11 Nifty tips for Buying a condo in 2022

Is condo investment the right move for you in 2022? Here are 9 tips to help you decide on Buying a Condo

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Should you buy a condo in 2022? It’s an important question, and the answer will differ depending on your personal situation and your financial goals. 

it’s likely that condo investments will be at an all-time high and will continue to increase over the next few years as people move away from houses in the suburbs and opt instead for condos downtown. 

But with higher prices come higher risks, so it’s important to consider all aspects of condo investment when deciding whether or not this type of real estate purchase is right for you and your family in 2022. Here are nine tips to help you decide if condo investment in 2022 is right for you.

What is a condo?

Condos, also known as co-operative housing, are owned jointly by their owners through a special legal entity known as a condominium corporation and managed by a Board of Directors elected by unit owners. The shares (or units) of the corporation may be divided into voting and non-voting. 

You’ll want to know what type of unit you’re buying before making an offer on your prospective condominium property. 

Condos are single units in multi-unit properties, such as apartment buildings, standalone homes, or townhomes. It might be in a high-rise building or a walk-up with two or three flats.

Condo buyers should know what their purchase contains. Regardless of building size, you own your unit. You own a pro-rata part of the community’s common areas and facilities, such as parks, pools, playgrounds, gyms, and dog-walking areas. This includes the foundation.

Condo associations manage shared spaces. The association usually contracts a property management business to handle maintenance, resident communication, and other functions.

A condo owner owns their apartment but shares ownership of shared facilities, says David Lee, a Realtor in Orange County, California. Condo owners pay a monthly fee to finance the association’s budget and costs.

Condo owners pay their own property taxes, utilities, and occasionally exterior upkeep.

1) Know your mortgage

More & More  buyers are going condo crazy—but not all of them know what they’re getting into. 

If you’re thinking about buying a condo, it’s important that you know how much your mortgage will cost so that any investments (especially speculative ones) make sense. 

It’s also crucial that you do some research on current market trends and recent developments in real estate. When considering whether or not to buy a condo in 2022, here are some things to consider: 

USA has seen huge growth in population over the past decade, with immigration levels hitting new highs every year. 

Buying a condo means paying maintenance fees on top of your mortgage payments each month—that means higher costs up front but lower ongoing expenses than owning a house would entail. 

Condos have lower transaction costs than houses because condos have no land transfer tax; however, their property taxes tend to be higher due to condominium fees paid by owners within each building.

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2) Understand real estate property management

Real estate management is a big job, and it’s best to hire professionals to handle all of it if you can afford it. 

If not, make sure that whatever firm you go with has experience specifically with condos; your complex is probably full of regulatory rules and regulations that need to be followed, so having an expert on hand can save a lot of time down the road. 

It’s also worth getting a few quotes from different management firms; there’s often a significant range in pricing between different companies offering similar services.

3) Learn about strata living

If you’re thinking about buying a condo, it pays to do your homework before diving into an expensive and long-term purchase. 

Condo living differs from renting an apartment or house—you’ll have additional costs such as strata fees, maintenance fees and special assessments, so it’s a good idea to learn about those rules before buying a property. 

You can get more information on how strata works by reading Investing in Condos: Rules of Buying a Strata Home.

4) Consider your lifestyle

Do you despise having to cut the grass and prune the hedges? What about giving your driveway a good power washing? 

If you need to spend more than $10K on a new roof, will it be difficult for you to make those kinds of financial sacrifices? If you responded “yes” to any of these questions, living in a condominium might be the right choice for you.

On the other hand, if the desire to have a sizable backyard outweighs the amount of work that will be required to maintain it, then purchasing a different kind of property might be the better choice. 

In a similar vein, if the idea of sharing walls, ceilings, or floors with a neighbour isn’t appealing to you, then a condo — which requires you to actually live on top of your neighbours — is probably not the best option for you. 

Those who are happy with the majority of characteristics of apartment living, sans the built-in maintenance responsibilities, are typically the greatest candidates for condo living.

5) Research locations carefully

Real estate prices have gone down in many cities, including some that experienced huge booms as recently as 2021. 

With rental costs going up rapidly and foreclosures still rampant, purchasing a home might not be a great investment—especially if you want space (such as a yard or garden) that is hard to find in dense urban areas. 

If you do purchase a condo, remember that your decision will also impact where your family lives and how long they live there. 

Be sure you’re comfortable with that before you make any decisions about buying property—and especially before taking out a mortgage on it!

6) Consider legal and tax implications

It’s important to remember that, as a condo owner, you’re bound by laws and restrictions set forth by your homeowner association (HOA). 

Depending on where you live, these rules can govern everything from grass height to types of pets allowed. 

Make sure you do your research so you know what your specific HOA requires—and factor in related costs (like lawn care) when determining whether or not purchasing a condo is financially feasible for you. 

Plus, it’s also worth looking into other costs associated with buying property (i.e., legal fees and taxes). Be sure to know what these additional expenses will be before proceeding with your purchase!

7) You may have to leave your pets 

 

If you have a large or small pet, think twice before purchasing a condo; most do not allow them and may only allow reasonable size pets with an additional deposit and fees. 

If there are no restrictions against pet ownership, be sure to get an agreement from your future neighbors that they will not mind if Fido hangs out on their balcony, too! If all goes well, consider getting pet insurance (even if it’s just for your peace of mind). 

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8) The cost of furnishing a condo is much lower than most people think!

Instead of buying a home and investing extra money into furnishing it, choose to buy a condo instead. 

The cost of furnishing a condo is much lower than most people think! You can also choose from a variety of floor plans which may be perfect for your lifestyle or future needs. 

There’s also no need to pay for upkeep costs, since most condos take care of all those things for you!

9) Don’t forget about maintenance fees, property taxes, HST, and other hidden costs

Buying a condo is often touted as an affordable way to buy real estate, but it’s not necessarily so. 

Condo fees typically run between $200 and $600 per month, which will add up to thousands of dollars over a decade or more of ownership; these maintenance fees can quickly eat into any savings on your monthly mortgage payment. 

In fact, even if you rent out your unit at a profit and pocket that cash, remember that there are still hidden costs: 

Property taxes tend to be higher than they would be on a stand-alone home; HST will also cut into your profits.

  1. Find a condo that is approved by the FHA.

There is a possibility that obtaining a mortgage for a condominium will take more steps than doing so for other kinds of properties. 

When you apply for a loan, the condo development in question, in addition to your own personal finances, will be examined closely. 

This is due to the fact that lenders want to ensure that they will make their money back.

When looking for the appropriate financing for your purchase, it is in your best interest to seek the aid of a mortgage professional who has prior experience working with condominiums. 

On its website, the Federal Housing Administration (FHA), which provides insurance for FHA mortgages, provides a list of condominiums that have been approved for purchase by the FHA. 

It’s possible that conventional lenders have requirements that are comparable to those of the FHA, but if the condo isn’t FHA-approved, you won’t be able to receive a normal loan even if you meet those requirements.

The benefits and drawbacks of purchasing a condominium

It is crucial to consider the advantages and disadvantages of purchasing a condo if you are considering doing so. 

The following are some of the most important factors to consider:

Pros of Buying a condo

Because of the possibility of a lower purchase price, purchasing a condo rather than a single-family home may be a better option for individuals who are buying their first home or who have limited funds available for a down payment. 

This makes condos an attractive option for first-time buyers and others who have limited financial resources.

Lower costs for outside care — In condo developments, exterior maintenance is normally handled by the HOA (often with the exception of windows). 

This means that exterior maintenance expenditures are reduced. This involves the maintenance of the grass and shrubs, as well as the roadways, pathways, roofs, and siding on the exterior of the building. 

Owning a condo may be a more financially feasible option than buying a single-family home due to the fact that condos are often smaller and need less maintenance than single-family homes. 

Additionally, property taxes are often on the cheaper end.

You may be in closer proximity to your neighbours, making it more likely that you will meet them in person, and some condo associations offer social events such as pool parties, barbecues, and doggy playdates. 

You may also have the opportunity to participate in these events. (Of course, if you are interested in mingling with other people, this will be an attractive feature for you.)

Depending on the condo complex, you may have access to first-rate amenities such as a grilling area, business centre, pool, dog park, covered parking, clubhouse, and other luxuries, and the expense of enjoying these conveniences is typically split among all of the members.

Cons of Buying a Condo

HOA rules and fees – One of the most common complaints about living in a condo community is that the HOA rules can be overly restrictive. 

These rules regulate everything from the collection of trash to the types of items that can be stored on your patio, the number of pets you are allowed to have, and whether or not you are allowed to rent out your unit. 

HOA fees can also be prohibitively expensive. In extreme circumstances, disobeying the restrictions might lead to financial penalties or even foreclosure on the property. 

The costs associated with condo associations also frequently go up over time.

Taking into account the fact that you and your neighbours jointly own the common property, there is a possibility that the community as a whole could incur financial losses in the event that one or more owners fail to pay their maintenance fees. 

In a similar vein, if one or more of your neighbours who also own condos goes through the foreclosure process, the units could trade hands at a significant discount, which would have an impact on the overall property values. 

(Some associations have guidelines and the finances to buy back these units; thus, it is imperative that you enquire about the customary procedures that are followed when a scenario like this arises.)

Less privacy, and perhaps a large number of renters – If you place a high value on your privacy, you should consider whether or not living in a condo is the right choice for you. 

Condos have shared spaces, such as the lobby, hallways, and facilities. 

Because you and the owners of the adjacent properties will share walls, ceilings, and floors, noise may become an issue for you. 

It is important to keep in mind that some apartment buildings may have a high turnover of renters, which might result in the use of moving vans and tenants who may not have the same level of concern for the upkeep of the community as owners do.

Problems with parking and storage Many condominium complexes do not provide its residents with assigned parking; as a result, you may have to walk further to reach your front door. 

It is not uncommon for there to be no outside storage space at all, in addition to the limited storage space that consists of one or two small closets.

Is purchasing a condo a viable option for first-time buyers as well as investors?

If this is your first time purchasing a property, a condominium may seem like an especially alluring choice. 

You may already be accustomed to living in a condo-style setting if you’ve been renting, so you may continue to have that kind of experience while developing equity in your new home. 

The reduced price is the most obvious benefit, but there are other advantages as well.

Condominiums, on the other hand, aren’t simply for people who have limited financial resources or who have immediate plans to sell the property; they can also be excellent long-term investment prospects. 

You can rent out a condo on an annual basis by finding tenants willing to sign a lease, or you can explore renting out a condo on a shorter-term basis through services like Airbnb or VRBO. Either way, a condo can function as a rental property.

Although investing in rental property can provide you with a source of passive income, doing so requires careful consideration of a number of factors, such as how simple it is to find a tenant for an extended period of time, how much money you can make from out-of-town guests on a nightly basis, and how much it costs to keep the property in good condition for both tenants and guests. 

The good news is that there are tax benefits that are available for rental homes, which can help offset some of those costs.

As the overall price of homes continues to rise, the purchase of a condo in 2022 is certainly going to set you back a little bit more money, regardless of the reason for your interest in doing so. 

When searching for a single-family house in some places, the process of buying a condo might feel just as competitive as the search. 

Compare a number of different homes, and be flexible with regard to the features that are either must-haves or nice-to-haves. 

To ensure that your needs are met and that your interests are protected throughout the condo buying process, it is in your best advantage to seek the assistance of a real estate agent who specialises in condominiums.