In the past, condominiums were not necessarily considered a good investment for a variety of reasons, however that image has changed dramatically since then. With single-family homes soaring, condominiums and townhomes are becoming more attractive to many buyers, including singles, downsizing retired couples, and small families looking to buy in great school districts. However, for those homebuyers who have only considered a single-family home as the definition of homeownership, they may not be familiar with the options available in the form of condominiums.

Condominiums are buildings in which individuals separately own the airspace within the interior walls, floors, and ceilings of their unit, but have a joint interest in the common areas they share, such as the grounds, lobby, hallways, pool, grounds and parking lot. While many condominiums are designed to resemble apartments or are built into urban high-rise buildings, more and more builders are designing them where they can be referred to as townhomes. Townhouses are typically attached to one or more houses and can range from duplexes and triplexes to communities with hundreds of houses.

In addition to paying a mortgage, each homeowner is responsible for paying a monthly fee to the condominium association, generally known as the homeowners’ association, which is made up of unit owners. The fee covers building maintenance, repairs, grounds care, and insurance.

In the past, condo ownership suffered from a negative image for a variety of reasons, however that image has changed dramatically since then. Condominium associations, once the thorn in homeowners’ sides, have worked hard in recent years to clean up their negative image where disputes and lawsuits once ran rampant. Homeowners associations have become more knowledgeable and much more professional when it comes to property management and have taken steps to prevent legal problems and disputes before they happen. However, there are some disadvantages that still need to be considered before buying.

1) Homeowners Association Monthly Fee

If there is a homeowners association, you will usually have to pay a monthly maintenance fee that is separate from your mortgage payment. Many condo owners view this expense as similar to the costs they would have incurred to have someone take care of lawn care and other maintenance if they owned a single-family home. However, be on the lookout for unnecessarily high monthly charges and ask to see a copy of the latest financial statement from the homeowners association.

2) Less privacy

There is also less privacy than with a detached single family home. Community living is not always desirable for some people and the noise level generated by living close to other people can influence some buyers to simply look elsewhere. Usually the biggest concern is parking for homeowners and their guests. However, many condominiums are being designed with their own garages and have common parking areas available for guests.

3) CCRs can be very restrictive

CCRs or Covenants, Codes and Restrictions are defined as the statutes that govern the use of the property. Most CCRs are reasonable, but some can be very restrictive. Generally, there are limits to the type of exterior changes or improvements you can make to the property. In addition, you may find, among other things, that they prohibit or restrict pets and the rental or sublease of units. Be sure to get a copy of the CCRs and review them (they usually have a summary booklet) before you decide to bid.

4) High rate of renters

Also, be sure to find out the landlord-tenant ratio. Because many condominiums are often purchased as investments, there could be a high percentage of tenants in the building. Although this trend is also changing, especially in condominiums that are located in urban areas where they provide convenient shopping, access to transportation and other amenities, attracting owners who intend to live in their condominiums.

5) Resale value

In some real estate markets, like Las Vegas and Florida, builders have overbuilt condos and townhomes and are selling at a loss. However, in other real estate markets they have maintained their value as an investment despite economic downturns and problems with some homeowners communities.

While some of these factors would discourage some buyers from buying condos, it may be the right investment for others because it fits their pocketbook and lifestyle. Despite these drawbacks, the high price of single-family homes in some real estate markets such as California and the influx of more individual home buyers into the real estate market have made condominiums a relatively important national investment. A professional real estate agent can help and guide you to show you the best deals in your local market and city.