What every “Condo” Buyer should know… before you buy! By Pete Vakakes
Currently there are over 1,100 condominiums for sale in the Gulf Shores and Orange Beach areas. The price range varies from the low $50’s to $500,000 +. These numbers offer the potential buyer with a broad spectrum of diversity. My goal is to provide you with some valuable knowledge that will enable you to make a sensible decision on what is best for you.
Have a purpose and formulate a plan. Determine why you are purchasing a condo. Is it for personal use only, a second home, maybe it’s a rental property? You must first define your reason for buying. It allows you to make the right choice the first time. How you finance and how you intend on using the property will ultimately effect your IRS tax position. We need to formulate a personal plan for you to effectively prepare you for the condo buying process.
Never buy a condo with the assumption that you will always cover expenses with the rental income. You must ask yourself this question; “Can I make the payments even if I have no rental income that month?”
Location, Location, Location. What do you want? Gulf Front, Beach View, Across the street from the Gulf, on the Lagoon, water access, on a golf course, off the beaten path? Determine exactly what you want. Obviously the most expensive location is “On the Gulf”. Prices then vary from there. Again you must determine it’s use. The most appealing to renters is it’s proximity to water, which in turn effects your bottom line.
What type of condo do you want? Your initial plan should include what size of a condo you are looking for. One, two or three bedrooms? More than that? Do you want a high rise with hundreds of units or something smaller, 4-6 floors with 50-60 units? You might even be looking for the one or two floor complexes. If it is for personal use, buy what you are looking for. If you plan to be in a rental program, buy from the perspective of a renter. Ask questions. Find out the rental history. I can help you with this. * Remember bathrooms are just as important… never buy a three bedroom one bath.
Don’t forget the “Condo Fees”. This is a fee established by the condo association, “the unit owners” and collected to cover the upkeep of the property. This includes the landscaping and insurance, and other things necessary for the property to maintain itself to the standards under which you purchased it. You are purchasing what is inside your walls. This includes maintaining insurance on your personal property inside the unit. Don’t assume the condo fee will always be at the rate at which you first paid. The fee floats in order to prepare for upcoming expenses.
So who makes up the “Condo Association”? The answer, the owners, led by a President, Vice President, Secretary and Treasurer. The purpose of the association is to look out for the best interest of the owner of the complex. The money collected as condo fees is dispersed based on decisions made by this group of owners. It would be a smart move for the potential buyer to review the financial records of the association before making any final purchasing decision. There are written rules and regulations which makes it easy for you to review.
The little book of “rules and regs”. This is the rule book of the do’s and don’ts. Even though you own the unit, doesn’t mean you can build a storage shed on the roof. These documents are written with legal advise from attorneys, so it can get lengthy and boring. My advise is to read and make sure when a change occurs that an update to the book is done.
Who covers what when it comes to property taxes. The current tax rate in Alabama is one of the lowest in the country. Remember though, if its rented you fall under a different program and the rate goes up. We can discuss this in detail as we formulate your plan and choose a property.
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The final word. I prepared this information sheet to assist you with the decision making process. My goal was to provide information that could help make that final decision a little less stressful and a little more educated.
I look forward to working with you. Please let me know what I can do to assist you further in your pursuit of the “perfect” condo.