Have you been planning to invest in a condo in 2012? Here is a short list of things to consider before you make an offer.
- Look beyond the condo features and fancy finishes. Take a close look at the masonry/tuck pointing, roof, common hallways, exterior stairs, parking lots and garages. If these areas are not well maintained, they can be a source of major special assessments, and can make it difficult to sell in the future. If you are not familiar with these items, ask your realtor, she will be an expert in this.
- Look for a condo that is updated, with kitchen and baths no older than 5-10 years. Otherwise, when you plan to resell the unit in the future, you will have to spend money to update the kitchens and baths. Appraisers consider the age of updates when determining value, and anything 15 years or more is not considered updated or in excellent condition.
- Take a close look at the condo association financials and meeting minutes. Look for the amount of condo replacement reserves, annual operating expenses, and budget vs actual expenses for the prior and current years. A good rule of thumb is for the condo to have an amount at least equal to 10% of their annual operating expense in reserve, and the annual income from assessments should more than cover condo common expenses and a contribution to reserves.
- Size up the condition of the common hallways and look into the percentage of units rented. A building that is approaching 50% non owner occupied may be one that is not mortgage able in the future when you want to sell.
Maggie Finegan, ABR, Move with Maggie Chicago Real Estate Team