26/09/2022
There are times when Home Investors scout around for condo properties, some may realize that not all condos are created equal. What looks good on paper, may not necessarily translate into reality.
With this, please note the following for your future investment:
✅️Increasing Value Over Time
Some buyers can be quickly convinced by a condo’s low sticker price and think that they are getting a good deal or bargain. However, as the saying goes, “you get what you pay for.”
Buyers should look at the overall value of the condo property rather than the low price. And that covers many things: will the property appreciate in value over time? Does the low cost leave out maintenance of essential amenities or association dues? Is the structure robust enough for earthquakes and other Acts of God?
The price of the unit, when compared against extenuating factors like these, might make you reconsider the value of the property.
✅️Unit Density
Some condos may have posh-looking architecture, or grandiose-looking amenities (i.e. giant pool, resort-like vibe, upscale clubhouse, etc.), and many will find this attractive.
While these are indeed nice, one of the primary things that buyers should consider when purchasing a condo is density — this means the total number of units per floor, per building planned by the developer, which also equates to the total number of households, families, and people which will share the development with you.
While you are being shown around, you may be seeing just one or two buildings in the complex, and everything might look spacious and open. But once building numbers 11 and 12 are under construction, the ambiance will definitely not be the same.
More occupied units mean more people using common areas such as elevators, affecting the living experience considerably.
The more people there are, the faster the wear-and-tear and the more difficult (and costly) maintenance will be. Moreover, more people per square-meter leads to a noisier neighborhood, less privacy, and more cars, which means even more congested parking!
✅️Association Dues and Fees
All condominium developments have association fees, and that’s normal. Association fees pay for facilities and upkeep, among other things. Before signing on the dotted line, you should know and understand what the monthly dues are worth and what they will pay for. In the end, this will amount to quite a sizeable sum.
Find out the breakdown of your association dues: these fees normally cover maintenance and repairs, security, janitorial services, taxes and licenses, and wages of condo employees and admin staff.
Always remember that association dues are often computed against the size (per square meter) of your condo unit. So the bigger the unit you get, the higher the condo fees you will be paying.
Failure to pay your association dues on time may incur penalties or interest, so it’s best to know how much eachbproperty manager will normally charge. Frequent non-payment may even result in your basic utilities being cut-off or being barred from using the shared amenities.
✅️Restrictions & Policies
Some condo buyers fail to do their due diligence outside of the ocular inspection and the financing terms. When buying a condo, prospective buyers should ask questions relevant to their lifestyle or way of living.
For example, one should find out about the condo’s policies regarding smoking in the condo unit and the availability of smoking areas.
Some developers also have strict regulations on making any renovations on the condo units. The most common restrictions include renovations affecting the building exterior, electrical load, and the number of construction personnel involved. Some require a construction bond, architectural drawings, and engineering blueprints, and of course, the contractor has to be approved by the building administrator, along with various permits that need to be issued.
Finally, check if there are any restrictions or limitations in the service providers allowed by your building admin. These include (but are not limited to) cable, internet, satellite, and telephone providers.
Best to check as well on policies on the delivery of various items (e.g. food, courier, laundry, furniture, etc).
✅️Resale value
Another factor that condo buyers often overlook is the eventual resale value of the condo.
When choosing a condo, it would be wise to buy from a real estate developer with a track record of having proper maintenance and good resale value.
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