Condo Buying Tips
Monday Aug 01st, 2016
Look for a condo that's in a development that has a high ratio of owner-occupants to renters. Some lenders won't lend on condos that have a high rate of absentee ownership. Also, owner occupants tend to be more concerned about keeping things going well in the development.
Find out what the condo fees are and what is covered by this fee and include it in your costing. Some condos prohibit pets, and some have parking, storage and renting restrictions. Read and understand the Covenants, Conditions and Restrictions (CC&Rs) and any other pertinent governing documents before you complete a purchase.
It's usually best to avoid buying into a condo complex where the homeowner's association is involved in litigation. To find out if there are any other association issues that you might want to avoid, read copies of the minutes from recent homeowner's association meetings. One of the best ways to get the straight scoop on a condo project is to talk with some of the current residents. Find out what they like and what they don't like about living there before you decide to buy.
What are the tax, legal, and financing considerations?
If you decide to invest in a condominium rental property, many of your personal expenses may be deducted from income in addition to the normal tax deductions such as mortgage, interest, depreciation, and other condominium-related expenses.
For example, you would normally be entitled to set up a small office in your current residence for managing your investments, which would include keeping your records. You could deduct a percentage of all your home-related expenses. The normal formula is to take the square footage of the office area that you are using relative to the total square footage in your home. In general terms, 10% to 15% or more is usually deducted for that portion.
In addition, you would be entitled to deduct a part of the car-related expenses involved in managing your investment portfolio, whether it is one rental property or more than one. The percentage of all your car-related expenses can vary, obviously depending on the usage of the car relating to your investment.
If you are seriously contemplating investing in a condominium, it is important to consult your real estate agent and seek the advice of a competent tax and accounting professional, and legal advice from a lawyer specializing in condominium law.