This post is from Ashley B. She’s 26 years old, lives in Minnesota, and works in the accounting department of a small company. This story is one of our Reader Stories series. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want to submit your own reader story? Here’s how.
I have never quite figured out why I was fascinated by finances growing up. Both of my parents were frivolous spenders but, even as a child, I was always very frugal with my money.
I graduated college with a four-year business degree and a relatively low ($12,500) debt. I purposely lived at home for a year when I entered the workforce, which allowed me to save somewhere around 70 percent of my income.
When I had saved about $20,000, I began to look for a house. I wanted something small and easy to maintain, and it had to be cheap since I was still in the beginning stages of my career and only making $25,000 a year. My first few searches resulted in nothing even remotely desirable. My budget was too low to bring up anything but old, broken-down townhomes. That’s when I started looking at condos.
Get over it!
I had sort of had this prejudice that condos were for old people. They were just glorified apartments that you had to actually take care of yourself without being able to call someone to fix the oven for you. Once I started actually looking at them, though, I very quickly got over that prejudice.
I soon found one that I fell in love with. It was a corner unit, 1,000-square-feet with two bedrooms and two baths, in a nice suburb only 20 minutes from downtown Minneapolis. With the money I had saved for a down payment, my mortgage came to a mere $585 a month. With a $300 association fee my total monthly living expense was $885. None of my friends living in two-bedroom apartments were paying less than $1,000 a month in rent. Yes, I have to pay property taxes, but divided by 12, my taxes add less than $90 per month to my budget. I had a friend move into the second bedroom and pay me $400 a month rent so both of us felt like we were getting a great deal.
Other perks of condo living
Along with the low living expenses, I found so many more advantages to my condo lifestyle.
- Underground heated parking. If you live in a place that stays below freezing for several months at a time, like I do, this feature is invaluable! Never again do I have to carry groceries through blistering wind, rain, or snow! Also, the morning after a big snow storm when other people are scraping off their cars and heating them up, I just walk down to the nice 60-degree garage and pull right out!
- No yard work. Ever! No mowing, no raking, no shoveling!
- The highest electric bill that I’ve ever had was $55, and that was the month in the middle of the summer when it was over 90 degrees every day.
- Basic cable and water are included in my association fee.
- I feel extremely safe at all times. Most of the people who live in my building are older. Everyone I have met has been friendly and easy-going. Packages will sit by the front door sometimes for days at a time before someone claims them. Common sense tells me thieves are looking at the big single-family homes a few blocks down, not at the big closed-in building with the security-locked front door and no easy escape unless you want to jump down two stories.
- Surprisingly, noise is not an issue. Only rarely do I hear the neighbor’s TV playing and even then it’s so faint you almost have to second guess if you heard it. I’ve also had friends over at times when we’ve been loud and rambunctious into the late night and no one has ever banged on my door to complain so I assume it’s not an issue for anyone else either.
I have been here for about a year and a half and I always tell my friends to consider condos when they talk about looking at houses. It’s like having all the advantages of an apartment, but cheaper and with the financial security of owning your own place.
Reminder: This is a story from one of your fellow readers. Please be nice. Remember that this guest author isn’t a professional writer, and is just learning about money like you are. Henceforth, unduly nasty comments on reader stories will be removed or edited.
GRS is committed to helping our readers save and achieve your financial goals.Savings interest rates may be low, but that’s all the more reason to shop for the best rate.Find the highest savings interest rate from Ally Bank, Capital One 360, Everbank, and more.
This article is about House and Home, Reader Stories
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
Discover is a paid advertiser of this site. Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
SEARCH FOR RECENT ARTICLES
Glad that the Condo lifestyle is working for you!
One risk or two to point out:
1. Read the governing documents and stay abreast of where the condo association is on building/maintaining a reserve and keeping up on major maintenance items. If it turns out that your building needs a new roof, major plumbing upgrades or other maintenance on a commonly owned part of the building and the association doesn’t have the funds for it, they can charge a special assessment to the owners that you will have to pay. You might consider building a larger emergency fund so a cost like this doesn’t hit your budget too badly.
2. Pay attention to how many of the units in your building are owner occupied vs. renter occupied. You may find that the quality of the building goes down if there are a larger percentage of renter occupied units, and you may have a harder time selling your unit in a building that has a lot of renters. Not something you can do anything about unless your condo association has rules about the number of renter occupied units allowed.
loading....
I was stiffed with the new roof cost (that they planned to reno in 5 years) as I was selling – and had to pay up all in full (and never see the roof). The rise of cost also comes more often then you’d expect. And if you ever come to need to rent the unit out – that could be a problem.
loading....
I’d also add that understanding the financial health of the condo association is an absolute necessity.
I had a coworker a few years back (at the beginning of the RE crash) that was actually worried about what would happen if his condo association went bankrupt because there were so many REO and delinquent units that weren’t paying fees.
Hidden costs and shared liabilities like that are one of the big reasons that we’ve stayed away from condos and HOAs, though the convenience factor is obviously a big plus that draws people in. As long as you know what your risk is, condos can be a great lifestyle – especially when you’re young!
loading....
Good coverage of the benefits
I think condos are a good option — I’ve considered them myself because I like the security of living in a big building and I don’t want to deal with yard maintenance at this stage in my life.
Here’s what I’ve learned in my research:
1. Be sure to budget for rising costs and maintenance. I’ve had friends face a $100/month rise in condo fees or “special assessments” where they’ve had to pay $6000+ each for repairs or extra money for utilities that the association’s budget didn’t cover.
2. Condos come in all shapes and sizes. Where I live, there are townhouse condos and freestanding condos as well. Condos are a form of ownership, not a form of dwelling.
3. Have a lawyer look over all the paperwork — including the condo board’s agreement. And look over the condo board’s financial statements as well. Know the rules and the fine print. Jennifer B is right — look into the percentage of renters. If you find yourself moving in with someone or later buying a freestanding home, you may be prohibited from renting yours.
4. Know the market. Beware that condos don’t often appreciate in value the way a free-standing home will. Compare values over time. In some cities, (such as major cities here in Canada), the condo bubble is predicted to burst. Most couples I know bought houses and they’ve had a higher increase in value than a comparable condo. (They talked numbers with me.)
5. Consider what perks you’ll actually use. If the condo has a party room, gym, pool or elevator you’ll pay higher condo fees. If it saves you a gym membership, that’s great! If not, it’s just an extra cost.
6. No matter where you live, you’ll be lucky to break even if you don’t stay at least five years or turn it into an income property. (When you consider closing costs, moving costs, eventually selling your condo.) You have to look at overall cost of ownership, not just the monthly payment.
I’m still renting due to #4 and #6. I’m really glad I crunched the numbers before diving in. Condo living be a great idea — but it’s important to do your homework first.
loading....
great points, Elizabeth, thanks!
loading....
I agree with most of your findings. The unexpected rising condo fees are what keep me from buying one.
I plan on buying when I am in my 60′s- but also plan on spending time on the board so fees are managed.
loading....
We lived in a condo for 7 years and it was the best thing ever. We only moved after having kid #2.
I used to feel like the association fees were excessive but after moving to a house and realizing how much it costs to maintain a house, I actually feel like they were a good deal.
loading....
I think condos can be a great choice for certain people. But I think this article glossed over the condo fee issue, as others have pointed out.
Here in Florida, some big condo buildings had their water turned off http://www.ccfj.net/condowateroff.html because not enough units were paying their association fees. Frankly, you are, to a certain extent, at the mercy of your condo neighbors in that you are all paying for a portion of a common bill. That can be a positive, but it can also be a negative.
loading....
A friend of mine keeps getting dinged for extra cash when the condo board goes over budget for water. (That utility is covered in their condo board.) Every unit is expected to pay their share so she’s paying the same as units with families or 4-5 students. Sharing the bills is good for families and landlords, but not so good for singles.
It really pays to look into the association’s budget and check to see if there’s a hefty reserve fund. In some areas, condo fees are kept low to attract buyers but then special assessments are needed to make up the difference.
Rising condo fees also impact the condo’s resale value. There’s one development in my city where prices have plummeted because condo fees got out of control. Buyers are looking at the price per month they have to pay, so a lower purchase price is often needed to offset the monthly cost of condo fees.
loading....
Agreed. Good points! It’s good to check the association’s budget, and (just like buying any other property)talk to other owners about their experience there, especially if they’ve been there a while. If there have been previous special assessments, problems with the board, maintenance issues, etc, it’s important to know how they were resolved.
loading....
We currently rent but are considering a condo instead of a house as we’re both busy and don’t have the time/inclination for home maintenance. Unfortunately in my city condos aren’t any cheaper than houses – we’re at the peak of a real estate bubble for both, so it won’t really save us that much money. But when I look at the overall picture, such as the condo allows us to work more, as there’s less time needed for maintenance, and a condo is better when we become snowbirds, the condo seems the smarter choice.
loading....
I thought it was funny to hear that you associate condos with old people. In Boston I think of everyone buying condos as young people! If you want to spend less than 750k for your first home, you will probably be choosing between leaving the city or getting a condo. I have considered the pros and cons, and come down on the side of moving to a suburb to get a house where I don’t have to share any space or follow anyone else’s rules. I still think condos are a great option though.
loading....
I was thinking the same thing! Here in Chicago, everyone buys condos because single family homes are crazy expensive within the city.
loading....
Ashley, the choice of yours I find the most interesting is not condo over traditional house, but having a roommate over living alone. That $400/month is making a big difference to your financial profile, and you are ‘earning’ that income due to your social skills, i.e. being able to get along with a roommate. That skill is a financially powerful one, and rarely used after college.
My husband and I choose to have a housemate, currently a quiet, polite fellow who pays $550/month for his own bathroom and a spacious bedroom. Some of our friends are amazed we’re willing to have a ‘stranger’ live with us. But I would point out that every friend any of us ever made was a stranger — before they became our friend.
My point is that social skills are sometimes also income-generating skills. Way to go, Ashley.
loading....
My husband and I have also had a roommate in our second bedroom more often than not. $400/month has made real difference to the timeline we project to pay off our mortgage, and very minimum headache. We’ve also made really good friends!
loading....
My sister also has a roommate in the condo she owns. He pays half of her mortgage/fees and it saves her a ton of money. He’s a super nice guy and loves her cats, so it works out well for them. I know she’s not looking forward to having to find another roommate when he eventually moves on.
loading....
I thought at first $300 condo fees a month was steep but you do seem to get a lot of perks. Why are apartments more expensive than condos? I would think that living in a greener area was more desirable than in a building.
loading....
At 20 minutes outside of Minneapolis you may be where public transportation isn’t an option. Bus service in downtown Minneapolis is decent, but outside the downtown area service breaks down quickly.
I also live 20 minutes outside of Minneapolis and a car is a must. If I lived in an apartment downtown I could probably do without.
As it is, if I want to catch a bus downtown there’s one bus per hour. If I need to get to a different suburb I’d have to go downtown, then catch the hourly bus that goes to the other suburb. It’d be impossible for me to get around my suburb by bus.
loading....
Another Minneapolis (city of, though) resident here. My guess is that she’s comparing apartments to condos in her specific suburb or neighborhood, and there may be a lot of factors at work. You can get some really good deals on Twin Cities condos these days. In some Minneapolis neighborhoods, though, it’s definitely cheaper to rent, at least if looking at staying anything less than 10 years or so. On the other hand, the condos are still (at least the non-luxury ones) still cheaper than a single family house in the same area, so if you’re in it for the long-term, it can be a decent option. It’s perhaps also worth nothing that the Twin Cities are different than a lot of other cities, as there’s a real focus on owning, as well as a stigma against renters that I haven’t experienced elsewhere. I’m in my 30s with a kid, and people think it very odd that we have chosen not to buy. (I think it would also be considered weird if we bought a condo, though; families with kids are expected to live in SFHs.)
loading....
I definitely have considered condos but I live in a vacation destination so almost all of the beach condos are rentals. I am not a fan of yard work at all.
We don’t have crazy weather or underground parking though. The thing I hate is how long it takes you to get from your car to your actual unit.
loading....
Great move on the condo. Maintenance-free living is awesome. Not everyone understands the aversion to yard work.
However, what caught my attention is the starting salary. You have a business degree and only got $25k? Is that the norm for the area?
I got a business degree ten years ago and my starting salary was nearly double that amount. Should you be searching for another job?
loading....
Housing prices are lower in Minnesota. Perhaps salaries are significantly lower than where you are as well?
loading....
I’m a 27 year old business grad from Minnesota. My starting salary 5 years ago was in the $40k’s, but that was for a Fortune 500 company, and she noted she was working for a small accounting firm. Maybe she made a decision to trade salary for a more desirable (to her, at any rate) work environment.
We do see lower salaries overall compared to many other parts of the country, but I think it’s more than made up for in cost of living. My friends who moved to the coasts make more than me, but they also pay twice the rent/mortgage as I do for half the space.
loading....
I did assume cost of living and housing prices would be lower in her location, but her starting salary is really shocking to me because I was grossing over $3k/month as a summer student in 2000 and 2001. Admittedly, that was at a Fortune 500 firm.
But if she’s happy where she’s at, the trade-off may be worth it.
loading....
I live in the Twin Cities and graduated with a business degree in 2006. My starting salary was in the $50′s. Her salary sounds very low ($12/hour) which is not the norm for the area. To each their own though I suppose.
loading....
As a 23-year-old condo owner myself, all I have to say in response is, “Meh.”
Pretty much the only thing that keeps me from moving out is that my total costs for this place are about $750 (including electricity, mortgage payment and HOA fees). I have almost every feature I wanted (except an in-unit washer/dryer), and if I had found a comparable apartment (2/1 with fireplace and w/d), rent would have been about what I’m paying now.
That is the only positive thing I have to say about my condo. The people who are on the board are borderline insane. When it came time to discuss replacing the sagging fence along the back of the property, the only options that were raised at the townhall meeting were (1) painting, or (2) a $30,000 cinderblock fence. NO ONE had an idea for anything in between. And then one weekend, I came home from visiting my family to find that new pickets had been nailed up over the old fence. WHO DOES THAT?! So now there is a nice new-looking fence that is still sagging.
As for feeling safe, it depends on the neighborhood you’re in. I can’t quite describe the horror I felt when I was sitting on my couch and glanced over at the edge of the front door, open to let in a breeze, and noticed that there was a split along the door – as if someone had kicked it in.
In short, this place sucks and I can’t wait til I can get out of here.
loading....
I bought a condo this summer myself after looking at houses, townhouses, and finally condos as well. My condo wasn’t really cheaper, but it was certainly a better deal for the space in the city. I have a two bedroom, two bathroom condo and pay less per month (including property taxes) than I would have been paying to rent my 700 sqft one bedroom apartment had I re-signed my less.
I definitely love the no yardwork aspect! I finally settled on a condo because I didn’t like the stairs of a townhouse and I had no interest in replacing roofs or siding or cleaning out gutters.
I think that with condos, it’s more important to find a place that is less expensive than renting than with houses since you’re probably not going to see as much appreciation in value.
Also, I don’t know about your association, but mine doesn’t allow renting out. That’s definitely something I looked for and considered. I don’t want to become a landlord, so I was planning on selling anyways when I wanted to move.
loading....
Andrew:
Perhaps her parents were happy to have her. She didn’t say that she lived rent-free. She sounds pretty responsible and I suspect she contributed to the household. Lighten up.
loading....
Hi Ashley, great work buying a condo and sharing it! I bought a foreclosure, a house with a giant yard, in 2008. I was proud of myself for getting a great deal and probably $40,000 in repairs and upgrades later (I have all the receipts scanned in but can’t bear to add it all up), I have decided that it sucks to be 29 living in a suburban neighborhood on a cul-de-sac surrounded by 39 kids and no eligible bachelors. Owning a condo can be the way to go for many! There’s always the allure of having a yard, but in July when you’re pulling weeds and mowing grass and your friends are at the river, it’s not so great. Life is always about balance and what’s right for you!
All that said, I’m selling in early 2013 and am moving in to a paired home in a new urbanist community where there are singles and where my yard will be 24′x14. Pulling weeds will take all of 5 minutes. It’s a big price jump at $70,000 more than the value of my current home but also cuts 13 miles from my commute and is now bikeable. My roommates who pay $600 a month are buying a house in the summer so I will lose them, but I have a relative living with me who pays $50 a week (that’s about 23% of her take home). It goes up to $300 a month once we move closer. It’s nowhere near half, but she’s still young, and having a built in dogsitter is also a big deal when you travel a bunch.
To anyone thinking about buying: Yes assessment fees can be annoying and there is nothing more critical than reviewing the finances of the HOA before purchasing. But also think about what improvements a house needs and factor that it in to the purchase price. Think you can wait 2 years before putting that roof on? So what, add that cost in for anything that needs to be done in the next 5 years. I did not do this, and my balances on 2 credit cards are a reflection of this poor planning. The house is not always the great deal you think it is. I also did a lot of the work myself and very competitively bid jobs that I couldn’t do. There are always unknowns and the cost of materials adds up. I would have been far better off buying the house for $185,000 than I was getting this for $167,000.
loading....
I lived in a single family home for about 12 years. Then, lived in a TownHome for 16 years. Stayed in Apartment for a year. Did not like it. Then, decided to buy a Condo this year.
It is built in 2006.Only 6 year old. I moved in on april 20, 2012. Did not see any leaks on the ceiling. Recently, on November 1, 2012, a droplet dribbled on my lap on the commode. I looked up and found the beginning of a nasty leak on the ceiling.
Professional plumber is going to check on it tomorrow, Monday, Nov. 5 to see what started the leak.
Right now, my visible damage is the stained ceiling, about 8 inch diameter.
Can anybody speculate and/or advice me how to proceed with the matter?
loading....
When we lived in a condo building, the bathrooms were stacked on top of each other and there were multiple incidents of leaks (tubs or toilets) that would come down into the ceiling of the person below them. You end up dealing with your neighbors/neighbors’ insurance if they do not do the proper maintenance. You also want to be very careful that you have the necessary insurance in case a leak ever starts in YOUR unit and cascades down into the neighbor below you. We had a neighbor whose dishwasher flooded and it damaged units up to 3 floors down.
loading....
I have had bad experiences with this type of situation. I found it extremely difficult to determine what was the association’s responsibility and what was mine. The maintainence guy they sent over claimed he knew the cause of the problem without even fulling examining. But there was nothing I could do about it. i ended up splitting the bill with neighbors 50/50. It was a very unpleasant experience. Needless to say, I woudl first get the bylaws and determine who “own” the problem. Regards
loading....
Where I live, condos and co-ops are pretty normal and lived in by all age groups—but like someone else said, you’ll often find the younger crowd moving into them.
We are in contract for a co-op. It is really the only thing we can afford in our area—condos and houses are too expensive.
The one thing I would make sure of in a condo or co-op, especially because you mentioned it, is the noise. The way some places are built you can hear EVERYTHING from everyone around you.
Definitely have someone look over your financials before you buy one. Elizabeth (Comment #2) also provided some good tips.
loading....
One other factor to think about with condos that hasn’t been mentioned here: what the long-term prospects are for the building. In 30 years, when your mortgage ends, what will the building look like? What will the 30-year horizon look like to the buyer you sell your house to down the road?
With a SFH, at some point it makes sense to tear down and rebuild a large section (or the entire) structure. This isn’t possible with a condo. This isn’t a huge problem right now, but there are a growing number of condo buildings from the ’70s that could really use redevelopment in the next few years. And even if 90% of condo buildings are fine, the remaining 10% will be ugly enough situations that many people may shy away from buying condos when you’re looking to sell.
loading....
Yes! In Toronto, they have problems with glass falling off of new condo buildings. I hate to think of what some of those places will be like in 30 years. I’ve been warned about the decor of the lobby and common areas being “dated” in the future and affecting prices — and you have no control over how and when it changes.
Most people in my area aren’t buying condos to live in for 30 years. They’re first-time buyers, older adults looking for a different lifestyle or people buying rental properties. I guess it doesn’t matter to people in the long run?
loading....
Yes, agreed. I live near some condos that were built in the mid 1980s, and they just scream “1985.” It looks so dated; if I were a buyer, I’d pass on them. It’s too bad, too, because I’m sure the units are fine – but if the outside looks like it’s frozen in time, you start to wonder about the rest of the place.
Which makes me wonder what people will think of the condos built in the last 10 years or so with the stone facades. Will that stand the test of time, or will that look dated as well in a few years?
loading....
Ashley,
Interesting! To share, we live in a 10-story condo, 2br/2ba, 965 sq ft in beautiful Honolulu. We are at the top 3 rental/housing markets in the nation. Amazing when you pay $885 with HOA fees. We put 25% down, and still pay $1816 total! Talk about extremes. But real estate is high value here, we are surrounded by ocean and tropical weather year-round, so that’s a trade. Have been a renter for last 12 years, so took awhile to get the down payment in this market, but we did, and it’s nice to start building equity.
Some (+) with condos, esp. in HI:
1. Bigger space. We, too, live in a corner unit, and we like the
privacy and being close to elevator and parking garage.
2. Older people/mature owners as neighbors. They care, so we
care. We don’t have crazy amenities, we are a super simple
building, with a young Resident Manager who could also pass for
a bouncer or security guard. (another +)
3. Pet-friendly AND condo allows renters. Renters tend to be responsible.
4. 15 minutes to downtown, 25 min walk to work. Never complain
about a commute, or yardwork. If we need to taxi, it’s cheap.
5. Real estate never drops in HI. Imagine that Single Family Homes
are at a median price of $500k, what some would pay $200k
or less comparably in Vegas or Arizona. Again, land values
are prime, here. We paid less for a condo.
Some (-)
1. HOA fees, and rising. Yes, we pay $400 a month, but if you
knew that newer luxury condo/apts with luxury amenities like
pool, tennis courts, party room start at $800-$1000, we are
cheap. Yes, we expect costs to rise, but our goal is to live here
and pay off our mortgage early. Use the extra $$ elsewhere.
2. Neighborhood elements. We live on a hilly incline above
freeway, so here and there we see people walking, a few
“chararacters”, but where I grew up in the suburbs, that was
normal, too. Just be street smart. I lived in downtown, and it was similar.
Bottom-line, it’s lifestyle choice and what you are willing to live with,what
you can afford, and for us, we’d like to build wealth, too as we don’t have
mega resources to renovate or fix things. Simple is key.
Good luck!
loading....
I live in a condo in Seattle. It’s in a neighborhood that I love, but if weren’t so underwater, I’d sell it in a heartbeat and move to an honest to god house with four walls, no neighbors, and a beautifully tall fence.
Unit living has got me down. The walls are paper thin, and we hear our neighbors music and we hear it every single time someone goes up or down the stairs. Not so bad during the day, but when people are coming home from the bars at 2am, with all their drunk friends, it’s quite annoying.
The rental rate is extremely high, which means the number of people who actually own their units is dwindling. Renters just don’t care about a property the same way owners do.
The condo only has twenty units, and it is difficult to get people interested to be on the board of directors. It’s the same ten units over and over again who actually show up to the meetings, vote, and care about what happens to the property.
I will never buy a condo again.
loading....
I think that’s the building, not condo living itself.
I live in a condo, but it’s a higher end, concrete building where most residents are owners who are older and/or professionals who work long hours and too tired to party hard.
Most days, I don’t hear or even see my neighbors.
I’m currently considering moving to another condo building with mainly rich retirees who will maintain their units (and property value) and I won’t even have to deal with the occasional loud party on weekends.
loading....
It seems like a lot of the posters don’t live in expensive urban areas and view living in condos as a comparable choice to living in a single family home with a slight discount in price offset by fees.
For most young professionals living in expensive cities like Chicago, New York, San Francisco and DC, condos are often the first step to a life of home ownership. When SFHs in a safe neighborhood start at price of $750k and up, suddenly condos begin to look very attractive especially when the rent to own ratio is in your favor and interest rates are at historic lows (both true now in most markets.) Condos allow many first-time buyers to begin building equity usually at a reasonable entry price.
loading....
You’d have to be a fool to buy a condo right now in the city I live in (Toronto). Some markets are okay for condo renting but not condo buying, admittedly not most of the USA where this blog is targeted though.
Not uncommon to see prices of $400k for a 1 bedroom 700 squarefoot unit which is shoddily built and has heinous maintenance and $300+/month condo fees plus “special assessments” once in a while.
And Vancouver is an even bigger condo bubble. I think renting a condo keeps your expenses down and allows you some mobility in case of a bad condo board/condo maintenance. Just make sure you save the difference between renting and owning and get some return on it.
loading....
I’ve lived in condo for 3 years. I bought in October of 2009. I thought I had bought at the bottom of the market; which looking at the price I bought in at versus early 2000s, it had dropped. Little did I know, the value of my place would have plummetted so much now that in 2012 my 20% down payment has vanished and am currently under water.
The reason for the drop in value is that a lot of the association members are older in age and when they’ve passed away, there family have just wanted to sell fast and have taken a lot lower of prices. The unit that just sold in my building is for 27% less than what I paid.
I wish I would have asked about the demographics of the association prior to buying…
loading....
Thanks for the post! I need to move soon and was debating between buying a foreclosure and renting for a couple more years… but hadn’t even thought of condos! Thanks for reminding me that there are other options
loading....
Check into TownHomes and Single Family Homes before you buy a condo. With TownHomes and SFH, you have some Cand value. With Condos, the owner does not own any land. Price-wise, Condos are almost the same as or more than TownHomes less Land Value. I learnt it after I bought my Condo in april 2012.
loading....
Here in NYC owner-occupants and investors alike favor condos in walkable neighborhoods. Why? You can always find a tenant.
That’s important because it is easier to outgrow a condo than a single family home, and you do not want to have to sell after only a few years of owning.
loading....
I see that it’s different here in the Philippines. Every condo unit here has its own utility meters (electricity, water) plus billed for their own cable, etc. so the unit owner is responsible for those. (I have observed that for some reason my water bill was lower when I lived in a condo than my present situation of living in a detached home. Go figure.) When you rent a unit out, the utilities are paid for by the tenant as well, because of said meters. The association dues can be expensive especially the more upscale ones, but if you happen to own one managed by a well-known company, it’s worth it because the service is quick. The value seems to be rising all the time here, because space is at a premium.
loading....
I’m late to the comments but just had to add – don’t assume your neighbors are OK with you being “loud and rambunctious.” They might just be too afraid of confrontation to say anything. The next time you think you may have been a little loud, you could kindly ask a neighbor if the noise bothered them. That gives them an opening to let you know if they wish you’d keep in down.
My condo in the Boston area was one of the best financial decisions I ever made, though much of that was lucky timing thanks to buying it before prices around here went crazy. It kept housing costs down for years so I could save in other areas, and it’s currently worth more than double what I paid for it. I rent it out for twice its total costs in mortgage, condo fees, taxes and a repair fund, so it’s both a diversified asset and an income stream.
loading....
I haven’t even begun saving for a down payment yet, but when I am ready to buy, I will definitely be looking at condos. I like a low-maintenance lifestyle. I know I’ll need to do a lot of homework on associations, though.
loading....
I bought a townhome-style condo in 2007, when it was just me and my boyfriend (now husband). Our HOA was brand new (old rentals turned into condos) so there were no financial records to review. The developer was not able to sell all of the units before the real estate crash, so he’s currently offering his units at liquidation prices… ~$30,000 less than I paid for mine. And they’re still not selling. Additionally, a short 6 months after the start of our little HOA, an incompetent property manager nearly bankrupted our HOA. Add one child into the mix, and we just want to leave. However, being so underwater, we can’t sell. A similar unit to ours that’s a rental has sat open for months now, so renting is probably not a good option at this time.
So, I’m not saying a condo is ALWAYS a bad choice… it’s great if you can find a good situation. And I don’t miss doing yardwork. But a lot can go wrong when you depend on so many other people for the well-being of your home. My husband are (not so) patiently awaiting the day we can leave for a standard single family home. Until then, we make do with what we have.
loading....
I like that you mentioned a feeling of safety as a major perk (because it is!). Apartments can be a lot different than that because many buildings are more liberal with who they will rent to compared to who they will sell a condo to. I always think thats something very important to consider when looking for a place to live, especially here in Tampa where some neighborhoods are very questionable.
loading....
In our HCOL area, I think most young people start off with a condo and then move to the suburbs when they can afford a house. I guess you could also just buy a house but anything affordable will be in like a more run-down neighborhood or town. Our plan is to get a 2 bdroom condo that will also be a good rental income property. Live there until we need more space for a growing family, then hopefully rent it out while being able to buy a house with a yard.
loading....
I think this is a great post.
We bought a condo in 1999 because we lived in a high-cost area and felt we could never afford a single family home there otherwise. Plan was to start small and move up.
The condo purchase was an “I have no other choice” move – it was cheaper than renting at the time. It would never have been my first choice. But it really ended up being quite suitable for us. I LOVED it.
We were particular and would only buy an end unit to lessen the number of shared walls. I don’t believe I ever heard a peep from our neighbors, and we were in an older building (it was exceptionally sound proof). Things we liked were the low maintenance and lack of yard, since we are not handyman and landscape/garden types.
We ended up moving to a home in a cheaper city, to raise kids. (Interestingly, all our costs here are about the same but the electricity actually costs us less in our “twice as big” home. Just to say, modern efficiencies can make up for bigger size – so I would not always assume that smaller condos use less energy). But, anyway, we enjoyed it for a while, and for our personalities we like the space when there are more of us living under one roof. But these days we really look forward to when the kids are grown and we will move back into a condo or townhome. We would not be happy with 4 people in a small condo, so we will wait until there are only two of us. That is just us.
You have to be careful with the HOA side of things, but not all HOAs are bad/crazy/fiscally irresponsible. In fact, we have had very good experiences with two HOAs (a condo HOA and a single family home HOA). I feel I know at this point exactly what took look for next we home shop. Our current HOA did not even exist long before the economy soured, but they did an excellent job of planning ahead and saving when times were good. We have not had a HOA increase in 10 years (entire time of the HOA existence). I would look for ample reserves to repair/replace old structures/fixtures, etc. I would look for an HOA that does not have a history of constant increases. In this day and age you have to be really careful of rate of vacancies/foreclosures and HOA defaults. All these numbers are terrible where I live right now, but the HOA had the sense to pay off all debts and save up to replace all buildings before all this mess. Which is no doubt why they are just eating costs right now and riding it out.
loading....
I would never live in a condo without being active on the condo board.
Part of my job is to look at condos with problems… essentially multifamily complexes, either in townhouses or villas or towers or what have you. If you live in a condo and are not involved with the board, you are NOT choosing how to spend your money. Someone else is prioritizing it – so for goodness sakes just be involved.
Another thing – read the AGM notes from the previous couple years. Find out what big projects were completed in the last 5 years, and if they were special assessed. Find out what big projects are coming up. Find out how much money they have in the reserve fund. As per getting a lawyer to look at your agreement, yes, but I know a woman who did all of this and still bought a condo without being aware of current and upcoming (costly) projects. Be wary.
loading....
Good points! I have been living in a condo complex for the past 15 years and absolutely love it. I can lock and leave to travel and not worry about a thing. Sure I have a monthly fee of $150 that I wouldn’t have if I had a house, but the freedom outweighs all else.
loading....
This was a really interesting viewpoint to read – most of the condo stories I’ve heard among family and friends have been absolutely wretched.
But I do live in a “renter’s” town with a strong, strong emphasis on tenant rights, reasonably low rents and oodles of transitory students. The condo building in the last year or so though, has been incredible. There’s a new building going up in every neighbourhood. I like to see increased urbanization, of course – but the gentrification that goes with it not so much.
loading....
The best thing in my opinion about condo living is location. If you work in a city and your condo is within walking distance or a short commute to work, your lifestyle will improve.
Cutting down on commute time gives you more time to do the things you enjoy! It also reduces your transportation costs which add up over the years.
loading....
My overall condo experience has been pretty good in relation to some others. Yes, the HOA fees have increased about 25% over the past 5 years, but apparently that is common in newer buildings, that the fees are artificially low at the time the builder sells the units, and need to rise a lot initially to cover actual maintenance and reserve fund costs. I have had one really big special assessment ($16K), for a repair that I was expecting but turned out to be exponentially more expensive than projected once they got started on it (discovered a much bigger problem than they expected).
That said, my condo has gone up about 25% in value, and is in a beautiful historic building occupied mostly by well-heeled owners in a very good part of town that is walkable and has great public transportation. I have no fears about the neighborhood degrading or my property losing a lot of value, so I feel it was a good investment.
loading....
I live in a condo now and its great! I don’t own it, I’m the roomie paying 400/rent, but it’s nice not to have to shovel in the winter, etc.
I would buy one if I had the money for a down payment and if I knew where I wanted to live and what I wanted my career to be…
Looks like it’s working out well for you!
loading....
I too live in the twin cities area. I thought I would be frugal so in 2006 I purchased a modest, 800sqft. condo for $80K. I was taught it was the right thing to do. Fast forward 4 years, and I got married and inherited a dog. The 1 bedroom space was simply too small for us. Despite our high income, we were force to short sell the condo since the value dropped by $60K (it would have taken us 15 years to make up that difference!)
A couple of learning from my experience:
-Condos and Townhomes are tempory. Humans lack the ability to envision their life even 3 years from now. If there is even a small chance you could: get married, have kids, or change jobs in the next 5 years, don’t do it! This is what apartments were meant for.
-Association dues go up
-HOA’s are terrible to deal with
-Assessments can leave you with huge “surprise” bills
-Make sure your association is in good financial standing
-Selling is harder because you are competing with identical units.
I understand I have a cynical view of condos due to my own experience, but most people who would consider condos are at a transient point in their, and chances of needing to move/upgrade in the next 5 years is great. This could put you in a bind!
loading....
Great post, I’d love to see more on the subject from you.
loading....
Great article. I’m 23 and looking to buy my first home. I’ve entertained the idea of going with a townhouse, but considering I’d be living on my own it doesn’t really make sense at this point.
One other advantage is that taxes are significantly lower on a condo. In NJ, where I live, a typical 900sqft condo will likely pay in the neighborhood of $3000-$4000 per year in taxes. For a townhouse, you’d have to add $1000 to that. For a single family house, you’re looking at $6000-$7000 per year at the very least (and for a shabby house).
loading....
If my child had graduated college, paid down their loan and saved for their first place, we would be thrilled.
We are not in the position to do that for them, but we are in the position to let them live in our home for free for something worth wild like that.
We are NOT frivolous. That is why we would do it : )
Dee
loading....
The OP described her parents as ‘frivolous spenders’ in the post.
loading....