Condominiums are great investments for a variety of reasons. If you are searching for a family home, a condo is an affordable single-family home that is great as a homeowner’s first home. It is a property you are paying for to own one day and has much less upkeep than a traditional single-family home. Condos are also fantastic investment properties for real estate investors. They have sought out properties by individuals, couples, and single families. Condos are much more affordable than other options of housing and therefore attract many different types of people with many types of living situations.
No matter what you are looking for in a condo, you should have a good understanding of what makes a good condominium property before you think about purchasing one. This article will discuss the red flags to look out for when you are thinking about buying a condo.
1 – Normal Maintenance Is Not Being Performed
This may be one of the biggest red flags of them all. It is important that your landlord is doing their part in keeping the condominium complex clean. Typically people who live in condominium complexes pay a monthly fee that goes towards keeping the entire complex clean. This would include all amenities such as a gym, a pool, or any other recreational shared spaces. Additionally, the monthly fee condominium owners pay should also be put in towers keeping the building itself clean. Some of these tasks would include keeping the floors swept, the walls and lighting fixtures dusted, any stains or garbage in common areas cleaned up, and the floors vacuumed.
While those are some of the more basic tasks one would think of when it comes to upkeep a condominium complex, there are some other signs of maintenance you should look out for to ensure the complex is being maintained. First, you should be aware of how the exterior spaces are kept. You should look out for if the parking areas have proper lighting. At night it would be very difficult to locate your car or just walk around in general if there is no parking lot lighting. Also in the exterior, it is good to look at how the building itself looks. This includes the walls, the roof, and the windows. You want to ensure that nothing looks like it is falling apart or has been in need of a repair for quite some time. That could hint as to how there is not much maintenance going on in or outside the building.
Everyone living in a condo in a condominium complex pays monthly fees to a homeowners association. The homeowners association is responsible for the upkeep and maintenance of the complex. If you are looking at a condo and there is little to no upkeep, that is a huge red flag as it means either the monthly fees are not being paid to the homeowners association and are being misused somewhere else, or the homeowners association is not doing their part to clean and maintain that complex.
These are also important things to look out for if you are an investor as well, not just an individual or family looking to purchase a condo to live in. If you are an investor looking to purchase a condo complex, you may not want to buy one that is in dire need of repairs. If the previous owner of the building didn’t do their part to keep up maintenance, then it is going to be very costly to repair everything they had damaged.
2 – The Building Is Poorly Designed or Constructed
Another big red flag to look out for before purchasing a condo is how the building itself is designed. It is possible that when the building was being built, construction was rushed in order to have the buildings be up quicker. This could lead to hazardous parts throughout the building and cause more expenses later on. If the construction of a building was rushed, it is likely that factors such as building codes and other city codes were violated. This would just make the building dangerous to live in.
You should also ask about how old the building structure is. If it was built a while ago it may have older electricity and HVAC systems that would be hard to repair and replace. These older systems could also be more prone to malfunctions. You don’t want to have to constantly worry about electricity or heating not working throughout your unit.
It may be a good idea to have your own condo unit inspected for any building code violations before you purchase it. An outside perspective can help give you an understanding of how safe your specific unit is, and the likelihood of the rest of the building itself being safe and up to code. You don’t want to purchase a unit that is going to cause you both financial and safety problems in the future.
Additionally, if you are an investor thinking about purchasing a condominium complex you should also have an outside perspective to review the building for violations. All of these code violations would become your problem after you buy the complex and could get extremely costly to fix. Even if there are no code violations, it is important to inspect the building itself just to see if it was poorly constructed. This would also get costly to repair any rushed construction that may have happened when the building was being built.
3 – Neighbors Who Do Not Pay Their HOA Fees
If you are interested in purchasing a condominium you have the right to review the HOA financials. As someone who owns a condominium, you are required to pay a monthly fee to the Homeowners Association (HOA) who are in charge of basically keeping the building and the common areas clean. Before you purchase a condominium, you should ask to look over the HOA financials. These files will tell how much money is collected each month, how much money is in reserve, and how much money is being spent each month. These files should also be able to tell you how the money is being spent and what exactly it goes to in keeping up with the upkeep of the building.
These files will also be able to show if the other condominium owners are paying their HOA fees. If they are not, that means they are probably unhappy with the service they are receiving. This could be a red flag as it shows the current president of the other condominiums in the area doesn’t enjoy living there. This also could mean the other condo owners simply just don’t care about living there, even if the HOA services are fine, and will never pay and or care about the upkeep of the buildings.
If you are a real estate investor thinking about purchasing a condominium complex these are also important factors to review. If the current residents don’t like living there because of bad HOA services then you will need to either figure out how to change those services. Additionally, it may be difficult to attract new people to purchase condos on that complex if there is a reputation for bad HOA services. It also may be difficult to find people to purchase properties if the neighbors in the surrounding units just don’t care about maintenance in the building. Reviewing HOA financials can help give perspective to how the current residents enjoy living there.
4 – Poor Installation
While you are touring a potential condo unit to purchase you should inspect the walls to see how insulated they are. A big red flag in some condominium units is bad installation. This means you would be able to hear the noise you wouldn’t want to, including the neighbors, sounds from outside, and even noise from your own unit in different rooms. Poor installation can be extremely annoying if you are trying to do work, watch a movie, or even sleep at night. Since not everyone is on the same schedule it is likely that you would hear noises that would bother you if the condo unit has bad insulation. A good way to test this is to tour the unit on a busy day such as a weekend or an open house. This could give you a good idea of how loud the unit could get.
If you are an investor, this may be an even bigger problem as it would become your problem to fix these installation issues. People who would purchase these condos will never want to buy one if they can hear distracting noises from your neighbors or the outside. Renovations to fix this could get quite expensive. Be sure to check how insulated these walls are before investing in condominium units.
5 – Bad Parking
Another big red flag for condominium complexes is inadequate parking. This could mean there are limited parking spaces available and more people occupy the condos than there are parking spaces available. There could be parking in unsafe places such as street parking or even parking at another location in which you would have to walk to your unit. There even could be no parking available. This would make it difficult for individuals with cars to be able to live in those units.
You should also look out for how safe the parking lot or spaces are if they are available for the complex. This could include if there is good lighting around the parking area at night so you can both see your way to your unit and so other drivers can see you walking. You also should see if the parking lot is well maintained. If there are a lot of cracks in the pavement or potholes in the ground it could damage your car while also making it difficult for you to walk around.
As an investor, this could get pretty expensive to repair. Adequate lighting and repairing an entire parking lot can be expenses in your budget you might not want to pay. Also, if the unit doesn’t even have any parking available it could get difficult to find someone who would want to purchase it. Make sure to look over the parking areas before investing in a condominium complex.
6 – Your Real Estate Agent Does Not Typically Sell Condos
If you are considering purchasing a condominium unit make sure to talk to a real estate agent who understands the condominium world. If you are talking to an agent who only sells houses, they may not be able to answer all of your questions, or the ones they try to answer could be incorrect. There also are many differences between selling a condo then there is a house. Condos have different highs to be considered and an agent who sells houses may not be aware of these and can steer you in the wrong direction.
As an investor, you want to make sure your agent knows everything they can about condos to make sure you are getting all of the information. If your agent specializes in selling houses not condos, it is likely they will forget to tell you important factors or even be able to tell you what to look for. Be sure to talk to an agent who specializes in condominiums.
In Conclusion
If you are interested in purchasing a condominium, you want to make sure to stay clear of any possible red flags. These red flags could save you from purchasing a property that you wouldn’t live well in. Ensuring that the complex is clean and up to code is one of the most important factors. This comes along with other residents paying their HOA fees so the building is able to stay maintained and clean. As an investor, these six red flags are essential to look for as they could be very costly to fix if you were to invest in a condo complex. Additionally, it may be difficult just to find people to purchase the condos if these red flags are present.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
