Condo ownership is generally thought of as a step to home ownership, and there are many reasons it can financially prepare you for the demands of later owning a home. Generally speaking, condos are less expensive than comparable single-family properties. By owning and maintaining a condo first, you can set yourself up for the next step of owning a single-family home.
#1 Lower Down Payment
First-time home buyers in particular have a challenge when it comes to putting down a down payment. They do not have a previous property sale to supply them with income to do this, and many are young or in the early stages of their careers. As a result, opting for a condo with a low required down payment can make the process more affordable. On the flip side, an older couple looking to downsize or retire will also benefit from a low down payment. The difference between the sales price of a larger home and the money required for down payment can be used as extra spending cash in retirement when many people need it most.
#2 Property Sales Value
The sales value of a condo can be driven upwards due to improvements to and the desirability of the general condo building. As a rule, condos in small buildings are less affected by bubbles and busts in the housing market than are condos in big buildings. However, even condos in large complexes can present great property sales value if there are not many other units for sale at the time you prepare to sell. In this case, you are offering a chance to buy into a building where few opportunities exist. You will be rewarded with a more competitive market and higher prices.
#3 Amenities and Benefits
While you do have to pay homeowners’ association fees in order to receive many benefits of condo ownership, these fees represent only a fraction of the cost of your total benefits. For example, if you would like to have a rooftop pool in the middle of Chicago, you may have to pay several millions of dollars. As a member of an HOA in a condo that has this benefit, though, you can enjoy your rooftop pool for only a few hundred dollars a month. Financially, the amenities offered by many buildings are a great bargain to individual homeowners.
#4 Lower Utility and Maintenance Fees
The cost to maintain a small property is much lower than the cost to maintain a large property. Even in a relatively large condo, you are not paying for items such as your roof, windows or driveway. While these costs do come out of your HOA fees, you are again sharing the cost with a number of homeowners. Further, it is less expensive to heat, cool, furnish and clean a condo than a large home. This can represent savings that may later be used to purchase a house. Or in the case of individuals looking to downsize, these savings can be spent on living enhancements.
Post courtesy of finweb.com