In the past, condos were not necessarily considered a good investment for a variety of reasons, however that image has changed dramatically since then. With the high price of single-family homes, condos and townhomes are becoming more attractive to many buyers, such as singles, retired couples downsizing, and small families wanting to buy in great school districts. However, for those home buyers who have only considered a single family home as the definition of home ownership, they may not be familiar with the options available in the form of condos.

Condominiums are buildings in which individuals separately own the air space within the interior walls, floors, and ceilings of their unit, but collectively have an interest in the common areas they share, such as the grounds, lobby, and living spaces. hallways, pool, grounds and parking lot. While many condos are designed to look like apartments or are built in high-rise urban buildings, more and more builders are designing them where they can be called townhouses. Townhouses are generally attached to one or more houses and can range from duplexes and triplexes to communities with hundreds of homes.

In addition to paying a mortgage, each owner is responsible for paying a monthly fee to the condo association, generally known as the homeowner’s association, which is made up of the unit owners. The fee covers maintenance, repairs, land maintenance, and construction insurance.

In the past, condo ownership suffered from a negative image for a variety of reasons, however that image has changed dramatically since then. Once a thorn in the side of homeowners, condo associations have worked hard in recent years to clean up their negative image where there were once disputes and lawsuits. Homeowners associations have gotten smarter and much more professional in property management and have taken steps to prevent problems and legal disputes before they occur. However, there are some downsides that still need to be considered before buying.

1) Monthly homeowners association fee

If there is a homeowners association, you will generally have to pay a monthly maintenance fee that is separate from your mortgage payment. Many condo owners view this expense as similar to the costs they would have incurred for someone to do lawn care and other maintenance if they owned a single-family home. However, you should be on the lookout for unnecessarily high monthly charges and ask to see a copy of the homeowners association’s latest financial statement.

2) Less privacy

There is also less privacy than with a detached single family home. Community living is not always desirable for some people and the noise level generated by living close to other people can influence some buyers to simply look elsewhere. Usually the biggest concern is parking for owners and their guests. However, many condos are being designed with their own garages and have common parking areas available for guests.

3) CCRs can be very restrictive

The CCRs or Conventions, Codes and Restrictions are defined as the statutes that govern the use of the property. Most CCRs are reasonable, but some can be very restrictive. Generally, there are limits to the type of exterior changes or improvements you can make to the property. In addition, you may find, among other things, that they prohibit or restrict pets and rent or sublet units. Make sure you get a copy of the CCRs and review them (they usually have a summary brochure) before deciding to bid.

4) High tenant index

Also, be sure to find out the landlord-to-tenant ratio. Because many condos are often purchased as investments, there could be a high percentage of tenants in the building. Although this trend is also changing, especially in condos that are located in urban areas where they provide convenient shopping, access to transportation and other amenities, which attracts owners who intend to live in their condos.

5) Resale value

In some real estate markets, like Las Vegas and Florida, builders have overbuilt condos and townhouses and are selling at a loss. However, in other real estate markets they have maintained their investment value despite economic downturns and problems with some homeowners associations.

While some of these factors would deter some buyers from buying condos, it may be the right investment for others because it fits your pocketbook and lifestyle. Despite these downsides, the high price of single-family homes in some real estate markets like California and the influx of more individual home buyers into the housing market have made condos relatively important national investments. A professional real estate agent can help and guide you to show you what the best deals are in your market and local city.