Talk me out of buying a condo... (Seattle: sales, real estate market)

[leastprime]

I can agree with, fnh
Be sure you & spouse is 100% in agreement

[Ruth4Truth]

Originally Posted by kwarden13

I just relocated to Seattle from the East Coast with my dog and wife. We went looking at rentals last week and places to buy this week. It's hard to compare apples to apples as the place we would rent is not what we would buy.

We found a condo we love but at the top of our budget. Great location but has an HOA - as do many in the city. Very close to work and really not much we would have to do to move in.

On the flip side, to rent a decent 1 bedroom or loft with parking/pet fees/and other apt fees comes to about $2800-3200 a month. I really think its a waste and then we would have to move our stuff again if we buy (another expense).

I really think the condo is a good investment but am on the fence. The monthly mortgage with HOA/Taxes/Ins would be $3700-$4000, however, it much nicer then the apts. Also, the condo would wipe out most of our savings, however, we could replenish quickly with my new income.

Did the condo building look well-maintained? You should meet with the head of the HOA to ask questions: how long ago did they get a new roof? How much is in the reserve fund for repairs and maintenance? What's their maintenance schedule (exterior paint job, roof, trim, etc.). Just because there's a HOA doesn't mean they're managing things responsibly. Go back, and scrutinize the exterior of the building, with an eye for detail.

A friend of mine bought a condo, only to find out within the year she moved in, that maintenance had been deferred, the reserve was way inadequate for replacing the roof, and everyone's monthly fee went up by several hundred $$. She'd calculated pretty down to the wire when she moved in, all her expenses, so she was not at all happy. After the rude awakening, she made point of getting herself elected to the committee, so that she'd have some clout in how things were managed. I'm not sure how she even managed to pay the huge monthly fee increase, as she was stretched too thin for that.

Don't let yourself get caught by surprise. Do due diligence. It's a lot of money you're talking about: YOUR money!

[homesinseattle]

How are the financials in the building, reserves? Make sure you know.

[pnwguy2]

Originally Posted by homesinseattle

How are the financials in the building, reserves? Make sure you know.

Yes, this is important. And actually high HOA fees usually mean the condo is being managed well, as they are simply keeping up with costs. Of course, be wary of high fees for services you don't use...like recreational facilities, swimming pools, even golf courses. These high HOA's do exist and you need to study what you are getting and what you actually will use. In general condos are a good investment, but you have to do your homework.

[flyingsaucermom]

I wouldn't second guess it.

We aren't paying much less in mortgage (plus HOA, etc.), we send an additional $5-6k towards principal and our income is far from $300k.

[Chilkoot]

Originally Posted by homesinseattle

How are the financials in the building, reserves? Make sure you know.

Originally Posted by pnwguy2

Yes, this is important. And actually high HOA fees usually mean the condo is being managed well, as they are simply keeping up with costs.

When we purchased our condo in 2012 reserves were less than 60% and HOA fees were reasonable. We had two years of big increases that we didn’t expect. We’re now at 100% funded and haven’t had any additional increases for 2 years.

Another area that we weren’t familiar with was “special assessments”. There were a couple of units that we looked at in other buildings that had special assessments of an additional $10-$20,000 paid up front or spread out over monthly payments. These were disclosed from the beginning. Speaking with the HOA or attempting to explore meeting minutes looking for discussions of big ticket items that have not yet been disclosed might be a good idea, if it’s even possible to get that information.

[fnh]

^^^^That information should be available to you and if not, that would be a red flag. Ideally condo associations should also have reserves studies conducted every few years wherein an outside auditor reviews the finances and common structural elements to rate their "health". Ask for this as well.

Special assessments are simply unanticipated major expenses. Again these can (will) happen to every homeowner. Case in point, our Houston home (SFH) was struck by lightning last month. The "special assessment" for replacing our TVs/modem/Rokus/desktop iMac/AC units/landscape lighting and sprinkler system control panels/driveway gate motor/doorbell... has exceeded $30K so far.

[leastprime]

Originally Posted by kwarden13

Snip...
I really think the condo is a good investment but am on the fence. The monthly mortgage with HOA/Taxes/Ins would be $3700-$4000, however, it much nicer then the apts. Also, the condo would wipe out most of our savings, however, we could replenish quickly with my new income.

If Seattle area is where you want to spend next few-10 years, go ahead and get a condo/SFH/Townhouse. Our son, did 2years of hard savings (minimal IRA/Roth and 401k) i early in this decade, accumulating a down payment and then a couple of years after the purchase, to replenish his Reserve fund. If you can, i 'd consider a townhouse and eliminate the HOA.
Good hunting. You don't have to pull the trigger, but you do need to know what are the good options.

[meekawal]

HOA fees and horrible neighbors. Harder to sell a condo instead of packing and moving out of a rental.

[Botev1912]

Originally Posted by leastprime

If Seattle area is where you want to spend next few-10 years, go ahead and get a condo/SFH/Townhouse. Our son, did 2years of hard savings (minimal IRA/Roth and 401k) i early in this decade, accumulating a down payment and then a couple of years after the purchase, to replenish his Reserve fund. If you can, i 'd consider a townhouse and eliminate the HOA.
Good hunting. You don't have to pull the trigger, but you do need to know what are the good options.

Townhouses and a lot of new houses also have HOA fees.