Before you consider buying a Nashville condo, consider the financial costs added to the sales price through maintenance and other issues. While condos often appear to be cheaper than townhouses or single-family properties, the hidden costs can actually make the price of owning a condo higher than the price of owning comparable single-family properties.
Factor In Condo Association Fees
The first consideration is the association fee required by a condo or homeowner’s association. In Nashville, this can be anything from $50 to several hundred dollars a month. If you are purchasing a condo in a great area like Downtown or West End, though, the condo association fees can be prohibitive. You’ll need to consider these fees like a whole ‘nother utility. Since you do not own any space other than what is inside your condo, these fees can often be wasted on improvements that do not raise the value of your property, so investigate what those fees go towards.
Your Private Mortgage Insurance
If you buy a condo with less than a 20 percent down payment, you will be required to pay private mortgage insurance (PMI). And that’s usually true of both houses and condos! Some mortgage companies will make this requirement on even higher down payments. But believe it or not, it can be hard to secure private mortgage insurance for some condominium purchases. This occurs because the value of a condo is highly variable based on the value of the building and comparable sales within the building at the time of sale. Since these factors can be unpredictable, many insurance companies refuse to insure condo mortgages. Wherever you can, it’s recommended to try and put 20% down.
Needing Homeowner’s Insurance
A condo is defined as a property with more than two shared walls. In a condo, you may have residents above or below you. You do not own public spaces around your condo, and this leaves them open to other residents of your building or even those passing through. As a result, condos are viewed as less secure than townhouses or houses. Your homeowner’s insurance will increase based on the safety rating of your condo. Also, if there is an insurance claim anywhere in your building, you may see your personal homeowner’s insurance rates go up as a result. This does not occur as directly in a neighborhood as it does in a multi-family complex.
Consider Your Resale Value
At the time you sell your condo, the sales price will be heavily dependent on the desirability of the building and its neighborhood. Even a very desirable building will suffer if too many units are for sale at the same time. In this case, supply will be greater than demand, and the sales price of your unit will decrease. This is particularly true if the various units in your building are all really similar. In this case, it is very difficult to differentiate your listing in a competitive market. Further, even if you make improvements to your property, you must always be vigilant about out-pricing the building. There is a price ceiling on most condo sales in Nashville.
Less Maintenance Costs Than a House
Condo living can be great for single people and minimalists. If you prefer to live on the lighter side, with fewer responsibilities and chores, a condo setup can be extremely rewarding. All of the big maintenance and expenses like roofs, foundation, exterior, landscaping, and more will likely be taken care of, and all you’ll have to worry about is the minimal space inside of your four walls. If you decide to travel for an extended period, it’s much easier to find short-term tenants for condos than for houses.
