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Me and the Mrs. have started talking about selling the house and moving into a condo. With only one kid in the house and we don't spend much time in the yard anymore. The property value is declining and i'm getting tired of the upkeep. I've looked at some pretty nice condos online that I like. My only concern is sharing a wall with neighbors who blast their music. I would hope the walls are thicker then apartment walls. Also when we have grandkids not having a yard for them to run around in. Then again many places have playgrounds on sight and do kids really go outside anymore?

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Me and the Mrs. have started talking about selling the house and moving into a condo. With only one kid in the house and we don't spend much time in the yard anymore. The property value is declining and i'm getting tired of the upkeep. I've looked at some pretty nice condos online that I like. My only concern is sharing a wall with neighbors who blast their music. I would hope the walls are thicker then apartment walls. Also when we have grandkids not having a yard for them to run around in. Then again many places have playgrounds on sight and do kids really go outside anymore?

 

Sorry for the late response. We just sold our condo after a couple of years, no regrets. Noise is really not an issue, the common walls are generally double drywall and well insulated. Makes it a pain to mount the TV, but otherwise no issues. We had a little yard, so that was nice, and the kids played out there quite a bit but it wasn't much of a yard.

 

Watch out for high HOA fees, otherwise I haven't a complaint about my condo.

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Agree HOA fees in some condo buildings are outrageous! Especially in highrise buildings. In Chicago you can expect to pay $400+ in monthly HOA fees for a standard high rise condo. Those easily climb to $750-$1k+ a month if you go up to a luxury condo. And for what? Doorman? Window cleaning? Pool maintenance? Seems like its just money down the drain.

 

I recommend renting. Why buy when you don't even know if you'll like condo living? And renting allows you to try living in different parts of big cities if you're up for moving every few years. Plus with one kid left in house it sounds like you're close to retirement so travel and living in warmer climate might be in your near future.

 

I own a few residential properties but I rent them all out and choose to rent in a high rise downtown Chicago. I think you'll be amazed how much your life free's up and stress level goes down when you're not burdened with a mortgage, home repairs, possible declining home value, a suburban house full of clutter etc.

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I think for a party that doesn't want to deal with home upkeep but wants to stay somewhere for a long time, they make a lot of sense. Yes, hoa fees can be pricey, but they also cover a lot (especially home insurance on the exterior). Where I live, OKC, you can buy condos for dirt cheap. There are numerous ones less than 50k. However, here at least, they, typically, do not appreciate and can be harder to sell.

 

If I was considering it, I would verify a few things:

 

1) HOA fees.

2) Neighbors. VERY important, as you're going to be there for awhile. Check it out thoroughly and ask around.

3) Recent sales. How long are they on the market for and final sold price.

4) Comparable places to rent. No strings attached and less stress involved.

 

Owning property can be a great thing from a financial perspective (if you know what you're doing), however that doesn't always equate to a happiness perspective.

 

Best of luck.

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Ha, liver transplant surgeries aren't cheap bro. Neither are divorces!
The foreclosure rate right now is through the roof currently in the U.S. Divorce one is still high too. You would have interest sir. Amazing how alcohol can bring people together.
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Watch out for high HOA fees, otherwise I haven't a complaint about my condo.

 

That was one of my concerns. They don't often increase those rates do they?

 

I recommend renting. Why buy when you don't even know if you'll like condo living? And renting allows you to try living in different parts of big cities if you're up for moving every few years. Plus with one kid left in house it sounds like you're close to retirement so travel and living in warmer climate might be in your near future.

 

I don't know, rent increases yearly and almost force you to move every few years which I don't want to do. As nice as retiring someplace warm sounds we don't want to stray too far from family and friends.

 

I think for a party that doesn't want to deal with home upkeep but wants to stay somewhere for a long time, they make a lot of sense. Yes, hoa fees can be pricey, but they also cover a lot (especially home insurance on the exterior). Where I live, OKC, you can buy condos for dirt cheap. There are numerous ones less than 50k. However, here at least, they, typically, do not appreciate and can be harder to sell.

 

I fall into this category. I was shocked at how cheap they were. The HOA fees run between 150-250 in the areas I'm looking into. That don't seem too bad. I'd expect our kids will have to worry about selling it.

 

You can live with me. My basement is only 200 a month. lol, you have to drink with me though....

 

http://myreactiongifs.com/gifs/thumbsupcomputerkid.gif

 

Dude, I would get you so hammered, you'd let me post my Hillary 2016 signs in the front yard:drunk:

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Agree with everything Domer Dude said. HOAs are the biggest downside to condos. The other is selling a condo because they're so cookie cutter that buyers can find 10 condos on the market that are basically the same layout/finishes as yours. Can't sell and want to rent it out? Have to have the HOA approve that too. Those two reasons are why I would rent and never buy a condo in a highrise unless I absolutely loved the area and didn't care about money.

 

Sounds like you're looking in a smaller city and low to mid-rise anyways. Do you have any 2-4 flat multi-units in your city? My suggestion would be to buy a newly renovated 2 flat and live in one unit that's duplex down or up and then rent out the other. Cover most of your mortgage....No HOA cause you own whole building....and then you get the benefit of ownership, low interest rates and high rents! Plus more storage like garage, storage rooms, etc.

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That was one of my concerns. They don't often increase those rates do they?

 

They can, it all depends on the board. There are a million issues when it comes to HOA and politics and a lot of them stem from the housing crash a few years back, here is the BASIC idea of how HOA dues work:

 

1. When an HOA is formed after the condo project is handed over to the HOA by the builder, the HOA orders a reserve study from an accounting firm (Yes, a stupid place to get it but it is what it is). A reserve study basically lists out all of the components of the community and their usable life span (Paint, wood trim, ornamental iron, fences, gutters, asphalt, etc...). The HOA then generally pursues a quote for each of the items to be replaced every X years as according to the reserve study. This forms the basis of your HOA dues. In a perfect world your HOA dues would go simply to maintaining your own property by having the components replaced periodically.

 

2. Once the baseline is established, the community gets quotes for all communal services (Groundskeeping, pool, spa, gym, etc...) and factors those recurring monthly or periodic costs (including utilities) into the HOA dues.

 

3. The HOA generally then builds a percentage cushion into the monthly dues for special projects and for emergencies.

 

The housing bust caused issues because a lot of homeowners simply didn't pay their HOA dues, and even though the HOA can lien the property it amounts to nothing but a PL write off when the property is foreclosed on. Also, if your HOA board (Voted on by the residents) is not knowledgeable or deep thinking, you can get into trouble. Case and point: Our community started having pinhole slab leaks a couple years back. The HOA would pay to have them fixed. The cost was high because the leaks caused mold, damage, etc... The HOA spent 750,000 repairing the problems as they arose without researching the cause of the issue. This becomes a exponential deferred maintenance issue because the reactive cost of fixing was 10 times the cost of the proactive fix. As a result, the HOA ate through all of the reserves repairing the issues only to find out that EVERY unit had to be repiped with PEX piping because the copper pipes were reacting to the chloramine in the water and started to leak.

 

So they raised our dues from 280 to 420 over the course of a year, a special assessment, to deal with the repiping a project. We could do nothing as homeowners but vote the board out, which the residents did not do. *shrug* So you can complain about it, you can bitch, and you can ask when they are going to lower the dues again, but they are not forced to do so, they are elected.

 

There are a lot of other little nuances that go into dues, assessments, etc... Lawsuits, interest payments from HOA savings accounts, reimbursements, and more, but that is a thousand foot overview.

 

So short story long, no they do not typically do it, but if you have a board who is reactive and stupid, you will pay the price for it. I read as much as I could before I moved in about the HOA meetings, read a lot of the minutes of the meetings and such, for what it was worth. Do the legwork, if you see a community that has a rather large gap between dues and amenities and between it's dues and the next comparable community, be suspicious.

 

That said, I still like Condo living, just have to be cognizant of the different facets.

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What kind of condo - townhouse, low-rise, high-rise, big city, small city, parking, garage, storage?

 

We are looking for like a quad or double. Three bedrooms 2 baths, garage. Living in a house for so many year in never notice that those storage places that you see everywhere are always near apartments and condos. I would rent one of those if need be but we don't have a ton of stuff laying around.

 

Get the history on HOA dues going back 10 years, know the maintenance schedules and who pays what, know how much they have in reserve. Are there any large bills coming, does a roof or furnace need replaced, etc? When you buy into a condo you are buying into the HOA. Know them before you buy.

 

I love our HOA.

 

Water. When water leaks/lines break it goes down through every unit in the building. 10 floors had water damage with some total guts (walls, ceilings, floors), twice in our building. Know the rules on who pays for what. Get the history and what is required for prevention in each unit. Was there previous damage in your unit?

 

good stuff to know. Thanks.

 

Agree with everything Domer Dude said. HOAs are the biggest downside to condos. The other is selling a condo because they're so cookie cutter that buyers can find 10 condos on the market that are basically the same layout/finishes as yours.

 

Sounds like you're looking in a smaller city and low to mid-rise anyways. Do you have any 2-4 flat multi-units in your city?

 

I've seen some condos listed in the same complex with huge differences in listing prices when they are pretty much identical. You can remodel can't? replace tile, cabinets, counter tops, knock down a wall?

 

We'll be in a small city probably a single story 2-4 unit.

 

So short story long, no they do not typically do it, but if you have a board who is reactive and stupid, you will pay the price for it. I read as much as I could before I moved in about the HOA meetings, read a lot of the minutes of the meetings and such, for what it was worth. Do the legwork, if you see a community that has a rather large gap between dues and amenities and between it's dues and the next comparable community, be suspicious.

 

That said, I still like Condo living, just have to be cognizant of the different facets.

 

So you also want to avoid places where there is a lot of empty units. I really appreciate the info you guys are giving me. One of the things that jumps out to me is a HOA price hike could screw you because as others have stated, condos can be hard to sell, add a huge HOA fee on top of it, nightmare. The thing is for us if we sell our house and get a good deal on a condo we like, we could pay cash.That would gives us some flexibility.

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Others have given good advice. How big is the community you would be buying into? With smaller buildings, the amount of potential surprises shrinks (think emergency tuck-pointing of a 30 floor brick building and the cost of that), and if there are enough units to spread the risk, you shouldn't have too much to worry about.

 

As others have said, read the HOA rules and regs cover to cover. Can you rent your unit if you have to? What percentage of units in the complex can be rented? Can you fly a flag? Have a grill? Some stuff seems petty until you try to do it and find out you can't.

 

Also, try to determine the current occupancy rate of the complex and see how that compares to the historical rate and the current budget. If you are at a histroically high occupancy, but barely making budget, what happens in another downturn? Our rates just went from $270/year to almost $500 because of a 20% loss in occupancy.

 

Try to find out what happens if they don't make budget one year. Do they increase rates or cut services? Or both? Which services get cut? We had a budget shortfall and the lawyers got paid, but services were cut.

 

Based on what you are describing, I think you are pretty safe from anything too dramatic. As long as the HOA has decent reserves and a budget that includes long term maintenance like roof repair and siding, they can absorb quite a bit.

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So you also want to avoid places where there is a lot of empty units. I really appreciate the info you guys are giving me. One of the things that jumps out to me is a HOA price hike could screw you because as others have stated, condos can be hard to sell, add a huge HOA fee on top of it, nightmare. The thing is for us if we sell our house and get a good deal on a condo we like, we could pay cash.That would gives us some flexibility.

 

I think the idea of the condo being hard to sell is a bit dated really. We listed ours at market and sold it in seven days, and that was with the ridiculous 420 dollar HOA. But I am sure it is tougher depending on where you live.

 

Over a long enough timeline, all property appreciates in value (Outside of Detroit). Keep an eye out for red flags like short land leases and lots of empty units and you will be in good shape. It is always worth googling the HOA and community you are interested in to make sure everything is on the up and up, read the CR&Rs carefully, talk to the neighbors. No one wants to lose money, but if you aren't starting a new family, a condo is a great option. We had quite a lot of retirees and grandparents in our neighborhood for that very reason. They would sell their houses and buy a nice condo with low or no payment because they didn't need as much space anymore.

 

The upside of the HOA is that they do handle things like roofing repairs, painting, wood trim, stucco, etc... for they own everything outside the drywall. It isn't all grim.

 

Good luck!

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