So if you’re a buyer who is looking into investing in a condo, be it for rental purposes or it could be as simple as moving into one. You have got to be aware of certain things before you sign on the dotted lines. In this article, we look at six crucial details that you need to know before you buy or rent a condo.
Know them through and through
You have to visit the condo association to find out how it operates and whether everything is in order. The affiliated condo association is going to be your point of contact for all functions and purposes, especially if you have an overseas condo owner. Think of buying a condo like a joint venture deal that you’re going to sign, so get to know the ins and outs of the condo association to make sure that nothing flimsy is happening within the association.
Look at that Budget
No condo association is going to show you their books because it puts them in a spot of vulnerability. But that doesn’t mean you can obtain them by other means. And when we say other means we don’t refer to anything under the table. Your condo seller is your access card to check out the budgeting of the condo association. Condo owners have access to the budgeting of the association and if they wish to sell the condo, they can then show the budget and books to the buyer if he or she requests it. What happens most of the time is that a potential buyer never looks at the books of the association and only verifies the seller. The condo association needs to be as stable as the seller.
If the condo association says that their Delinquency rates are extremely low, then either they are lying or you have stumbled onto one of the best run condo associations on the market. An association with a large delinquency rate is not a red flag for buyers who are not looking to mortgage the condo at any point in the near future. But the condo association helps keeping the amenities in working condition and if there are a number of condo owners refusing to pay the association fees, you will slowly start seeing that impressive swimming pool become not so impressive due to cutbacks.
The remaining cash
A significant part of the budget details that you request from the seller is the detail about the cash reserves that the association has. So higher the cash reserves, newer the building looks and higher is the demand. So if the building you’re trying to buy does not have other offers from potential buyers, then it is a red flag and you have to see what the cash reserves is like.
Number of Absentee Owners
There is an increase in absentee owners in prime real estate locations such as Miami, Las Vegas and California. Know that a condo association can lose its license if there are more than 49% of absentee owners. And since most transactions are done with cash, paper trails are extremely difficult to find. Try to research more about your association before you agree or sign anything.
Insurance is important
Most associations don’t get community insurance coverage in an attempt to cut costs. But not getting the insurance can greatly affect mortgage rates and refinancing. So acquire the master insurance policy statement of the association to see if the required insurances including the community insurance coverage is present.