Tips and Traps When Buying a Condo, Co-op, or Townhouse » (REV)

Robert Irwin is one of America's leading experts in real estate and the author of more than 50 books, including Tips & Traps When Negotiating Real Estate. His real estate titles have sold more than one million copies.

Steer clear of money pits and target the top properties in this hot investment sector!

Condos, co-ops, and townhouses account for more than one-third of real estate sales in the United States. Fully updated to address the many changes that have occurred in the market since the first edition, Tips & Traps When Buying a Condo, Co-Op, or Townhouse, Second Edition, covers all the bases to help you navigate the process of buying into a shared-ownership development.

Robert Irwin is one of America's leading experts in real estate and the author of more than 50 books, including Tips & Traps When Negotiating Real Estate. His real estate titles have sold more than one million copies.

Good Investment?     1
What Are They?     1
Who Buys Them?     2
What Do They Look Like?     2
Where Are They Located?     3
Why Have Condos and Co-ops Become So Popular?     4
Will They Retain Their Luster in the Future?     6
How to Decide If a Condo, Co-op, or Townhouse Is Right for You     7
The Pros of Buying a Condo, Co-op, or Townhouse     7
Maintenance-Free Lifestyle     8
Facilities and Services     9
Lower Entry Cost     10
Better Location     11
Luxury Amenities     12
The Cons of Buying a Condo, Co-op, or Townhouse     12
Rules and Restrictions     12
Increased Density     14
Monthly Fees and Assessments     14
Participation in Governing     15
Difficulties in Renting/Selling     16
Nine "Red Flag" Questions You Must Ask Before You Buy     17
Are the Monthly Fees Reasonable?     18
Does It Look Rundown?     19
Have There Been Big Assessments?     20
Are You Responsible for Any Areas Other Than Inside Your Unit?     21
Are the Reserves Adequate?     22
What Isthe Tenant-to-Owner Ratio?     25
Are There Any Lawsuits Pending?     26
How Much Insurance Does the Board Carry?     27
How Much Liability Insurance?     28
How Much Disaster Insurance?     29
Are There Any Unreasonable Rules and Restrictions?     29
Buy Old, Buy New, or Buy a Conversion?     33
Should You Buy New?     33
What Are the Pluses of Buying Brand New?     34
What Are the Drawbacks of Buying Brand New?     36
Is Buying New a Good Investment?     42
Should You Buy a Conversion?     43
Was the Job Cosmetic or Thorough?     43
The Big Difference between a Rental Unit and an Owned Apartment     45
How Do I Know If a Resale Unit Was Originally a Conversion?     46
What Do I Look For?     46
What about Resale Potential?     48
What's the Bottom Line?     52
How to Evaluate What You're Buying     53
Most Important-Location!     53
The Location of the Development     53
The "Curb Appeal" Factor     55
The Location of the Unit within the Development     55
The Design of the Unit Itself     60
Getting to the Right Price      63
Checking the Inspection and Disclosure Reports     65
Why Disclosures?     65
Can I Rely on Disclosures?     66
What Should I Do with the Disclosures?     66
Do I Need a Professional Inspection Report?     69
What If It's a Conversion?     70
What Will It Cost?     71
Where Do I Find an Inspector?     71
What Do I Do If the Inspection Reveals Serious Problems?     72
Will a Home Warranty Plan Protect Me?     74
Living by the Rules     75
Why the Need for So Many Rules?     76
There Is Conformity     76
There Is Stability     77
You Get Security     77
You Get Investment Potential     77
Where Are the Rules Written?     78
What Are CC&Rs?     79
Can CC&Rs Be Changed?     80
What Do the Bylaws Cover?     81
Can the Bylaws Be Changed?     81
Can the Rules Restrict Who Buys into the Development?     82
Living by the Rules     83
Beware the Architectural Committee!     85
How Do I Handle Myself When Seeking to Make a Change?     87
How Do I Handle Myself When I Have Been Fined for Breaking a Rule?     88
What Is My Recourse If I Feel I've Been Unfairly Treated by the Architectural Committee?     89
Petition the Full Committee and Ask for a Review     90
Appeal the Matter to the Board     90
Ask for a Vote of the Membership     92
Go for Mediation     93
Sue the Board and the Other Owners     93
Sell Your Property and Leave     94
Is There Anything I Can Do to Prepare Myself?     94
Fighting the Board     97
People Who Run for the Board     97
You and the Board     98
How Do You Evaluate a Board of Directors?     100
Is the Board Active, Proactive, or Passive?     101
Is There a Newsletter?     101
How Are the Meetings Conducted?     101
Does the Development Have a Web Site?     102
Is the Management Professional?     102
The Duties of the Board     103
How Does the Board Protect the Development and Owners?     103
Why Does the Board Need an Operating Budget?     104
When Should the Board Set Up Reasonable Reserves?     105
What Must the Board Do to Collect Fees?     107
Why Does the Board Need to Make New Rules?     109
Why Must the Board Handle Requests for Alterations?     109
What about Overall Operations?     110
Additional Duties of the Board     110
When an Owner Defies the Board     111
Why Would a Member Go against the Board?     111
Why Would the Board Not Be Able to Act?     112
The True Meaning of Community     118
Can I Rent Out My Condo, Co-op, or Townhouse?     119
Are There Restrictions against Renting?     120
Number of Occupants     121
Number of Cars or Motorcycles     121
Where Signs Can Be Placed     121
Use of Recreational Facilities by Tenants     122
Other Restrictions     122
What Are Your Responsibilities to the Development?     123
Tenant Must Abide by the Rules     123
Tenant Must Maintain the Premises     124
Tenant Must Meet Approval of Other Owners     124
Do I Need a Lease?     125
How Much Should I Charge for Rent?     126
Should I Become a Landlord?     127
Can I Write Off My Rental Costs?     128
Tips on Financing a Condo or Co-op     129
What Are My Financing Sources?     129
Can I Get a Bank Loan?      130
Will Builders or Developers Offer Me Financing?     132
Can I Get a Credit Union Loan?     132
What about a Loan from a Mortgage Banker?     133
Should I Use a Mortgage Broker?     133
What about Borrowing on the Internet?     134
Should I Try a Savings and Loan?     135
Don't Forget to Try the Sellers     135
What Special Financing Features Should watch Out For?     136
What Are Points?     136
What Are Adjustable-Rate Mortgages?     137
What Are Interest-Only Mortgages?     138
What Are Option Mortgages?     138
What Are Balloon Mortgages?     139
Are There Other Types of Mortgages?     139
How to Handle the Purchase     141
Should I Check with My Attorney?     141
What Should I Do Before I Make an Offer?     142
The Right Approach     143
How Do I Back Out After I've Made an Offer?     144
How Can I Use the Inspection Clauses to Back Out of the Deal?     144
What Other Contingencies Can I Use to Exit Gracefully?     146
Can an Escape Clause Ever Backfire?     147
What Happens After All the Escape Clauses Have Been Removed?     148
Bring Your Checkbook to the Closing     150
Are There Extras I Have to Pay?     151
What If I Don't Want to Pay the Fee?     153
Just for Condo Buyers     155
What Is an Airspace?     155
What Are the Benefits of Owning an Airspace?     156
What Are the Drawbacks of Owning an Airspace?     157
Can I Buy Insurance to Cover All Risks?     158
If There Is Insurance, Will I Be Covered?     159
What Other Specific Concerns Should I Have about a Condo?     160
What Are My Personal-Use Facilities?     160
What about Property Taxes?     161
What about Utility Bills?     162
What about Laundry Facility Arrangements?     163
How Far Away Is Your Car?     163
Just for Co-op Buyers     165
Differences between Condo/Townhouses and Co-ops     166
What Are the Advantages of Buying a Co-op?     167
Big Profits, in Some Cases     167
Lower Prices to Get In     168
You Get Shared Ownership Benefits     169
What Are the Big Disadvantages?     169
Is a Co-op Financially Stable?     169
Is a Co-op Difficult to Resell?     170
Can I Get Financing on My Co-op Purchase?      170
Why Aren't There Many Co-ops Outside the East Coast?     172
Are Most Co-ops Conversions?     172
Are There Any Problems with Buying Co-op Conversions?     173
How Hard Is It to Buy into a Co-op?     174
Why Are Co-op Fees So High?     176
Can the Board Keep Me from Renting Out My Co-op?     176
Can the Board Determine to Whom I Can Sell My Unit?     177
Are There Any Special Rules?     177
Can I Be Evicted?     177
Can My Ownership Stock Be Sold against My Will?     178
Will I Be Able to Vote?     178
Is the Board of Directors All-Powerful?     179
Will I Be Able to Deduct Interest and Taxes?     179
Is a Co-op Purchase a Good Investment?     179
Just for Townhouse Buyers     181
What Is a Townhouse?     181
Is a Townhouse Technically a Condo?     182
How Is Title Held?     182
What Is the Structure of a PUD?     183
What Are the Advantages of a Townhouse?     184
Increased Privacy     184
Bigger Units     184
Less Noise     185
Garages and Utility Rooms     185
More Open Space      185
Better Layouts     186
What Questions Should I Ask When Buying a Townhouse?     186
Who Is Responsible for the Roof?     186
Who Is Responsible for the Lawn, Garden, Deck, or Patio?     187
What If I Want to Put in My Own Swimming Pool or Spa?     187
Is a View Important?     188
Is It Easy to Get Financing on a Townhouse?     188
What about Insurance?     189
Do I Pay My Own Taxes?     189
Is a Townhouse a Better Deal?     189
Tips for Selling Your Condo, Co-op, or Townhouse     191
Why Would Anyone Want to Buy Your Unit?     191
The Trouble with Showing     192
Security Gate     193
Security Guard     193
Difficult-to-Find Location     193
No Signs Allowed     194
What about All the Documents?     195
Should I Help with the Buyer's Financing?     197
What to Watch Out for When Carrying Back Paper     198
How Much Fixing Up Should I Do?     199
What If There Are Structural/System Problems?     200
Should I Use an Agent or Sell by Owner?     201
Tax Differences for Sellers?     202
Index     203