BUYING A CONDO IN DENVER? ASK THESE 6 QUESTIONS
There's nothing more exciting than living in a condo in the heart of Denver.
Whether you're looking in Capitol Hill, Uptown, Wash Park or the Rino, condominiums are convenient, close to all the Mile High City has to offer and can be more affordable. (Yes, can be.)
But there are a few things you should know before starting your condo search.
How large is the reserve fund?
Yeah, yeah, you know to ask what the HOA fee is. (We'll cover that below.) But you may not know to ask about the condo's reserve fund.
A condo building carries a reserve fund that is used to pay for capital expenses. Those are the longer term expenses such as replacement of boilers, chillers, and the roof.
There is no magic number here. If the infrastructure is all fairly new, an HOA might get away with lower reserves. But if there are numerous big-ticket repairs coming soon, you should see a healthy reserve balance.If not, and a big repair comes up, you could be stuck with a special assessment.
Are there any assessments planned?
When a capital expense comes due and there aren't enough funds in the reserve to cover them, there are typically two ways to cover that cost: raise HOA dues or issue a special assessment.
A special assessment is a lump sum payment paid by all homeowners. (The exact amount is usually calculated based on your unit's square footage.) Ask if there are any assessments upcoming so you're not surprised with a big bill within the first few months.
What is the HOA fee?
Because much of the space in a condo building is shared, you will share the cost of upkeep with all residents. In Denver, the home owners association fees typically range between $200 and $400. The more upscale the building and more amenities offered, the higher the HOA fee.
You should request a record of the HOA fee increases from the past 10 years. Is there a history of raising the fees regularly? If so, why?
For this question (and all of these questions), contact the current HOA president.
What does the HOA cover?
The HOA fee at a condo typically pays for things like lawn care and exterior building maintenance, as well as certain utilities in buildings whose units haven't been separated.
Some things you might want to know. Does it cover window repairs? What about problems with the balcony? Any agent should be able to find these questions. Or, again, reach out to the HOA president and have a conversation.
What are the association rules?
Do you have a dog? (Of course you do. Everyone has a dog in Denver!) Well, check out the HOA bylaws before signing the dotted line.
Your agent should track down the declaration and bylaws. No, it's not US Weekly or anything, but take 15 minutes and read through the entire document. It's dry, but very important.
Some buildings have a no-pet rule. They also typically set minimum rental periods, so if you're looking to do short-term rentals, for instance (and you should!), these rules might prevent that.
What percentage of residents are owner-occupants?
The Federal Housing Administration -- you know it by its sexy acronym, FHA -- will not approve a loan for a condo in a building where less than 50 percent of its units are lived in by the owners. (This is otherwise known as owner occupancy.)
What does this mean for you? Well, FHA is one of the biggest provider of home loans in America. So if you want to sell your condo in the future and less than 50 percent of the residences in your condo are owner-occupants, then you just eliminated a big chunk of your buyer pool.
So ... do you feel a little better informed? Great! Give me a call today and we can start you on your path to condo ownership.