Diane Weighs in on Condos v. Houses

Diane Crowley tried to leave a comment on my recent post about Condos v. Houses. It was a great comment but too long for Blogger's comment section.

So--

I'm reprinting it here in full:

Hi Grace,
Boy, do I have a lot to say on this subject. I have owned two houses and two condos. I still have one of each so perhaps this makes me qualified to chime in on the subject of condos.

First and foremost, make sure any condo association you're considering has fully funded reserves. Don't buy in one that's not or you will be facing higher dues and assessments. A high level of foreclosures in the development is a red flag, as people stop paying their condo dues first, which strains the association's budget. Another negative is a high percentage of rentals. Banks don't want to see more than 30% renters. Even if you're paying cash, it's an excellent rule of thumb. Attend a board meeting before you buy. Find out who the management company is and speak with them. Most of these companies manage multiple HOA's and can tell you who the good ones are. Make sure the complex has no signs of deferred maintenance. Walk the complex early in the morning and talk to the people who are out walking their dogs. Get a history of dues and assessments. If there were assessments in the past ten years, find out what they were for.

"The Board" is a group of your neighbors, not some evil empire. Many people complain about "The Board", but refuse to attend a meeting. Don't be one of them. If you buy a condo, plan on attending meetings until you are asked to join the board. If you're not willing to do this, don't buy a condo. Same for the rules. Read them first. If you don't like them or find them onerous, don't buy there. The rules are clearly spelled out before the purchase and shockingly few people bother to read them. They then complain vociferously about "The Board" and "The Rules".

I've been in my present home for nearly eleven years and on the board most of that time. Our meetings are rarely over one hour and everyone works together to lighten the load. We are fairly conservative and frugal. To save money, we have a team of volunteers who deliver our newsletters and anything else that doesn't require a postmark. As a result, we kept our dues at $275 for three years. Last year, we reduced the dues to $260, as our reserves are 100% funded and we had a surplus. The rate will stay the same this year. Our dues include care and feeding of three pools and lush, mature landscaping, so we are getting a lot of bang for our hard-earned bucks. The only assessment was over twenty years ago, due to insufficient reserves. We make sure to keep the reserves fully funded and do not anticipate any assessments in the future. In your discernment process, always ask about assessments. They generally loom on the horizon long before notices go out. Get a copy of and actually read the minutes from at least a year's worth of meetings. If there is an assessment coming, it will be in the minutes.

When I went shopping for my current home, I knew I wanted my own driveway, no speed bumps, and a place that looked the same whether I was home or not. I got all of this and great neighbors to boot. My unit is attached to two others. The dog-walking neighbor places our newspapers on our porches every morning. On trash day, the one who is home when the cans are emptied brings everyone's up from the curb. We watch out for each other in lots of other ways, big and small. Last year, we had a neighborhood food drive and collected over 650 pounds of food for the local food bank.

Here's a story about the value of being on the board: When my first condo board announced that there would be an assessment equivalent to 1.5 month's mortgage to replace the roofs, I asked if it was necessary to replace all six roofs at once. We had them inspected and photographed. It was determined that we could do two buildings per year and avoid the assessment completely.

Obviously, I vote for a condo, but it must be the right one for your needs. It's not hard to find if your goals are clear and you do your homework. One myth I'd like to bust is that of taxes. As a renter, you are still paying taxes indirectly. They are included in your rent. Your landlord is paying them with your money. That's part of why rents always go up, roughly on pace with inflation. If you have a fixed rate mortgage, or none at all, your taxes may increase, but it's generally a much smaller percentage of your total budget.

Whew! That was a long one. It's hard to proofread in the tiny comment box, so I hope I've explained things clearly enough to help you with your decision.

Your blog has helped me in so many ways. I hope I can return the favor.
Kind regards,
Diane