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Before You Buy A Condo
Now that you've found the right condominium property; one that meets your needs and
desires and seems to be priced right, what questions should you have answered before you make a formal offer.
These are, in my judgment, the most important things you need to understand before buying a condo whether it is a normal transaction or a foreclosure-related short-sale. Knowing the answers to these queries is very important
regardless of the type of sale it is.
Meet the Property Manager You can learn more in a face-to-face meeting, but
even a phone conversation will give you a sense of how responsive and communicative the property manager is.
Review the Associations's Financials.of the Association and in particular, the balance in the Reserves fund.
This will give you an indication of whether the association fees have been kept at levels that create a slow build-up of reserve funds to cover replacing the roof, periodic work on the tennis courts or pools,
or repaving the parking lot. A small balance in the Reserve fund may be explainable (perhaps they just finished a major project), but it does deserve an explanation. Ask if the Reserve fund has been subjected to
a "reality check" in the past 5 years. If not, there's no way to judge whether the Reserves account is being kept at a level sufficent to cover future costs.
Ask what kind and how much insurance the association carries and what is covered, and more importantly, not covered ?
Ask the property manager what the delinquency rate is on condo fees.
If many people aren't paying their association fees in a timely fashion, something may be amisss and you want to know what that "something" is before you buy into that condo association.
Does the property manager expect, or do the Board meeting minutes anticipate any "special assessments" in the near term. If so, you may be able to get the Seller to pay them in advance as part of your closing.
Review copies of the minutes of recent condo association board meetings. This will give you an
indication of the kinds of issues and concerns, if any, that the board has been dealing with. It will give you some clues to
what may be wrong with either the physical construction or any behavioral issues among the residents.
Even if there are no issues or concerns, a review of the minutes will reveal the sorts of projects under way at the
complex.
"Who's Watching the Store ?" You need to be wary of a condo association without a "professional" property manager.
Although many condos are run very well by residents, themselves, such an arrangement can lead to more hassles for owners.
Condos managed by the residents, themselves, are subject to all the foibles of businesses being run by "amateurs." That's worth thinking about.
There is a national certification board for Community Association Managers. You can learn more about the qualifications of a Certified Community Association Manager at The NBC CAM website
If the complex is professionally managed, ask some of the residents (not the Seller) about their satisfaction with the property management firm.
Ask several residents. Some people are chronic complainers and no property manager or Board could ever keep them happy at a monthly condo fee
they'd be willing to pay.
Review the Rules, Regulations and By-Laws. Many condo associations have abbreviated versions of their rules that will tell
you, in summary fashion, things like whether or not you are allowed to have pets and how many? What restrictions, if any, are placed on pets and pet-owners ?
You may not have a dog, but you may not appreciate it if your next-door neighbor
has three dogs that bark day and night and you have no recourse. How about parking. Can your guests park on the premises ? For how long ? Build a list of concerns
and then go looking for answers in the condo documents.
Are rentals permitted and, if so, what percentage of residents are renters. A condominium with
a high percentage of renters as residents, in addition to other problems this may cause, may make it harder for you to resell the unit later on.
If you are planning to be an investor-owner intending to rent your unit, you need to understand the rental policies of the association. If the rental population is over about 10%, there should be
clear rental policies in either the by-laws or as an amendment. If rentals are allowed, are weekly or monthly rentals allowed or only 12 month
leases. Associations can have very different rules for owners versus renters. For example, many condo associations allow "owners" to have pets, but not "renters." Ask other investor-owners about their rental experiences. Keep in mind, however, that condo associations can, usually by a majority or super-majority vote,
change its rules and/or bylaws to prohibit or restrict rentals. The more investor-owners there are, the less chance there is that that will happen.
In summary, check out your Tampa bay condominium association as carefully as you would any other major component
of a single-family home purchase. You can avoid grief by fully understanding the situation while there's still time to
either decide not to make an offer or to make adjustments in your offer to compensate for what you've learned.
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