Home ownership is a huge accomplishment for any buyer. While you will own a piece of property, the process of buying a traditional single-family home varies significantly from buying a condo. In this article, we’re going to outline the additional factors you must consider when buying a dwelling in a multi-unit residence. In addition to protecting your new residence with a Bergen County Condo Insurance policy, read on to prevent headaches and avoid mishaps along the way.
Get a copy of the condo association budget.
Request a copy of the budget before signing anything for the condo. The budget will reveal the condo association’s expenses and revenues and will show whether the association is in good standing. If the expenses are higher than the revenue, the condo is accumulating debt due to defaulted member payments or mismanagement. If more than 15 percent of all condo residents have defaulted on their loans, lenders may not be willing to approve any more mortgages for units within the property. Even if you don’t need a loan, the association may reduce tenant amenities to make up for lost revenue in a bad situation, explains The Nest.
Much like any dwelling, you’ll need to get the right insurance to protect your belongings. However, the association covers the shared areas and some portions of the condo itself. Ask your association exactly what it covers and what it doesn’t so that you can make up for any gaps in your own property and flood insurance policies.
Ask about renters and foreclosure rates.
If there are a lot of foreclosures, it’s a good indicator that there isn’t a great turnover rate or that the building doesn’t hold its value as well as you’d hoped. You’ll want to ask about renters, as well. If there are more renters than owners, chances are the property won’t be maintained as well. After all, owners have more of a stake in the property.
Cash on hand.
The condo association should build a certain amount of cash reserves into its annual budget. These reserves are accumulated through the payment of maintenance fees and are meant to be a safety net for unforeseen circumstances and general repairs. If the association doesn’t have at least 10 percent of the total annual maintenance fees on hand as a reserve, tenants may have to pay a catch-up or assessment fee at some time during their residence to bring the account up to date. You don’t want to get stuck paying this or any other additional fees, explains the article. Be sure to ask about their financials before buying the condo.
About Tri-State Insurance Agency
At Tri-State Insurance Agency, we want to ensure your high-net-worth homes are protected during the holidays and year-round. Our homeowners’ insurance policies are designed specifically to protect affluent homes like yours. To learn more about our coverage options, contact our specialists today at (973) 579-6776.