is allowed to be kept on your balcony.
They can also dictate what happens on the interior, such as whether you
can have pets or run a business from your home. It's very important to
review the Covenants, Conditions and Restrictions (CCRs) during the
contract period to be sure that the rules are not too limiting.
- HOAs require an
additional fee which may be paid on a monthly, quarterly or yearly
basis. These fees may only cover common area maintenance and insurance,
or they may include trash removal and other amenities such as a
clubhouse or swimming pool. Find out what is included in a particular
development, and be sure that you can afford your monthly payment once
you add in HOA dues.
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| No one likes a surprise bill |
- In addition to
the dues, there may be other budgetary concerns relating to the HOA or
common areas. HOAs often try to build their financial reserves to
address ongoing maintenance items such as exterior painting or roof
replacement, but sometimes unexpected costs come up. When I was the
Office Manager at a Boulder HOA, the old elevators had to be replaced to
be brought up to code and address some safety issues that the board was
not aware of. This was rectified with a "special assessment," a
several hundred dollar charge to each condo owner above and beyond their
monthly dues.
- How the HOA is
being managed can affect homeowner satisfaction. Most hire
professional management companies to run both the administrative
duties as well as the maintenance of the development, but some still
hire their own people that are supervised by the board of directors.
Ask current residences about their experiences, or attend
an HOA meeting and ask to see several months of meeting minutes to
determine if there are ongoing issues with residents, maintenance or
other items.
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| You can't pick your neighbors |
- Condos and
townhouses can sometimes be difficult to finance as lender requirements
are different than they are for detached homes. The proportion of owner
occupant units versus rentals is a big factor in obtaining financing.
Lenders may also look at the delinquency rate for HOA dues, as well as
any outstanding litigation against the development. Not long ago, I was
working with a Buyer who also had a townhouse to sell. She was tripped
up by a buyer's lender who would not finance the loan due to a pending
lawsuit over another owner's unleashed dog biting someone. Even though
my client didn't know these people, the dog owner was in violation of
the HOA leash rules, and the HOA was adequately insured against such
lawsuits, it still made the underwriter nervous. Be sure to talk to
your lender about financing limitations regarding a particular unit you
are interested in purchasing. Your Realtor should also be
able to find a lender who has experience with harder-to-finance
developments.
- Find out what the
master insurance policy for the development covers and what it
doesn't. Make sure you understand where your responsibility picks up -
depending on the type of attached dwelling you buy, you may or may not
be liable for damage to or systems within shared walls.
In this area of Colorado, the attached dwelling market tends to move slower than the detached market, which can inform your negotiation strategies. Keep that in mind when it comes time to resell your unit, as well. Give me a call if you need some help sleuthing information for a particular development.
images: TenSafeFrogs, TCHganja, joeltelling, smerikal
I would love to help you with your real estate journey.
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