Tips for Buying Your First Condominium, Mistakes to Avoid: When it comes to investing in real estate, it is very natural for buyers to have many questions. They often deliberate on what to buy, where to buy and how much to pay for it. Before buying a condo, you should also check 2D or 3D floor plans; it will help you to understand the internal layout, size, and dimensions. For those who decide to buy condos, there are some more things to consider.
A condominium is a type of property that has more than one owner. Regularly, a condominium property consists of a large complex of apartment units or townhouses. Each of these units has different owners. In such a situation, the owner of a unit owns everything within his unit, including the walls. However, individual owners regularly share rights to other areas of the property, such as elevators, swimming pools, living rooms, and hallways.
If you believe that a Condo is an ideal option for you, we offer several tips when looking for the ideal one for you.
1. Verify your current status.
Before buying, it is important to analyze your financial situation. The most important thing is to determine our income and the capital that we have available as a down payment. Although interest rates for loans are currently low, obtaining a mortgage is difficult. Banks are increasingly demanding in verifying their income and credit history.
2. Set realistic expectations.
If you are buying your first condo it is important that your expectations are realistic regarding the increase in the value of the property. The average valuation of a home in the United States is 3.6% per year, according to data from the Case-Shiller index. This indicates that it is no longer feasible to buy and try to sell after a few months or a year.
3. Location, Location, Location.
A condominium gains value if it is located in an area with high-quality schools and with good communication and transportation routes to the main urban centers.
4. Become an expert.
When you have chosen an area that pleases you, inquire about the current market there. In the listings, you can find out about property prices similar to the one you are looking for.
5. Seek pre-approval of a credit.
You must seek credit approval, at this point, you will know the details of the mortgage. It is important that you look for many options from different banks to make a better decision.
6. Think long term.
Buying a property is a long-term investment. At the time of purchase, you should imagine living there no less than five years. After this period of time, it is beneficial to own a property. Benefits that you will not see if you plan to sell within a very short time.
7. Find out what the condo offers
Not all residential complexes are the same, so not all include the same things. Extra parking spaces for guests, parks, sports areas, pool, etc.
8. Consider the improvements.
Calculate the cost of the additional investment required by the home. No property is perfect and even the newest require changes and modifications. Smartly made modifications will increase the value of your home.
9. Seek advice from an agent
Hiring a real estate agent who is an expert in condos can solve some doubts you may have. The agent will advise you to find the best options for the condo and even the types of financing.
10. Ask about association fees and regulations
Association fees are payments (not included in the mortgage) for the maintenance or remodeling of the condominium.
In addition, find out the regulations required by the association, you will not want to spend bad times for not knowing about noise restrictions or the correct use of common areas.
The condo property is not for everyone. Think about whether buying a condo will meet your needs, and do yourself a huge favor by making a list of all the points listed above for when you have to discuss a real deal.
Mistakes to avoid when purchasing a condominium
Are you planning to purchase your first condominium? Getting a suitable condominium comes with several challenges, excitements and fear. Every individual loves to settle for that perfect condo, you’ve always dreamed of, but several mistakes and bad decisions people make usually prevent this from happening.
We highly recommend that you know these smart tips and techniques to take advantage of, to avoid making the following common mistakes when purchasing a condominium.
Being unaware of your spending budget
If we recall from the subprime mortgage mess, what the bank tells you about your spending budget differs from what you know about your budget. To know this, you need to outline all your expenses, such as credit card payments, auto costs, school loan payments, health insurance, groceries, and retirement savings.
Also remember your annual expenses that are compulsory, such as any insurance premium. Remove all these expenses from your wages to find out your spending budget on your new home monthly. You can also use a mortgage calculator when making this estimation to discover the current interest rates. This will provide an estimation of your overall payment on the mortgage.
Now use these estimations in your search for the most suitable condo in your vicinity so you won’t end up purchasing what is beyond your spending budget. There are situations where you might have to cut down on some of your expenses and/or increase your income to afford your desired condo.
Neglecting other expenses
Apart from the monthly payment you make as a homeowner, there are other extra expenses you usually incur. Unlike when you were still paying rent, you are solely responsible for the property taxes, home insurance payments and other maintenance such as roof repairs, a new furnace, and so on.
Purchasing a condo also requires paying maintenance costs every month, which is not even part of the repairs or maintenance carried out. This is because it mandates you to become a member of an association of homeowners who requests a certain amount every month from owners of specific units of a property to represent condominium charges.
Getting distracted easily
Aesthetic repairs and simple upgrades are cheap tricks that agents use just to play on your mind and sometimes trigger a much higher sale. Sellers often spend about $2,000 for minimal upgrades and incur several thousand on staging. We recommend that you opt for condos for which you have not realized full potential, especially when on a budget. You can also opt for condos that you can increase its value, which will cause a boost in equity.
Forgetting to carry out a proper inspection
Before finally closing on the sale of your new condo, it is important to know of the shape that it is in. You would want to avoid carrying out several unplanned or expensive repairs. This is the reason we must establish a comprehensive inspection of the condo. Avoid letting your emotions get in the way till you completely have a full idea of the physical condition of the property to avoid getting into any financial mess.
Continuing to pay rent because it is cheaper
We commonly believe in this modern era that owning a home is cheaper than continuing to pay rent on the property which makes most homeowners seek amazing deals and interest rates on homes. Also, the rent might increase by an average of 3% every year. Apart from this, you might also lose several discounts on the mortgage, which will eventually help you save thousands of dollars.
Not using a representative
You need to avoid walking into a new condo without a representative, broker, or agent whenever you are serious about getting one. We believe an ethical rule that agents act in the best interest of both the buyer and seller, but you will soon find out why dealing with a seller’s agent might not be in your own best interest without representation of your own.
Waiting for an additional discount on the price
Prices in the real estate market usually fluctuate. Experts suggest that once you’ve discovered the condo of your choice, waiting for more discounts is a bad, and risky move. Reasons being that prices might not come down as expected, but soar high.
Purchasing a suitable condominium can be both challenging and daunting. It isn’t without potential pitfalls. Being aware of this will prevent you from the mistakes and help you buy with confidence.