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When looking at the Home Owners Association (even if called Condo Owners Association) take a close look at the budget from several angles.
1. What do the dues cover? Amenities (pools, etc.), how much landscaping, snow removal, etc.
2. Is there a Reserve? The Reserve is set aside for future planned/expected items such as roof replacement. The FHA says at least 10% of dues should be set aside in a Reserve fund. If not enough set aside then come time for such replacements the association will either have to borrow money (paid back various ways like via a dues increase) or do an assessment which is a one time charge to each unit usually payable various ways.
Do not be scared about Reserves. Any wise homeowner would also be putting money aside for the same thing, such as $200 per year for a $2,000 roof replacement in 10 years.
I have lived in 5 homeowner associations and enjoyed all of them, including my present one.
Just a couple of things to think about from my townhouse experience:
Stairs are a huge pain with little kids, you will be carrying them up and down, then they will want to climb the stairs so you will have lots of gates. Totally do-able, but just think about it. We left our townhouse when we had kids.
Homeowners Assn, as the previous poster mentioned. Check out the reserves and what is covered.
I have lived in my townhouse for 10 years. Overall, I love it. The sound proofing of the walls is better than I expected - rarely do I hear anything from the neighbors. I think that makes a huge difference in condo vs. townhouse purchase, too.
The one thing I would caution you to do is to study the HOA rules/handbook (in Ohio I was given several days to read these documents after my offer was accepted). Make sure you can abide by all rules, as I have run into some neighbors that complain about the smallest infractions. (for instance, if you have pets or plan on them, make sure you can comply with everything listed, etc...)
Thanks for the insight, everyone. Since I will be purchasing a condo or townhouse, either way I will be dealing with an association, so I will certainly read over everything line by line. I think there is 7 or 8 townhouses connected to eachother in an area that is mostly made up of 3 flats. It was advertised as a townhouse, but my realtor kept calling it a simplex. I'm having a bit of issue finding the details on that, but apparently there is a slight difference.
The unit was built in 1995 and has original roof, and was told that the last inspecor said it had 5-7 years left, obviously we would hire an inspector as well. The only thing that I'm a bit hesitant on is the resale value. As my realtor said it lacks the WOW factor, as it is a pretty simple unit, but seems like a good fit for us. Plus I see us staying there for a good 10 years.
Stairs is a good point, since there is 2 flights to get up to the bedrooms. I thought about the pain of moving everything in, but I think we can manage.
Another ? for everyone if you dont mind. So I'm going to e-mail my realtor and say we are interested, and want to move to the next step. What exactly is that next step? Agreeing on a price to offer? Should we look at the unit again? yada, yada, yada Sorry for the newb question
-I would ask the agent for her recommendation for a first offer, let her know if you REALLY want this place or would like to negotiate a bit. But, you make the final call on what the offer is, based on what you saw and the comps she uses to set an offer price.
-I would go back to the unit again and think about how you would live in the unit and also ways you can add a wow factor to give it higher resale in the future. It may be as easy as new paint and flooring. Can you do something more with a balcony or maybe update a 1/2 bath to make it more modern. These little things all help.
-I would ask the agent for her recommendation for a first offer, let her know if you REALLY want this place or would like to negotiate a bit. But, you make the final call on what the offer is, based on what you saw and the comps she uses to set an offer price.
-I would go back to the unit again and think about how you would live in the unit and also ways you can add a wow factor to give it higher resale in the future. It may be as easy as new paint and flooring. Can you do something more with a balcony or maybe update a 1/2 bath to make it more modern. These little things all help.
Thank you, I will discuss with the realtor.
We did discuss some updates, such as refinishing the floors which would be pretty inexpensive, and marble flooring when you walk in since its a small area.
The unit was built in 1995 and has original roof, and was told that the last inspecor said it had 5-7 years left, obviously we would hire an inspector as well.
So the roof is 17 years old and likely has less than 5 years remaining useful life left. How much will a new roof cost? How much money has been reserved by the association to replace the roof? If funding is not adequate, the difference will come out of your pocket.
You could encounter a similar situation with a SF home with a roof that will likely require replacement in the next few years. The good news is that your fair share is likely less than a new roof on a SF and there may be some money reserved for this purpose.
You really want to see a few years of financial statements and budgets. How many units are occupied by renters vs. owners? It can matter.
So the roof is 17 years old and likely has less than 5 years remaining useful life left. How much will a new roof cost? How much money has been reserved by the association to replace the roof? If funding is not adequate, the difference will come out of your pocket.
You could encounter a similar situation with a SF home with a roof that will likely require replacement in the next few years. The good news is that your fair share is likely less than a new roof on a SF and there may be some money reserved for this purpose.
You really want to see a few years of financial statements and budgets. How many units are occupied by renters vs. owners? It can matter.
All very good points. We were ball parking less then $5k for a new roof, we will certainly be looking at reserves. I'm kinda stuck on the place attached to this unit selling for more $ and it has the same roof. I just dropped a line to my realtor and get his take on everything, I guess that is what he gets paid for. I just dont like getting into something I am not knowledgable on.
The question of what the HOA dues cover is an excellent one.
Personally, I live in a townhouse, and my HOA dues do not cover anything for my own personal lot. They don't cover exterior maintenance, or yard work, or siding, or paint, or roofing, or fencing. All they cover is maintenance, insurance, utilities, etc of the common areas (the grassy areas by the street). Each owner is expected to do their own yard work, and their own maintenance. But the dues are only about $100/year.
We have townhouses we manage (the rentals on) where the HOA does all the yardwork, but still none of the other exterior maintenance like siding, fence, or roof, and the dues are $600/year.
And we have a set of condos we manage that have no dues (it is only 2 triplex style buildings and the two owners, one for each building, just split all the costs).
So what you think you will be getting isn't always exactly what you will actually be getting. And it can vary a lot even within the same town. Make sure you don't assume anything.
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Sorry for the newb question
