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Not sure where to put this thread, but in doing 'research' on condos, I see a common theme that condos are a bad idea as an investment.
But what about if one wanted to purchase a condo solely to live in?
The reason why I ask is because I was recently renting and living in a condo unit, and it was one of the best places I've ever lived in. Very quiet, considerate neighbors, good and safe area, etc.
For the amount I was paying in rent, I could purchase such a unit and pay a lot less (with a good down payment minus the monthly HOA fees).
I can't afford a house, but I could afford a condo. Whether it increased in value or not over the long term isn't my primary concern.
Any thoughts?
It is your home, not an investment. I wish people would never have started referring to homes as an investment.
I owned one condo that was a good experience and another that was a disaster.
Buying a condo is a crapshoot (compared to buying a non-HOA single-family house). You hand over decision making about a lot of important things to people who may or may not do their best to protect everyone’s best interests, or who, even with good intentions, make costly mistakes you might not make yourself as a single-family homeowner.
This is not to fail to give credit where due to the fair-minded, well-informed, and reasonably thinking people who serve on some boards, and who work as hard, purely as a volunteer, as people who are collecting paychecks, but again it’s a crapshoot whether you get those great board members or their opposite.
There is also the issue of freeloaders--sometimes you pay more than your fair share to make up for others who don’t pay their monthly maintenance fee.
If you hope/plan to be in a place for decades (and want that place to be a condo), all you can do is look carefully at the present board, finances, building conditions, foreclosure percentage, pending litigation if any, community-mindedness of the present owners, etc. and try to find one that seems to be on a good trajectory.
But no matter how well you do your homework, you can’t be sure the cost of ownership, financial health of the community, condition of the buildings and grounds, and caliber of people making decisions (and of those living in the community) will be the same in ten years as it is now. Again, you have little control over many aspects of home ownership, compared to your ability to protect your investment as a single-family home owner.
It’s easy for people to say you can be an active association member (run for the board and make the decisions, etc.), but it’s important not to gloss over the fact that there are people who have had big financial setbacks as a result of condo ownership who would have been just fine if they’d instead bought a single-family home. They bought with an expectation that someone was minding the store and didn’t realize that in making that assumption they were actually taking a significant gamble (that they lost on).
So I think it’s good when people ask these questions and get different perspectives from different posters here. I appreciate the people who take the time to post to share their less-than-successful experiences so that someone else can possibly be a better informed consumer with respect to the issues they experienced and make an informed choice about buying a house versus buying a condo versus renting, and also, if they do opt for the condo, have a better grasp of what questions to ask about the particular condos they’re considering. (I like hearing the success stories as well.)
Owning a condo does go well for many people--but badly for many others. I don’t know if anyone has collected the data to be able to quantify the added risk of things going awry (compared to a single-family home that of course has its risks too but is generally much less risky), but there definitely is a whole additional set of potential problems with condo ownership.
So (as others have pointed out) I don’t think it would be accurate to say either that condos in general almost always work out well or almost always work out badly. From what I’ve seen and heard, neither condos that work out well nor ones that work out badly are rare enough to call a good or a bad experience an isolated incident. When I’ve visited condos I’m considering in person, I’ve had condo residents say things to me like “Buying this condo is the best decision I ever made” while others have said things like “We all talk about how if we’d known then what we know now...”
I live in Florida, where real estate prices hit a deep low a few years back and have zoomed up in the last couple of years. I wish now that I’d bought a single-family home when they were in my price range. Not because there aren't a lot of positives to condo living, but just because to me there are risks that are just really outside my comfort zone.
I keep thinking I need to buy a condo (despite my hesitations), because soon they’ll go out of my price range too (that’s just a concern I have; I’m not making a prediction either way), and I would like to own my home again and feel settled.
But as I research specific condos in depth, I find things that make me take them off the list. (I will add here that I’m looking in the lower price range, which limits my options to consider--I know of a couple of places I wouldn’t hesitate to buy if I could afford them.) I have done enough research to know that with some condos I’ve considered there would be stress and headaches and financial losses such that I’m better off continuing to rent than buying there. I want a home I can call my own (most people do), but not at any cost.
When I say I’m running into issues as I look at places, I’m not sweating the small stuff but rather talking about serious issues--things that involve high enough future costs that they are deal-breakers once you know about them--yet I’m finding that sometimes you really have to dig for the information--the info you wind up with in the end is sometimes the opposite of what you were told earlier.
Example: association president tells me the association is in good financial shape, no problems, but I eventually see budget indicating they have almost nothing in reserve in the face of high upcoming known expenses. (I guess he meant the lawn and pool companies weren’t failing to show up due to past-due bills, not that there weren’t big assessments and/or higher dues and/or deferred maintenance issues in their future. It’s important to know whether someone’s operational definition of “good financial shape” agrees with your own!) Another example: was initially told buildings, even though older, were in very good shape, only to eventually find out (only after asking many questions of different people to try to confirm there was no other reason for the low price than the fact that these were no-frills, older, apartment-style units) that the association was grappling with major (very expensive) building-repair issues.
So someone could do their due diligence yet still wind up with these problems because they’re not always easy to uncover. I’ve managed to dodge a few bullets because I’m under no pressure to move and have just been looking because originally prices were too good not to look, and now ... well, I’ve just gotten attached to the idea of eventually having my own home again.
But for others--those moving to a new community because of a job transfer and needing to find a new home quickly, or just living lives where they’re squeezed for time and/or new to the process and don’t know what to look out for--only a certain amount of due diligence is realistically possible in life, and ideally, this type of ownership wouldn’t be so risky that it requires so much caution. Because homes on this scale are definitely needed! Not everyone needs, wants, or can afford the typical single-family home (and yet would like a living situation that’s more stable than renting).
I’d like to see another option without the pitfalls of the legal/financial entanglement aspects of condo ownership, but with a smaller scale of home than most neighborhoods of single-family homes offer--say, a non-HOA community of smaller homes on smaller, low-maintenance lots, maybe even attached villa-style buildings, where there is a neighborhood spirit but independent financial ownership and decision making. (This may sound far-fetched because my impression is it’s not what’s typically being built today, so today most people would say it’s impractical to have people living in close proximity without an HOA, but this does exist in urban areas of older housing stock--think row house or townhouse.)
By the way, on the issue that was raised of thinking of one’s home as an investment (or not): On the one hand, I whole-heartedly agree with the sentiment. Not everything in life is about making a profit, and in particular, having a home has a special meaning apart from issues of its market value. I’m not an investor in the sense of buying a home in the hopes I will turn a profit on it--the two condos I owned were both my own home to live in, and at the time I bought them, I’d hoped they’d be my permanent “forever” home.
But I think it’s important for most people (anyone who isn’t wealthy) to remember that they may need to sell their home eventually (even if that’s not their plan when they buy, because life takes its turns), and that any proceeds from the sale of that home can make a difference in where you wind up next, and so whether it’s a good or bad investment does matter, because there’s a big financial hit to take at selling time if the value of your home has crashed (or was never there).
Personally, I’d have been in a better position to have taken advantage of the low prices on single-family homes a few years ago had I not lost so much on my last condo because of the real estate crash. In that sense, my home was not just my home; it was an investment (even if I was not focusing on it primarily as such at the time), so I’m trying to resist buying a home that I fall in love with but that isn’t a smart financial move--hoping to eventually be able to get into a place where heart and head align.
Anyway, best of luck to anyone who's making these decisions!
Last edited by City__Datarer; 12-13-2014 at 01:20 AM..
Not sure where to put this thread, but in doing 'research' on condos, I see a common theme that condos are a bad idea as an investment.
But what about if one wanted to purchase a condo solely to live in?
The reason why I ask is because I was recently renting and living in a condo unit, and it was one of the best places I've ever lived in. Very quiet, considerate neighbors, good and safe area, etc.
For the amount I was paying in rent, I could purchase such a unit and pay a lot less (with a good down payment minus the monthly HOA fees).
EDIT: I don't know where you live but in my State/County if you don't shovel a walk path and stairs to your door within I think it's 48 hours you get fined. Also homeowners must shovel the sidewalk. That I do not miss at all.
I can't afford a house, but I could afford a condo. Whether it increased in value or not over the long term isn't my primary concern.
Any thoughts?
You could look for a condo to lease with option to buy. Pay extra towards the price of buying. Or if this is even possible I don't know but maybe lease with option to buy to make the down payment. Then if you make payments on time and have enough of a down payment to the owners try you might qualify for the mortgage loan for the remaining balance.
I don't know how you cant afford a house but you could afford to buy a condo?? Geez condo's here in NJ cost the same as a single family house with private property and the condo taxes are higher than the single family homes. The only good thing is the HOA takes care of the common areas, landscaping and everything else shared. That was a plus for me when I moved in. So far the people who drove me up a wall are gone now except the stairwell screwball.
Last edited by staystill; 05-10-2022 at 06:45 PM..
Reason: last paragraph
One of the issues with them, that my in-laws had happen, is that certain expenses are not in your control. The condo board can vote in any number of expenses and raise the monthly rate to cover them and you just have to suck it up.
My in-laws lived in a golfing community and their fees went, in part, to the upkeep of the course. The board voted to gut 9 of the holes and restructure the course. This came with a 200% increase in their fees. They spent almost two years trying to sell the place, and when they did it was at a huge loss.
Not sure about Florida but I know in California increases in monthly dues 20% or more need to be voted on. Now, under 20% the HOA Board can raise dues. As for expenses, there is also a threshold where the HOA community would vote before an expense could move forward. Sounds like they had no choice with the restructure of the golf course. Best thing to do is to understand what kind of community you are moving into. I wouldn't of moved to a golf course community because of the cost and potential future cost and bc I don't play golf.
For me, I cannot afford a single family house as they cost over a million now in my area.
Not sure about Florida but I know in California increases in monthly dues 20% or more need to be voted on. Now, under 20% the HOA Board can raise dues. As for expenses, there is also a threshold where the HOA community would vote before an expense could move forward. Sounds like they had no choice with the restructure of the golf course. Best thing to do is to understand what kind of community you are moving into. I wouldn't of moved to a golf course community because of the cost and potential future cost and bc I don't play golf.
For me, I cannot afford a single family house as they cost over a million now in my area.
Which is a key consideration. In many instances, single family homes may very well be a better investment than condos. But that point does little to those who cannot afford a single family home or who otherwise don't want to live in a single family home. When I bought my place in Honolulu in 2016, I could afford to buy a single family home on parts of the island. Problem is I have never enjoyed living in single family homes and, instead, appreciated high rise condo buildings, which is what my search was centered on.
I think condos are a great investment in the right markets, or metro areas.
Example, condos are not a great investment in the Phoenix metro. SFHs dominate the metro and the majority of people living and moving there are looking for SFHs and neighborhoods that cater to the suburban lifestyle.
In contrast, in the Seattle metro area, townhouse or condo living is much more the norm given the geography and density of the area. Condo prices for even tiny condos are almost absurd, but in many cases like with most real estate it comes down to location, location, location.
I think in metros where there's a significant built up environment and expectation of condo living, location ends up being the more important factor in the "is it a good investment" factor.
Not sure about Florida but I know in California increases in monthly dues 20% or more need to be voted on. Now, under 20% the HOA Board can raise dues. As for expenses, there is also a threshold where the HOA community would vote before an expense could move forward. Sounds like they had no choice with the restructure of the golf course. Best thing to do is to understand what kind of community you are moving into. I wouldn't of moved to a golf course community because of the cost and potential future cost and bc I don't play golf.
For me, I cannot afford a single family house as they cost over a million now in my area.
Typically dues increases are controlled by one's Covenants, not by the government. Typical CA. They are an exception. CA does have a maximum increase of 20% a year. FL does not have a maximum nor does SC where I am located.
Which is a key consideration. In many instances, single family homes may very well be a better investment than condos. But that point does little to those who cannot afford a single family home or who otherwise don't want to live in a single family home. When I bought my place in Honolulu in 2016, I could afford to buy a single family home on parts of the island. Problem is I have never enjoyed living in single family homes and, instead, appreciated high rise condo buildings, which is what my search was centered on.
I'm fine with being in a condo. I'm in my second one! A small, private, walled in garden would be nice but I live in a high cost area. Next I would like to live in a high rise but Oakland doesn't have any high rise condos--most are around only 5 stories. We have 40 story apartment towers but I don't want to rent. In SF, condos in towers are very expensive as I'm sure they are in Honolulu... I'd live here in a NY second: https://www.redfin.com/CA/San-Franci.../home/17305603
Quote:
Originally Posted by johngolf
Typically dues increases are controlled by one's Covenants, not by the government. Typical CA. They are an exception. CA does have a maximum increase of 20% a year. FL does not have a maximum nor does SC where I am located.
No, the state regulates how high HOA dues can be increased by the HOA Board alone. Meaning, the Board can raise the due up to 20% but if they want to raise them 25%, the HOA Community would have to vote with a simple majority to pass the increase. I'm guessing in FL or SC, the Board can raise the dues any limit they want. That takes away too much control from all the residents but, maybe, it isn't an issue.
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