Condos offer a combination of convenient location and affordability, factors that make it an ideal choice for city dwellers. You can find many condos for sale, and chances are, there more than a handful of options that meet your specific requirements.
But one of the crucial things you need to check when scouting for condo units is the condominium association. You want to make sure it’s in excellent shape, run by the right people and with proper guidelines in place to ensure that there are no major headaches to deal with later on. This is especially true when it comes to the finances of the association.
Now the question you probably want to ask is, how can you tell if there’s a problem with the condo association? Here are telltale signs to watch out for:
- Low Reserves
Before you sign the contract transferring the ownership of the condo unit to your name, you’ll get what is referred to as the resale package which lists down the rules and bylaws, as well as the financials of the association. You’ll be given some time to review this document.
You need to make sure the Financial Statements of the association is in proper order and that there are profit/loss statements, bank statements and balance sheet. Look at the reserve and operating account balances to find out if the numbers are sufficient.
To determine if the reserves of the association are sufficient, you have to consider the type and size of the building, the number of units and the amenities. If the building is small and does not have an elevator, pool or gym, then it doesn’t really need a lot of reserve funds. But having big amenities means that the association needs to have enough money to operate and fix any potential issues that may arise. For example, if the elevator is broken, then the association should have more than enough in the reserve to have it fixed immediately.
- Too High/Too Low Association Dues
If the monthly condo fee is too low, then you have to take a step back and determine if it’s going to cause issues in the future. Naturally, if the condo’s well-run then there may be a good reason for the cheap fees. Sometimes, the developer might set up very low fees at the start to entice new buyers but once the association is run independently, the rates might skyrocket.
On the other hand, if the fees are too high, then that’s not really a good thing. You don’t want to pay a fortune on your association dues every month for years to come.
- Self-Managed Building
Although not having to hire a management company can lower operational costs, it’s not exactly an advantage for the homeowners and the association itself. Maintaining the building and ensuring all the taxes are paid are meticulous tasks, and if mere unit owners are the ones volunteering to handle all these, then it’s very possible that it can create a host of problems.
- Lack of Maintenance
Check the hallways, the lawn, and other common areas to see if they’re properly maintained. If you notice that the elevators are broken or the grass has not been mowed for quite sometime now, then it’s an obvious sign that the property is not being managed well. It could also mean that the association does not have enough funds to take care of all the building’s maintenance needs.
If you’re looking to buy a new condo unit, be sure to consider these things. Having a well-managed condo association can spare you from unnecessary headaches when you move into your new home.