Before you buy the condo, contemplate the assessments
When the condo assessments are more than your mortgage
I had a fun time creating an Excel doc full of homes I wanted to see during the condo viewing part of my homebuying process. There was one condominium in particular that I fell in love with from first glance.
It was right across the street from the lakefront, with bright yellow walls (that were oddly attractive even though I don’t particularly like yellow), had a duplex staircase going from the living room to the bedroom, a small storage space underneath the stairs, and a reasonably sized kitchen. I winced at there being no parking options because this was a crazy busy street. However, considering this condo had more than 20 floors, I already knew they wouldn’t be able to juggle parking spots for everyone. I still planned on putting myself on the waiting list.
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I looked at the price of the unit and was stunned to find out how cheap the mortgage was. It was only one-third of the price I was paying in rent. I knew there had to be a catch somewhere. No place this gorgeous is just cheap for no reason. Then I realized how much the condo assessments were: $600. For some cities, this may not be a big deal. But I’d taken note of at least 20 places I was interested in, and the assessments were always somewhere between $200 to $300 per month.
In all fairness, if I totaled the mortgage plus the condo assessments, it was still cheaper than what I was paying for rent. I could’ve swung it. However, the condo assessments for this place became problematic when I found out that they covered things like pool maintenance, but it didn’t cover the kind of bills I really needed it to take care of. When potential homeowners are looking for a new condo to buy, always make sure to understand whether the condo assessments cover day-to-day living needs, including:
Heat
Water and sewage
Electricity
Maintenance (ex. lobby cleaning or parking lots)
Garbage
Exterminators
Plumbing
Some condo associations charge higher amounts to cover household needs like this, on top of potential repairs. While the rate may seem high initially, if it takes care of common bills so you can just work on rare expenses (like appliance insurance), it may work to your advantage.
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Get comfortable with reading condo meeting minutes
When you’re in the buying process and get as far as reading meeting minutes, pay attention to how often those condo assessment rates increase. If you would be spending a boatload of money on your mortgage, the condo assessments and utilities, you may want to look elsewhere.