Pros and Cons of Buying a Condo in Orlando
So you're thinking of buying a condo? Let's talk some pros and cons before you jump right in.
First, let's discuss what a condo, or condominium, is, in Florida. Usually, although not always, a condo has upstairs or downstairs neighbors. When you buy a condo, you are not purchasing any land. Essentially you are purchasing a unit from the drywall in. Sometimes it's difficult to distinguish between a townhome and condo, and some places use the word "villa" instead of either.
The only way you can really determine what it is, is to look at how ownership is being transferred. If it's "Fee simple" it's a townhome. If it's "condominium" it's a condo. Don't necessarily rely on the MLS, as the information is only as good as what the listing agent has put in. You can ask your realtor to look up the state use code, which is probably going to be a more reliable source. I often see condos mislabeled as townhomes. This is important for financing, which we'll get to later on.
Pros
Sometimes, buying a condo is the only way to be able to afford where you want to live. For example, if you dream of living oceanfront, a condo is much more affordable than a single-family home. In Daytona Beach, for example, there are oceanfront condos for as low as $250,000, but homes will start in the $1 million range. You'll get the same view, but you'll have a much more affordable property.
Amenities. Many condo communities come with great amenities. Gyms, clubhouses, nice pools. A lot include water and cable in the monthly fee, but do be sure to check that information out with the condo association as, once again, what you read in the MLS may not be true.
Convenience. Good help is hard to find, right? Sometimes it can be frustrating to keep track of your lawn guy or your pool servicing company. Are they doing what they are supposed to? Why is the grass so brown and the pool so green? If you like a well-maintained property, but you don't want to have anything to do with it, a condo can be a great solution. In most condos, the roof and exterior are also covered under the building's insurance, so you won't be exclusively responsible for that, with everyone chipping in. Be sure to check the reserves of the condo association. Your exterior insurance is normally covered in your condo fee, so all you would need to insure would be the contents of your condo, which should also save you some money.
Cons
Noise As mentioned, condos are typically stacked horizontally, which means you will probably have an upstairs or a downstairs neighbor, or maybe both, in addition to neighbors on the side. This means, you're going to hear things, and people are going to hear you. I think it's important to know what things may sound like, by visiting at different times. Do kids live upstairs? Do you like to sleep in? Does the lady next door play the tuba? Or do you own a dog who barks when you're gone? These are really important things to think about.
Proximity People live closely in condos, and that can lead to a lot of tension. If your neighbor loves to smoke, or cook pungent foods, you're more than likely going to smell it. You can join the board or attend meetings to air your grievances, but sometimes the complaints are things you just can't control. Similarly, if your condo has a lot of rentals, and most of them do, what will your neighbors be like? If you have short term renters around you, are they going to respect the quiet hours if they're only there for a week? Are they going to follow the pool rules if they are on vacation? Are you going to mind if they park their car in your spot, or hang their towel on the balcony to dry, or cut through the flower bed to get to the building or not clean the grill when they are done? Damages to the property ultimately are paid for collectively by the owners of the condos, so this is can be aggravating.
Cost. Very often, I find that buyers are interested in buying a condo because the purchase price is low, but till you figure in the monthly condo association fee (typically $300/mo to up to three times that for oceanfront or really exclusive properties) you might find that you could buy a much more expensive single-family home and pay the same amount. As a simple example, if you were to purchase a $100,000 condo with a $400/mo condo fee, you could buy a $200,000 house for the same monthly amount using current low interest rates. Don't be fooled by the low purchase price.
Financing. This is a huge point and one that I find is often misunderstood. Lenders will tell you that they can help you buy a condo for 10% down, but this simply is very often NOT TRUE. Yes, in theory they can. You may qualify for that type of loan, and the lender may be willing to give it, but the condo won't qualify. The lender will tell you, they just need a "condo questionnaire" filled out by the condo association. However, the answers to the condo questionnaire are what matter. And the topics include things like "does one entity or person own more than 10% of the units?" "What percentage of the units are tenant occupied?" and "how much does the condo association have in reserves?" Let me share with you why this is important. Back when the market crashed, condos fell the hardest. Many of these condos fell to impossibly low prices and there were a ton of short sales and foreclosures....sometimes selling as low as $25,000. In the interim, the previous owners who were losing their condos, were of course not paying their association fees. Reserves fell, properties were broke for a bit and many are still catching up. People with money swooped in and bought them up, as many as they could, and used them as rental properties. For this reason, there are very, very few condos that will qualify for any type of low down payment loan. Ask you realtor to do a little research before you even get started and waste money on a home inspection and appraisal.
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