Here are three facts you should know about condos before you invest in one.
I think I'm qualified to talk about this, since we have had almost 15 condos for over 20 years. There are potential minefields here although condos can be excellent investments.
1. Beware of Homeowner Assosiation Fees
I have friends who are thinking about buying a $600,000 condo in Nashville. I looked at it, and I like it. It's got location, it's new, well built, etc.
There is one thing that puzzles me; even bothers me. The homeowner's fees are very low for that type of condo.
"Have you thought about the fact that your fees may go up?" I asked my friend.
"Yes, we're expecting that."
I have a feeling she doesn't expect the fees to really jump up.
I think they will. I think the fees are low now to attract buyers and with increased inflation get ready- they're going to probably explode.
2. Bad neighbors
Everyone is living in a cramped space, very close to each other. Some people can't handle that.
I have a tenant now who calls me every few days complaining about the neighbors above her and her claim their water heater is too loud.
I know, it doesn't make sense, but people, especially those in condos, aren't always reasonable.
Should I mention there is a lot of noise in these buildings? They're not libraries.
3.Dumb decisions made on how to spend your money
Okay, I've often called Homeowner Associations- Communist Central Committees.
I know it's a little harsh, but just wait until you get in the ring with those people who want to spend lots of money on tulips, and repaving the tennis courts because they've become a dog restroom, etc.
All of these add-ons can make your fees go up fast.
Your money can be wasted. That's the bottom line.
People like that have to be stopped and that's why you have to get elected to the Homeowner's Association Board which means a lot of your valuable time will be taken up in futility exercises.
So which will it be? Your money or your time?
Am I saying not to invest in condos?
No, but I'm saying you need to make sure you do all your due diligence first. It is vital you know exactly what you are getting into and where your money is headed.
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