Rental Property Types 8 Steps To Buying A Condo – What You Need To Know Beforehand by Dejan Kvrgic December 9, 2021December 9, 2021 by Dejan Kvrgic December 9, 2021December 9, 2021 The steps to buying a condo for the very first time can seem stressful. It can take much more time than you hoped it would – and the lack of experience will undoubtedly make the whole thing even harder for you. We agree that it can be pretty stressful, and that’s precisely the reason we made the go-to guide of 8 steps to buying a condo. Here, you’ll find everything you need to do – in the exact order that you need to do it! Looking for a quick resource on how to buy a condo as an investment, check out our video below: So, keep reading to see the complete eight steps to buying a condo – and let’s make your entire condo buying process a breeze, start to finish! 8 Steps To Buying A Condo – The Guide The condo-buying process is incredibly stressful; it’s understandable if you’re left feeling like you don’t know where to start or what to do. Looking through the details, preparing documents, and meeting with the Homeowner’s Association can bring out anxiety even in the calmest of people. So, to make all that at least a tiny bit easier on you, here are the eight simple steps to buying a new condo! #1 Start The Preparations When we say start the preparations to buy a condo, we mean – get a pre-approval at your bank: Get pre-approved for an income property mortgage before even beginning to look for the perfect condominium. Finding the right place and then realizing you can’t afford it would be the worst thing ever. Going to the bank and figuring out your budget will help you narrow down the search for apartments – and save plenty of time, too. We would advise you to meet with a few different banks to get the ideal interest rate. It may take time, but it will save you money in the long run. #2 Start The Search Being pre-approved can be used to your advantage because it gives you bargaining power with a seller. After that’s settled, you can start browsing through the different neighborhoods and see which ones you like for your real estate investment. Keep in mind the traffic, how close some essential places are, and consider if this place will still suit you after a decade or so. Think long-term is what we’re saying. Once you’ve narrowed it down to specific neighborhoods, you can start looking for some condos in the areas that seem suitable – especially if you don’t want to go through a realtor. There are many online sites that make it possible to buy a property when forgoing a realtor. Find a few places you like and go to the open house – and note down the things you liked (and, of course, disliked) about each of them. Talk to the owner about hidden service and upkeep fees – which are very convenient but can put a dent in your earnings. Not sure what to look for in a condo? You can always use our Property Finder tool: The tool is AI-driven, and it gives you the option to look through the hottest condos in the best neighborhoods right now. Best of all, you can set the filters according to your needs and wants – from listing price to property type and optimal rental strategy! Sign Up for Mashvisor #3 Finding A Realtor Working with a realtor will be far easier for you than finding the right condo yourself – time-wise, that is. Realtors have more experience closing on a deal – and it doesn’t hurt to have someone on your side. But on the flip side, the wrong realtor could take away a lot of your precious time. Check with the realtor’s previous clients about their experience – reviews are your best friend – and, while you’re at it, check their license and certifications online. Go over your realtor’s current listings and see if they can use the Multi-Level Listing platforms to find you the right condo. #4 Doing A Home Inspection This is one of the neglected steps to buying a condo. Home inspections aren’t mandatory, but we certainly recommend doing one before you present the seller with your offer. These are done by third-party inspectors who will assess the structure and the state of the condo. During the inspection, the examiner will likely assess the state of the wiring, plumbing, and the condo’s structure. Then, the inspector will draft up a report about the condo’s condition – along with any repairs the condo might require. The report will help you gain insight into everything. If the condo requires some hefty repairs, you could use that to your advantage to lower the selling price. Of course, that only applies to the scenario where the condo requires fixing up a few things. If the condo comes with severe structural damage, though, the renovations could take months – and that isn’t worth your time or money. #5 Making An Offer Okay, you did the inspection, the next step to buying a condo is making an offer. How does that work? When looking for a condo with a realtor, it could be a bit simpler to make a deal than relying on your own negotiating abilities – especially if you have zero experience in the field. Keep in mind that most people selling their condo will set a higher price than what they hope to get because they know buyers will try to negotiate a lower price. To figure out what a suitable offer would be, research the average price of a condo in that area, look up how long has that particular condo been on the market, and whether the seller is in a rush to sell. All that can help you reduce the current price of the condo and help you get a price that’s more than fair. If the seller rejects your offer, they’ll likely present you with a counteroffer below the listing price. Next, you can negotiate the processing and closing fees. Speaking of negotiations, can you negotiate HOA fees? No, HOA fees are typically non-negotiable; the only fees you could negotiate are the processing fees. And even those cannot be lowered – but the seller of the condo could cover them. When you finally agree on the price, the realtor will draft up the price agreement signed by the seller and you, the buyer. #6 Applying For The Loan Once you have set up the price for your dream home, it’s time to apply for the loan – usually a mortgage. Speaking from experience, this is where the problems are likely to start for the real estate investor. The problem with loans is that the borrower/user of the loan has to be approved – and so does the condo. Not every condominium unit can be approved because not every condo project can be approved for a Federal Housing Association (FHA) loan. FHA loans are among the most popular ways to get a mortgage because of the lower credit score requirements and a lower condo down payment required for the application. What could happen, though, is that your condo isn’t approved for an FHA loan, meaning you’ll have to apply for a standard mortgage. Unlike FHA loans, which are secured with government or federal housing, standard mortgages are secured via private lenders like banks and credit unions. People with an excellent credit score might opt for the standard, conventional mortgage rather than an FHA loan. You’ll need to apply for condo insurance to get the loan, but luckily, you can apply for an insurance plan online within minutes. So, that part should be easy. #7 Meeting The Board Having a condo without a Homeowner’s Association is virtually impossible; the two go hand in hand. Here’s the thing: Every condo comes with the Homeowner’s Association – and each condo owner or resident is required to pay a maintenance fee each month to maintain the community areas of the condo. These fees can be pretty affordable – but they could go over $1,000 in some instances. Of course, there’s a reason why you were looking to buy a condo unit rather than a house – and that’s the hassle-free way of living. The Homeowner’s Association takes care of everything. However, they’ll also have rules all residents must abide by, like the noise level in the shared areas or the number of pets allowed in the condo. When you finally find the right condo for yourself and your family, you’ll have to ask for approval by the HOA of that condo building. Your application needs to include a financial statement, from your income levels to expenses and holding assets. Sometimes, it may even be a good idea to attach a cover letter – if allowed, of course – where you can include professional and personal references. Extra Tip: To make your application for approval a stress-free experience, research the board beforehand. Look up the rules and regulations to gain a better insight into their works, and you’re more than likely to get approved if you follow the protocol to the core. #8 Signing The Papers Congrats, you made it! Signing the papers is the last part – the seller and you, the buyer, will agree on the terms and sign the contract written by a real estate attorney. And when the contract is signed, your loan application will be finalized, as well. That’s where you will need to prepare all sorts of documents to finalize the loan – the so-called “clear to close.” When you get the “clear to close” from your lending institution and the written approval from the HOA board, you can schedule the closing date. Before the closing date, you should get the insurance policy for your condo unit – if you haven’t already – starting on the closing date. However, if you’re financing your condo with a mortgage, your loan application likely required you to get condo insurance beforehand, so you already got that part covered. The closing date is typically a few weeks after you get an accepted offer and get approval from the HOA board. During those few weeks, you will sign the loan contract, get a certified check for the transaction of the funds to the seller, and after all that, you will sign the closing disclosure. The closing disclosure is a document containing all the closing costs and fees you must pay, like the title insurance, filing fees, the HOA association fees, and escrow fees. What To Keep In Mind Before You Buy A Condo? We’re not done yet. Before taking any of the steps we’ve covered above, take a moment to think about your lifestyle – and whether a condo can fit into it or not. So, are you the condo type? Condos are usually located in urban areas – and almost exclusively in downtown areas. Living in condos is all about convenience – you are located in the heart of the city, and there are likely banks, grocery stores, and other convenient places built right into your building. That also means you’ll be able to take advantage of these shared amenities and common areas, such as playgrounds, pools, gyms, and other public spaces. Moreover, condos typically come with lower maintenance requirements; you don’t have to deal with the upkeep of single-family homes and townhouses. However, all that comes with a cost: While you don’t have to worry about painting the exterior, mowing the grass, and all that upkeep stuff, someone has to – and you, along with your neighbors, will have to cover the expenses as part of your monthly HOA fees. That brings us to our next point – the Homeowner’s Association. One of the things that go hand in hand with the condo is the Homeowner’s Association. As we mentioned earlier, the condo board issues a series of rules and regulations that residents must abide by if they want to live in the condo. If that’s a bit too much for you and you don’t like the idea of having to follow a strict set of rules, you might want to rethink this whole condo-buying idea. Another thing to consider would be the noise and traffic congestions. You see, most condos are situated in urban areas; some level of noise is to be expected – along with bright lights during the night. If that seems like something that would bother you, again, you should reconsider your decision to live in a condo. Condos are a fantastic choice for individuals who want to live in urban areas and are willing to embrace all the aspects of this lifestyle – the good and the bad. The Bottom Line Okay, you’ve decided to buy a condo. As you’ve had a chance to see in this guide, that’s merely the first – albeit monumental – step, though. Buying a condo will be a process – and a lengthy one, might we add. If you require further assistance, don’t hesitate to get in touch. Sign up for Mashvisor’s services, and we’ll help guide you through the housing market! Start Your Investment Property Search! START FREE TRIAL CondoInvestment Property AnalysisProperty FinderProperty SearchReal Estate Videos 0 FacebookTwitterGoogle +PinterestLinkedin Dejan Kvrgic Dejan is a content specialist with a real estate & marketing background. Since 2013, he’s been helping businesses in various industries thrive in the digital world. In his free time, he’s a recreational drone pilot and basketball enthusiast. Previous Post Where to Find Airbnb Statistics for Your Investment Property Next Post How to Predict the Airbnb Performance of an Income Property Related Posts Pros and Cons of 5 Different Types of Residential Properties Best Type of Investment Property: Multi-Family Home! Is Multi Family Real Estate Management Compatible With Part-Time Real Estate Investing? Are Efficiency Apartments Good Real Estate Investments? Should you be investing in studio apartments for rent? Is Owning Apartments Profitable as a Real Estate Investment Strategy? How to Get Started in Mobile Home Investing Should You Invest in Studio Apartments for Sale? 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