Condos

Boy, did condos catch on.  When the word condominium was introduced in the real estate market place in the late sixties, no one really understood it.  I remember as a seven year old kid, going through my first so called condominium with neighbor friends of mine.  Today, condominiums are built in every major metropolitan area of the country.  They are international as well.

The great concept to condominiums is you’re able to enjoy the benefits of real estate ownership without all the hassle of maintenance.  In condo living, you’re the owner of everything within your four walls.  You own that space along with a percentage of the common areas as well, such as the pool, the landscaping, parking lot, etc.  Each month there are fees called “association fees” that each condo owner has to pay to handle the expenses of the condominium complex.  They involve the electric to light the condo complex, the heat, the garbage removal, long term maintenance, short term maintenance, hallway cleaning and a host of others. 

The way the condo association fees are estimated is by taking the expenses from the previous year and adding an additional 5%.  Then they take that total and divide it by twelve months giving a monthly total for expenses.  Then they divide that total among the condo owners based on their percentage of space owned in the building.  This figure will be the month association expense you will pay in the complex.  If the complex expenses exceed what is estimated for a year, there will be what is called a special assessment that all owners will have to pay in to.  This will happen on occasions and you’ll need to be aware of this.  Once in a while, you’ll find that a major component of the building needs to be replaced like a boiler heating system and there is not enough of money to cover this in the association reserve.  This will also be invoiced to you as a special assessment and you’ll be obligated to pay your portion of it based on the percentage of ownership you have in the complex.

It may sound dangerous to buy in to a condominium not knowing what might happen with all the what if’s, but as long as the property is managed decently, the chances of you benefiting by being an owner of real estate is much higher than that you having a negative situation of having to pay more into the complex than what it’s worth.