If you live near a big city, you likely have the option of purchasing a condominium in a high-rise building. Often selling for more than a much more spacious single-family home, high-rise condos offer the latest amenities in a prime location. Young urban professionals seek out these living quarters to be close to the trendiest bars and restaurants, where they’ll spend hours socializing with the coolest people in town.
Despite the hype, however, high-dollar condos can be a tough sell, especially during times of economic turmoil. That million-dollar condo that promises to rise in value may remain on the market for years, preventing its owner from moving forward. Before you make the decision to purchase a high-rise condominium, here are a few things to consider.
Choosing to live in a condo is different from solely investing in one. If your primary purchase motive revolves around earning money in a few years, a high-rise condo may not be the best idea. You’ll likely be forced to pay exorbitant association fees each month, which will be tough to recoup even if you choose to rent the property.
If those monthly fees aren’t enough, condo owners must also deal with the occasional “special assessment.” With a special assessment, the association decides an additional amount of money is needed to handle a particular project. When added to the other expenses of condo ownership, these fees can become a financial drain for a property investor.
Location, Location, Location
Builders tend to maintain a, “Build it and they will come” mindset, always second-guessing the next big area of town. This can be dangerous, since that plan to revive a dying, high-crime area of town could never quite come to fruition. High-rise condo investors should search for properties in thriving, up-and-coming areas rather than areas that may someday improve.
Within the high-rise building itself, location should also be a consideration. Sound experts say, surprisingly, the higher a unit resides, the more likely sound is to be a problem, since higher units lack the insulation provided by surrounding buildings. Lower floors also tend to attract more interest due to the fact that residents aren’t required to rely solely on the elevator for access.
The building’s HOA should be a part of your decision. How active is the board in maintaining the property? Do owners have a say in the upkeep of the building? If possible, obtain a copy of the bylaws and recent meeting minutes. From these you may be able to pinpoint issues that will influence your decision.
For investors seeking to turn a property into a rental, reading the bylaws is essential. Some condominiums have strict rules prohibiting units to be rented. This one point alone will stop many investors before they even get started. Since this policy is prevalent among high-rise condominium complexes, you’ll likely need to start your search with this one criterion specifically in mind.
A high-rise condo can be a lucrative investment if chosen correctly. By setting a goal up front and choosing the right property at the right time, you’ll be able to maximize your success as a high-rise condo investor.
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