Condos can look enticing. In hot real estate markets, they may appear more affordable than traditional homes. But there’s a lot not to like about condos. If you’re considering purchasing a condo, here are a seven things to look out for:

  1. Condo Fees: Any condo is going to have a fee. Usually this is referred to as a Home Owners Association (HOA) fee on the MLS listing. Make sure to factor this fee into your monthly payment calculations. When you’re calculating the long-term cost of ownership, make sure to index this fee to inflation. It will go up.
  2. Condo Assessments: Did you know that just paying the condo fee may not be the full extent of your financial obligation? When something major needs fixing like the roof, the boiler, or all of the windows, the Condo association can levy an assessment on all of the owners. This is a lump sum of money you have to pay in a certain period of time. I’ve seen major assessments run into the $15k-20k range per owner! The Condo association can tell you whether they have anything immediately planned and this can be a point of negotiation in a sale. If there is an upcoming assessment you can often get the seller to pay all or part of it in the closing.
  3. Condo Association Financial Health: When evaluating the above fees and potential for fees it can be useful to know how the Condo association is doing financially. Your realtor should request financial statements from the association as part of the due diligence, but here are some common questions to ask:
    • Does the association maintain a large reserve to cushion or prevent assessments? If the reserve is small or non-existent, you should expect periodic assessments for major repairs.
    • Has the HOA fee been steady for many years?  If so, it may be due for an increase. If it has been increased recently, you should find out why. Sometimes a recent increase is a signal that deferred maintenance is becoming critical.
    • Are any units behind on their dues or past assessments? While the condo association can put a lien on a unit for non-payment, often the other owners in the association will be stuck with paying necessary expenses for units that are in default.
    • What’s the composition of the Condo association leadership? Are they owner-occupiers or landlords? Landlords often want to keep the monthly fee to a minimum in order to maximize cash flow at the expense of association reserves and maintenance. Owner-occupiers tend to take better care of the property but can be busybodies when it comes to association rules.
  4. Condo Association Rules: These can be the pits. Everything from whether you can use an antenna for TV to the color you can paint your front door. Common are restrictions on pets and on renting out your unit. Maybe these don’t bother you… but it’s worth giving them a hard look before buying.
  5. Condo Governance: Some associations are super chill. Other are run by Atilla the Hun. Somewhere in between is a happy medium where the major rules are enforced and common sense reigns.
  6. FHA Lending Rules: If you need an FHA loan (and if you do, you probably shouldn’t buy until you don’t need FHA), buying a condo comes with additional restrictions. There are many, but the big one is that at least 50% of the units need to be owner-occupied.
  7. Your Neighbors Are REALLY close: Don’t forget to check out the neighbors all around you (including above and below your unit, if applicable). Buying a condo is a much bigger commitment than renting an apartment and you could be stuck with these people for a long time.

All that being said, I know plenty of people who live in condos and are totally happy. I just think that condos deserve a higher level of scrutiny during the buying process.

And while plenty of people could be happy being renters, we’re happy we bought our house (for the right reasons) in 2012.


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  1. I have a friend living in a condo in which the association is made up of largely retired folks who have little to nothing in common with this twenty-something. They can be bad investments if you are in the wrong crowd. Decisions are made that have very little worth to him but are geared toward elderly and retired mindsets.

    1. Yep. It sure seems like owning a condo puts your destiny in other people’s hands. While it might work out… it’s a gamble.

      1. Your buddy must live in my condo area. I have proposed that either they turn it into a 55 Plus community and add amenities for retired older folks or they UPGRADE and give some amenities for all ages. I am over 55 but I am a Boomer and the Boomer gen is not the old fogies gen and still likes some youthful amenities.
        The one damn thing I can’t stand is having to ask the HOA to do ANYTHING including hand a damned wind chime or plant a tree or flowers. And to be sure, there are some anal busy-body control freaks on the Board. One time one of them gave us a hard time about parking in the visitors 2 hour spaces (we were hauling in groceries) and I, being the mature adult that I am and all that, stuck my tongue out at her! She was lucky that I was civil enough to not to curse and flip her the bird. Back in the day that is what I would have done! LOL!

  2. This is an interesting post. It apples to most HOAs, not just Condos.

    Many people including investors buy into an HOA, and they buy there because of the way it looks and the feel of the community. then, when the HOA tells them they cannot do something, they squawk. The reason they bought is going to be ruined by them. But they want to make money, so they think it is OK.

    Often investors buy, and then run afoul of leasing rules. They want to rent their condo, but it puts the 50% owner occupied rule in jeopardy. Once that rule goes out, then no one can sell to anyone but a large down-payment (20%) or a cash buyer. Then, the condo becomes an apartment building to the detriment of those who bought a place to live in.

    1. Thanks for stopping by!

      The financing nuances are certainly restricting. While I don’t think I’d ever buy a place to live in that I also didn’t have the ability to rent… those people do exist!

      Co-ops are even worse, but thankfully not common outside of NYC.

      1. We might want to rent our condo if we can’t sell it and we might be able to get a ‘hardship’ variance if my health goes down hill and I can’t work.

  3. Interesting post…you covered the topic well. Many condo buyers have no clue of the financial health of the HOA until it’s too late. This is really important as it affects the stability of your HOA dues.

    1. Ours covers all utilities except telecom and things like HVAC and roof repairs, so the fee is not outrageous but it keeps going up and they won’t explain WHY it is going up. I have a feeling someone in the HOA has a buddy in the construction business because all they do is repair this and that and they never give added value.

  4. I just moved out of a condo and I’m so happy to be out of it. I think you neglected the most important thing. 1) If you own a house you can go to your backyard, in and out all day, but if you own a condo, you don’t have a backyard and so when you leave your condo you actually have to have a destination in mind. This seems minor but it turns out the higher up in your building you are less likely to leave.
    In terms of finanical, the most interesting thing is imagine you buy a house in a nice neighborhood. If it is a nice neighborhood — probably all the land is developed, so nobody is going to build 100 houses like yours in the neighborhood…. BUT if you have a condo there is nothing stopping people from building another 5000 units (that’s just a few buildings really) exactly like yours only a few blocks away, which creates tremendous downward price pressure on your ‘investment’

  5. I am living in a condo and so far, I don’t have problem with it. Yes,you were right,condo have their rules which do not give you freedom in everything, but I’m okay with it! I am single and has stable job, maybe condo really fits to my status, condo has additional expenses and if you are not aware with it, you will really regret..Better do some research and always think first before investing.

  6. I do agree with all these caveats – if you are in the market for a condo or apartment, you MUST do your extra research or you will live to regret it! If the HOA is a limited company, it may be relatively easy to obtain their financial reports online, without having to go through the realtor/estate agent. That is the case in my country, where the Companies Registration Office charges all of €5 ($6) for such info, and you can obtain it in minutes. Also make sure that the sellers clear any debts with the HOA, or you will be on the hock for them!

    That said, an apartment in a development where all of these things work ok – reasonable fees, reasonable rules, reasonable financial health – can save a lot of headaches otherwise associated with home ownership. That includes everything from taking out the trash to cleaning common areas to landscaping to managing repairs. I also love how my 2nd floor (3rd floor) apartment is fairly safe from being burgled when I am away travelling.

  7. I’ve lived in a condo for 8 years. We always owned houses but thought we wanted to try it out and see if condo life was for us. Our plan was stay 7 years. As it turned out everything was great. We had the freedom to make right off our kitchen into a private courtyard. We also had permission to have the front of our place professionally landscaped in a classic design. Really it’s like we have a smaller home but don’t mow the lawn and all the maintenance on the outside is handled. Our fees aren’t bad either. Really it depends where you live. I’ve lived in homes where there would be neighbors that never mowed their lawn or shoveled the snow. We don’t have any of those problems anymore.

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