Do Friends Let Friends Buy Condos? That was the message on the bumper sticker on the car in front of me last week. It made me chuckle but then made me think a little longer about what went into the sentiment.
Buying a condominium doesn't have to be a scary or mysterious process and, like planning a wedding without thinking about the potential decades of marriage to follow, deliberation needs to be given to the overall lifestyle choice before signing on the dotted line.
What do you need to think about if you are considering a condominium purchase?
Perhaps the first item on your "To Do" list is to check to see if the condominium community you are considering is FHA approved. In 2009, the Federal Housing Administration announced that it would insure loans on condos only in developments where at least 50% of the units are owner occupied and, for new developments, where at least 30% of the units are already sold. The rules for FHA approval are even tougher for Florida condominiums. If you plan to use an FHA-insured loan for your condominium purchase, you can check if the community is FHA approved at https://entp.hud.gov/idapp/html/condlook.cfm.
Next you should consider if you can easily afford the monthly maintenance fee for your new condominium as well as any unexpected special assessments that might crop up. You certainly can't predict if a hurricane will hit your new home months after purchasing it but you can investigate whether or not the community has reserves for the roof, exterior painting, paving and any other item for which the deferred maintenance or replacement costs exceed $10,000. If the association members have routinely waived or underfunded reserves, please know that this puts you at risk for a special assessment some time in the near future.
Is the community mostly owner or tenant occupied?If that dynamic makes a difference to you, find out ahead of time. Just as important, if you plan on renting out your condominium at some point check to see how permissive or restrictive your community's rules on leasing are. In that same vein, other lifestyle factors which are important to your happiness or livelihood such as owning a pet or pets, driving a commercial vehicle, running a business out of your home, etc. all demand a careful review of the association's governing documents to be sure you can live within the community's framework. If you cannot, don't count on changing the status quo after you move in; better to find a community that meets your current and future needs in this regard. Also, don't count on the fact that the documentary restrictions you find in place at the time of purchase will always stay that way. Association members can and often do vote to change important restrictions and you just might find yourself on the losing end of that vote.
What kind of delinquencies is the community currently experiencing? Again, the answer to this question will impact you in terms of the burden you will be expected to carry. While you are not entitled to a copy of the association's budget, your seller/owner is and should provide a copy to you as well as proof of the association's insurance coverage and information about association deductibles which will again impact your wallet as a new owner.
Finally, talk to a few of the residents you might encounter and look at the community bulletin board, newsletter and/or elevators. Does there seem to be a pervasive feeling of distrust or unease? Is the bulletin board littered with demands for a board recall or accusations of misuse of association funds? If you request your seller/owner to give you a limited power of attorney to attend a specific board or membership meeting, you will have a rare but important opportunity to see how well attended that meeting is, what the hot button topics in the community might be and how the board communicates with those in attendance.
Like any real property purchase, buying a condominium is an important step and can impact your future happiness. If you do your homework and buy in a community that fits your needs, the answer to the question "Do friends let friends buy condos?" is a resounding yes!