Buying in to the condo lifestyle may have trade-offs that only you can decide if best
– Price. Depending on where you live, the purchase price of condos might exceed that of a freehold property that you find suitable. Moving to a condo doesn’t necessarily mean downsizing to a cheaper home — especially if you’re upsizing the luxury and lifestyle.
– Appreciation. If you’re treating your home as an investment, some sources warn you may not see as high an increase in value on a condo over time as you would with a house. You may want to compare past real estate prices in your area to see how the numbers compare. Similarly, prices within an association may be more 'protected' in that your values are more tied together. Naturally this varies if there are varying design styles.
Also, just like owning a home, major repairs and renovations won’t necessarily raise the value when it comes time to sell. Even if the purchase price might be lower than a house, the overall cost of ownership could be higher. And just because you spent 3 months away traveling doesn't mean the windows don't need cleaning and the furnace filter unchanged.
– Condo fees. Like other types of homeownership, the costs don’t disappear when you pay off your mortgage. Monthly condo fees can range depending on where you live, what’s included in the fees, and what amenities you have. Perks like swimming pools and exercise rooms can add to the costs, and older buildings generally need more repairs and maintenance. Only you know best if the benefits match your goals.
Like most expenses, condo fees can increase over time. High fees can make your home less appealing to future buyers and ultimately cut into your profit. Condo fees in a fully managed Association might include insurance rates that a different Association, self-managed, that bills separately. This can weigh into why a buyer buys at one Association or another. Some people may like the lower and self-managed, but others may say you get what you pay for.
– Special assessments. If a condo board goes over budget, the costs will be passed to you. For example, if your condo fees include water for the swimming pool and a new liner needs to be installed, you have to pay your equal share of the shortfall. When some owners use more of a common element than others, like maybe a tennis court, everyone pays. It's like buying a house that has a 4th bedroom that would be unused. Only you will know best if the Association 'fits' your own goals and lifestyle.
Likewise, if major repairs are needed that the reserve fund can’t cover, you’re likely required to pay up. In buildings with more units, there are more people to cover the costs — or incur them.