Before making a real estate investment, determine whether the property will be worth the time, money, and effort. Condominiums can be affordable housing and can also be an investment, providing income for owners when rented out. Continue reading to find out how owning a condominium affects finances.
What is a Condo?
A condominium is a large building that houses many small units owned by different people. People who own condominiums share common areas and amenities with the other condo owners. These areas include pools, exercise rooms, group rooms, and parking lots. Condominiums also have condo associations, which are usually responsible for taking care of these common areas. A condo association will, in turn, have condominium insurance that helps to cover the cost of any repairs that may be necessary.
Homeowners purchase a condo for its selling price, but they also usually must pay additional fees, such as condo association fees. These fees are required monthly payments that help with the day-to-day expenses of the condominium building. These expenses may include maintenance, repairs, the salary of condo staff people, and utility expenses. There are also likely to be joining fees, electricity, water, and other charges. Often, owners also must pay for any improvements in units.
Benefits of Investing in a Condo
Condominiums provide many benefits that are often not available in a single-family home. Pools, gyms, spas, and playgrounds can be difficult to find in single-family homes, and even when they are available, homeowners are often not able to afford them. Many homeowners enjoy having these perks with a condo.
Condos typically require less maintenance. The condo staff usually mows the grass, cleans gutters, and keeps roofs in top condition. Condo owners often have 24-hour security and even fire sprinklers.
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Condos are often less expensive than traditional homes. They also tend to be easy to rent out, because of the amenities and low maintenance. Many investors can purchase a condo, and then rent it out for the full cost of the mortgage payment.
Cons of Investing in a Condo
Depending on the area and the type of condo, association fees can be expensive. These fees can also increase over time, leaving condo owners with more bills than they bargained for.
Owners are always contributing toward the building’s maintenance, and sometimes they must even pay for heat, water, sewer, cable TV, and trash collection. These items may cost considerably less for homeowners who live in a traditional home. Owners who are handymen themselves can be frustrated because they can’t use their skills to lessen the expenses. For example, they can’t shovel the snow or mow the lawn, but instead, they must pay the association, and then the association pays someone to do it.
Condos are typically smaller than the average home. While this may be acceptable for single homeowners or couples, larger families may find it difficult to fit into a condo. While the common amenities may be nice, they also decrease the privacy that homeowners have. Instead of enjoying a backyard or a private pool, condo owners share the amenities.
There are pros and cons to owning a condominium. Condo investment may be perfect for some individuals, and condos can sometimes even be a great investment. Be sure to consider all of the factors before jumping into condo ownership.