Should You Consider Buying A Condo?
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I'm often asked by my buyers whether buying a condo versus a single family residence is a good investment. It depends on your needs, below are some things you should consider. If you'd like to learn more pros and cons about buying a condo and you don't have a Realtor, I'd be happy to help you with your purchase. Please call me at (800) 477-0075 or submit an inquiry, click here. - Kevin Nakano
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According to the California Association of Realtors, condominiums (condo), community apartment projects, stock cooperatives, and planned developments are the various types of common interest developments (CID) in California. When a buyer purchases a unit in one of these developments, the buyer typically is also purchasing a pro-rata share of the common area or the buyer has an interest in the association that owns the common area. A condominium is characterized by the nature of ownership, title to an individual unit; and Undivided interest in the common area. (Cal. Civ. Code § 4125.)
Below may be considered positive aspects of buying a unit in a CID depending on your frame of reference:
- Homeowners' Association (HOA) enforces rules
- HOA may maintain exterior of building, roof, common areas, insurance, etc.
- Some developments have amenities like clubhouse, pool, exercise room, community gates, etc.
- Enables some buyers to live in what they perceive to be a better neighborhood at a more affordable price
- HOA rules may limit or prohibit all together owners renting their units to tenants.
- And so on and so forth...
Below may be considered negative aspects of buying a unit in a CID depending on your frame of reference:
- HOA enforces rules
- HOA dues, fees, fines, special assessments, etc.
- Garage parking may not be available
- May be limited or no guest parking
- Condo developments may not be approved for all types of buyer financing
- HOA rules may limit or prohibit all together owners renting their units to tenants.
- And so on and so forth...
Do units in a CID appreciate in value? CID units have the potential to appreciate in value, but note that value is driven by many factors and one factor is desirability. Are CID units as desirable as single family residences to the entire spectrum of buyers in the greater Sacramento area? Generally speaking, no. CID units typically appeal to a specific segment of the population, like buyers that don't want/need large front and back yards, buyers that don't mind shared walls/less privacy, buyers that don't want to deal with maintaining the exterior/landscaping of the property, etc. I've helped many buyers purchase units in CID over the years and some of my buyers only purchase CID units exclusively.
If you're an investor buyer, some HOA rules limit or prohibit all together owners renting their units to tenants, so you'll want to verify prior to purchasing. Also, if you are allowed to rent to tenants, keep in mind that owners are typically responsible for HOA rule violations by tenants and the corresponding fees/penalties/liens.
Please note, these are not all of the considerations a buyer should review/evaluate when purchasing a unit in a CID. Buyers are advised to verify all information above. Also, buyers are advised to carefully review HOA documents and refer any questions to the appropriate professional: attorney, tax professional or other licensed professional.
Below may be considered positive aspects of buying a unit in a CID depending on your frame of reference:
- Homeowners' Association (HOA) enforces rules
- HOA may maintain exterior of building, roof, common areas, insurance, etc.
- Some developments have amenities like clubhouse, pool, exercise room, community gates, etc.
- Enables some buyers to live in what they perceive to be a better neighborhood at a more affordable price
- HOA rules may limit or prohibit all together owners renting their units to tenants.
- And so on and so forth...
Below may be considered negative aspects of buying a unit in a CID depending on your frame of reference:
- HOA enforces rules
- HOA dues, fees, fines, special assessments, etc.
- Garage parking may not be available
- May be limited or no guest parking
- Condo developments may not be approved for all types of buyer financing
- HOA rules may limit or prohibit all together owners renting their units to tenants.
- And so on and so forth...
Do units in a CID appreciate in value? CID units have the potential to appreciate in value, but note that value is driven by many factors and one factor is desirability. Are CID units as desirable as single family residences to the entire spectrum of buyers in the greater Sacramento area? Generally speaking, no. CID units typically appeal to a specific segment of the population, like buyers that don't want/need large front and back yards, buyers that don't mind shared walls/less privacy, buyers that don't want to deal with maintaining the exterior/landscaping of the property, etc. I've helped many buyers purchase units in CID over the years and some of my buyers only purchase CID units exclusively.
If you're an investor buyer, some HOA rules limit or prohibit all together owners renting their units to tenants, so you'll want to verify prior to purchasing. Also, if you are allowed to rent to tenants, keep in mind that owners are typically responsible for HOA rule violations by tenants and the corresponding fees/penalties/liens.
Please note, these are not all of the considerations a buyer should review/evaluate when purchasing a unit in a CID. Buyers are advised to verify all information above. Also, buyers are advised to carefully review HOA documents and refer any questions to the appropriate professional: attorney, tax professional or other licensed professional.
Return to Homebuyer Resource Center page, click here.