Buying your first home is a fun and exciting process; you learn a good deal about real estate and how your finances will be affected. Buying a condo, however, is very different from buying a single-family home. Condos present different financing and insurance guidelines and are typically governed by a homeowner’s association with its own set of rules and regulations. Here are a few questions you need to ask your Realtor, to make sure you have no surprises in the future:

Reserve Fund – Make sure your community has done a reserve-fund review in the past five years. One of the best formulas for this is to use the age of the condo to determine how much work it will need in the next few years. A complex that is between one and ten years old should have a reserve fund of 10% of the cost of the replaceable items, such as roofs, A/C’s and tennis courts. If your prospective complex is between 10 and 20 years old, the repair fund should be between 25% and 30% of the cost of those replaceable items, and if you’re looking at a 20 year old complex, you will want at least a 50% reserve fund in place.

Can you rent your unit? – It’s important to know if you can rent your unit in case you have an unexpected move or loss of income. Most condos who rent over 10% of their building will have specific bylaws set in place. Some condos will help you find a tenant, for a fee, and others may be stricter. If your complex has anything to do with the leasing procedure, make sure you have an attorney look over the lease before signing anything. Also, some condos have a maximum number of units that can rent, so make sure you know whether they’ve maxed out, since some will make you wait on a list

Delinquency Rates – Delinquency rates are extremely important in the world of condos, since the association depends on dues being paid in-full and on-time. If people aren’t paying their dues, there may be some pending litigations, or internal issues you’ll want to learn about. Another reason to concern yourself with delinquency rates is because an underfunded association can become a nightmare. Some associations will drastically increase their dues to try to pick themselves back up, so new owners could be paying for past owners mistakes.

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