Buying a Condo-Who s Running The Show
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Buying a Condo: Who's Running the Show?
Summary
When purchasing a condo, it's crucial to inquire about the Homeowners Association (HOA). A significant question to ask is: "Who's running the show?" Smaller complexes might be resident-managed, but a professional management company is typically better, especially for larger complexes.
Article
When buying a condo, it’s easy to get swept away by the decor, ambiance, and views. However, it’s essential to focus on less visible aspects, especially the Homeowners Association (HOA).
For many first-time buyers, the HOA plays a subtle role in the decision-making process. Yet, the HOA can significantly impact your finances if unexpected issues arise post-purchase.
Key Questions to Ask
To avoid surprises, it’s important to ask about the HOA. A critical aspect is identifying who manages it. While residents might handle small complexes, professional management companies are generally preferable for larger properties.
Although these companies charge for their services, they often save money by securing lower repair quotes through their established contacts. They are typically more neutral in resident voting matters, ensuring fair administration. Since it’s their business, the HOA is efficiently managed, rather than being a rushed task before meetings.
Essential Documents to Review
Before purchasing, request to see the HOA rules, financial reports, by-laws, and recent meeting minutes. The conditions, covenants, and restrictions (CC&Rs) will directly influence your lifestyle, so ensure they align with your expectations.
Financial Aspects
The financial report highlights potential fee increases or upcoming emergency charges. It's crucial to ask how emergencies are funded and check the HOA’s reserved funds. Ideally, the reserves should be about one-third of the annual gross fees for all residents. A good benchmark is having at least $4,000 reserved per condo.
Rental Restrictions
The HOA also controls the allowable percentage of rental units. Keeping this under 20% is advisable to maintain the property’s resale value. Higher rental percentages can deter mortgage companies and affect property desirability, as tenants may not treat the property with the same respect as owners.
Next Steps
Once you’ve addressed these questions, consider getting a professional inspection that includes both the condo and common areas. With these precautions in place, you’ll be more confident about making an offer.
You can find the original non-AI version of this article here: Buying a Condo-Who s Running The Show .
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