Downsizing? Condominium? Should You Buy One?
A condo in Newport Rhode Island
Condominium Living Has Advantages and Disadvantages
This article is for anybody thinking of simplifying their lives by downsizing. Especially for senior citizens, downsizing is a project that should be carefully thought out. It's common, especially for Baby Boomers and those older, to think about a smaller home. There is less maintenance, obviously, lower costs and the satisfaction to be had by making life simpler. Condominium ownership is a wildly popular choice for people looking to downsize, but it's a choice that requires very careful analysis before you make the move.
Condos Can Have Great Views
The Benefits of Condominium Ownership
The idea of a condominium is really quite simple. It's an apartment that you own. Later in this article I will discuss whether you should rent or own. If you own a condominium you are usually one of the owners in a group of apartments. As a member of a group, naturally everybody wants some rules and regulations to ensure that people respect each other's privacy and enjoyment of the property. Here are a few of the major benefits of owning a condo.
1. Maintenance of common areas is taken care of. Especially if you like to travel, owning a condo means that you don't have to worry about your yard or driveway. You pay a monthly maintenance fee and it's all handled. You lock the door and head to the airport.
2. Amenities. It's common in many condominium developments to have amenities available for the residents. These may include a swimming pool, tennis courts, a community clubhouse and a golf course. Some developments also include shuttle transportation to and from shopping and cultural activities. There are even some that include use of a golf cart for getting around the facility.
3. Safety. Because of the density in condo developments, there is a sense of safety in numbers. Neighbors tend to take of each other, and there is always someone around to report trouble. There is no guarantee, of course, because your neighbors are not legally responsible for your welfare.
4. Rules and Regulations. If you own a single family home and your next door neighbor decides to paint his house a shocking pink, display vulgar lawn signs, play loud music and otherwise make a nuisance of himself, you're stuck with the problem. Private homeowners, unless your house is in a gated community with rules and regulations, are free to be obnoxious as their whims take them so long as they don't violate the law. When you buy a condo, you also sign and agree to be bound by the by-laws and the rules and regulations of the condominium association. The association is run by an elected board, and you agree to be bound by their decisions. The typical association is known as a Homeowners' Association, or HOA. You may be required to keep your unit in good repair on the outside. This may include replacing shutters, painting, power spraying mold and just about anything else you can think of that aims to keep your unity looking good.
5. Socializing. If you are a neighborly sort and like interacting with people, a condo development creates endless opportunities for friendship. There are often events such as movies, lectures or performances in the community house. If you are a single family homeowner, you don't get to interact with your neighbors regularly. Some people like this state of affairs. It's your call.
6. Selling your condominium. Real estate values are based primarily on comparable sales. The marketplace enforces this through bank lending which means real estate appraisals. Comparable sales figures are the key to appraising real estate. This can be a two edged sword for condo ownership. It's relatively easy to appraise a condo. If a couple of units identical to yours are sold within the past few months, you will be hard pressed to get much more than what they sold for. Areas all over the United States, especially Florida and Las Vegas, Nevada, have been decimated by the down market, with many condo owners under water on their mortgages. But in an up market, you definitely have a negotiating edge if you sell your unit.
If you're planning to downsize, what are you considering?
The Disadvantages of Condominium Ownership
Just as with the above list of advantages, you may perceive these things to be good or bad. It's really all about who you are, what are your likes and dislikes, and, of course, the preferences of your spouse. There are two major potential disadvantages to owning a condominium.
1. It's not your yard. If gardening and tending to a fairly sizeable piece of property is your passion, you will need to cool your passion in a condo. Your HOA will have strict rules. If you can live with taking care of a small garden in a box on your patio, then this is not a problem.
2. You don't call the shots. How you decorate the inside of your unit, of course, is entirely up to you. But there are decisions over which you have no control. If the board decides on a major upgrade of the entire development and it's approved by the owners, you may be stuck with a very large assessment. A private homeowner makes all the decisions on maintaining a home. Can you get two more years out of the roof? Go for it. Will a patch here and there do the trick? You control the purse strings. This is not so with condo living.
A Ranch House
What Are Your Alternatives?
A smaller house. Remember, this article is about downsizing your living space. If all of the condo rules and regulations and the giving up of a certain amount of freedom bothers you, there is one simple alternative. Buy a small house, preferably a ranch house if you are getting up in years. If your property is modest in size, the cost of a landscaper should not be too great. If you like to travel, consider hiring a contractor who agrees to look in on your house every day or two. The cost of hiring outside help may be lower than the monthly maintenance costs of a condominium. Interior upkeep and repairs are your responsibility in a condo, so there is no financial difference here.
Should you consider renting? If you can get past the psychic joys of ownership, renting may be just the option for you. You can take the money you would have put down on a house or condo and invest it or splurge. Caution: I do not recommend renting a single family house. You have no control over the landlord's decision making, except during the term of the lease. If he decides he wants to sell after your term is up, you have to move; it's that simple. If you rent an apartment, you are dealing with a landlord who is in the business of renting apartments, and the risk of having to move is much less.
Downsizing can be a freeing experience for anyone, especially seniors. As with any major decision, consider all of the facts, and more importantly, your preferences.
Copyright © 2012 by Russell F. Moran