How does condo pricing work

Note: Based on simple computation. Actual computation may include other fees and may come up with varying results. Buying a condo in the Philippines or renting one requires financial commitment and wise financial management. With the current amenities and services it offers, its accessibility, plus the current living trends in the cities, condo living is indeed for anyone who wants to experience a new way of living.

As long as you are firm with your decision of living in a condo, choosing to rent or to buy a unit will not be a problem. Taking time to read guides in buying a condo in the Philippines will help too. QQ ID : Calculating Cost of Renting and Buying a Condo.

A Look at the Purchase and Initial Renting Costs If you finally decide to buy a condo, the first thing that you need to settle is the purchase cost. Other Articles Aliquam a orci accumsan nisi volutpat elementum eget vel est. Pellentesque vestibulum. Typical condo fees generally always include a contribution toward the building's upkeep and maintenance, but they may also include heat, water, sewer, garbage collection fees, and even electricity and cable TV in some cases.

Consider how much these line items would cost if you lived in a home. Also, consider that, in a condo, you don't have to mow the lawn or shovel snow yourself, which ultimately means you will have to chip in to hire someone. Condo fees that are too high can be a sign of poor money management on the part of the condo board, but you will have to review the condo documents before being able to say for sure. Also, remember that condo fees are determined by the condominium's board of directors , which is made of owners just like you.

In other words, no one is profiting from these fees—they are decided by owners who have to pay them just like you do. Special Assessments Are Bad Even a well-managed condominium can fall prey to what is called a "special assessment. Many condo owners assume that their fees will take care of everything, but as an owner in the condominium, you are ultimately responsible for its upkeep, no matter what happens. This is not unlike living in your own single-family home. Even if you routinely save money for repairs, a major unforeseen expense such as a foundation or roof repair can still leave you out of pocket.

In fact, special assessments are often much better for condo owners than the alternative of raising condo fees over the long term. This is because a one-time fee will cover whatever repairs need to be done without putting a often much bigger dent in the overall value of each unit in the property.

Fees Shouldn't Keep Going Up Unfortunately, condo fees, like most expenses, tend to rise on a regular basis. This is based on inflation and the costs of running the building. Condo fees are calculated based on projected costs for the coming year, and should include additional amounts to put toward larger repairs.

Remember that no one is making any money on these fees, and if they are not appropriate for the building requirements whether they are too high or too low , owners will eat this cost when they try to sell their units. In other words, most condo owners will have a hard time escaping from a necessary cost, whether this occurs because the board tries to avoid repairs to keep costs down, or owners try to sell to get out of paying their share.

Savvy buyers will want a discount for a poorly maintained building or one with soaring condo fees. As is often the case in real estate , this discount is likely to cost more than just paying for the problem in the first place. The Bottom Line Many of the misconceptions that prevent homebuyers from considering a condominium —or leave them frustrated and angry when they do own one—often stem from a misunderstanding about how condominium ownership works and what owners are ultimately responsible for.

Edited By Suzanne De Vita. Edited by. Suzanne De Vita. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Share this page. Key Principles We value your trust.

What is a condominium? Read more From Jennifer Bradley. You may also like What is a townhouse? Condo vs. What is a patio home? Apartments are suited for anyone looking to stay in a prime location for a cheaper price near shopping, restaurant and entertainment centers, often at a more affordable cost than buying a condo or single-family home.

Condos appeal to those looking for a lower-maintenance living, home with a sense of security, opportunities to be social with neighbors, among other factors. Townhouses are a particularly good option or first-time homebuyers or other budget-minded home buyers who want more space than typically afforded in a condo. Modular home. Modular homes are enticing to empty-nesters looking to downsize, couples looking for backyard units like tiny homes or families looking to upgrade their dated properties in nice but expensive neighborhoods.

Single-family home. Single-family homes are best for families who prefer a huge yard and plenty of room to spread out.

Others still prefer a low-maintenance condo or townhome that includes benefits like landscaping, snow removal and exterior maintenance. If you decide a single-family home is the way to go, for example, you can always get a gym membership, and that would certainly cost you less than a condo and its amenities. Lenders look especially closely at condos to make sure they comply with special requirements. Whether or not you can get a mortgage depends on your specific condo building and the type of home loan you hope to use.

For example, your condo development will have to be on an approved list for you to get a mortgage backed by the Federal Housing Administration an FHA loan. What if you want a conventional loan? A well-run HOA or condo company should normally have a pile of cash saved up. It should charge each owner a bit more than it needs each month so that it builds up reserve funds. That way, it can pay for big-ticket repairs and maintenance when those become necessary.

But not every HOA or condo company is well-managed. You should absolutely do this. That can be thousands or even tens of thousands of dollars. This is something you should definitely do. Assessments are no joke. Of course, if you discover big assessments are in the pipeline, that will dramatically reduce the property value.

So see if the current owner will take liability for those or get a price reduction that reflects the threat. Otherwise, walk away.