Is it a bad idea to buy a 40-year-old condo?

Answer 1

The best way to answer that question is to ask yourself, "Is this condo in good condition?"

If the condo is in good shape, then you should consider it. Ask a realtor in your area to talk to you about condo values in your area, also ask them how stable their values have been in the last 5 years.

Good luck!

Additional answer:Look at the condition of the whole complex in the exterior and common areas. Are the parking lots and grounds maintained? Are recreational facilities maintained? Check out the roof and walls, doors, windows, porches, and balconies. What about security? This can all be done without even entering one of the homes, a drive through or walk through the halls can do this. See the unit. A realtor can tell you if the values for this complex has been increasing.

In today's market (2008) I would be more confident of an ongoing complex that is pretty full, rather than a new one. This is more an indication of a well run ongoing enterprise, and good management. If it's new, you don't know if the builder will run out of money during construction, or if the management is bad.

You want to see condo documents. You can usually see those after you have signed an offer but before you close. You want to put this in your offer, that you must agree to those, or you can back out. This will have details as to exactly what you own, what you must maintain and pay for, vs. what the management must maintain and pay for. It will tell you what services are provided (landscaping, snow removal, sometimes heat) and what is allowed or prohibited (pet issues). You also want to know how many can be rented out or are rented out. If individual units are owned by absentee landlords, sometimes in big numbers, and are rented out, then the character of the complex becomes more like an apartment building and not a neighborhood of home owners.

You also want a licensed home inspection before you buy, to examine if there are any general structural defects, or specific defects to you prospective unit.

Additional answer:Ask to see the last three years' worth of board meeting minutes and financials. Inspect the minutes to understand the harmony in the community and the ability of the owners and the board to work together for the preservation, maintenance and security of the residents and their commonly-owned assets.

In the financials, look to see how well-funded the reserves are as compared to the reserve study -- which you should also look at -- so that you understand any upcoming special assessments to cover replacement of major assets, such as roof, windows, elevator and so forth.

As well, look to verify that the assessments are sufficient to cover the monthly bills.

Additional Answer

Your first job is to read the community's CC&Rs and other governing documents: By-laws and board Resolutions, and verify that you're willing to live in this private democracy according to its guidelines. This is mentioned in the long answer, above, but it is key to your decision.