Home Buying in Raleigh>Question Details

Daniel.w.all…, Home Buyer in Raleigh, NC

What are the most important things to look for when buying a condo/townhouse in Raleigh?

Asked by Daniel.w.allen27, Raleigh, NC Tue Aug 28, 2012

I am a soldier out of ft Bragg and will be moving to Raleigh in the next few months to go back to college using my GI bill. My wife and I have no kids so have decided on a condo/townhouse as the best option for us right now. Budget 120-140k, using va loan, 630 credit score, 30-60k to put down. First time homebuyer so any and all advice would be greatly appreciated

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All of the answers provided are great considerations; but if this purchase is going to be used as a springboard for a future purchase of a freestanding house, you need to carefully consider the resale market for condos and townhomes, as the opportunity to build equity is minimal. Typically they are on the market longer than a single family property. And you are locked in to paying monthly dues on top of your mortgage, property tax and homeowners insurance. You will be able to find what on the surface appears to be a great deal, but you should consider your exit strategy. If you plan to sell it in order to purchase another property, carefully review sales data in the area you're considering.
1 vote Thank Flag Link Wed Aug 29, 2012
When considering the purchase of a townhome/condo in this area, location is extremely important. Townhomes and condos are typically tougher to sell because we do have a good selection of affordable single family homes which appeal to a broader section of the buying population. After you add in the HOA payments, the difference in payment between a single family home and a townhome or condo can be quite minimal.

Also, make sure you know exactly what the HOA dues cover. Exterior maintenance including roof and siding repair/replacement is not always covered by your HOA dues, suprisingly enough. Termite bond may or may not be included. Low HOA dues are not always a good thing, you must investigate to find out what you are getting, and your agent can help you with that. Also make sure you read the Restrictive Covenants carefully. Some developments prohibit rentals, which can be a benefit to the community but can also be a stumbling block for resale since it eliminates all investor-buyers. You will want to know what restricitons are put on how you can use your property before you go under contract.

The last piece of advice I would give you is to talk to your lender about whether going VA is actually the best route for you. You have a great down payment, and you may be able to go conventional and avoid that big Funding Fee.

Good luck, welcome to Raleigh, and most importantly, thank you for your service! Please feel free to email me if you still have questions!
0 votes Thank Flag Link Mon Sep 3, 2012
While location and resale potential are important considerations, I believe that the strength of the HOA is the most critical issue. As part of your due diligence before making an offer, get copies of the last two years (at least) HOA financial statements and review them with your agent. You are looking for red flags, such as high percentage of homeowners delinquent on their HOA fees, inadequate reserves, high (or abnormally low) expenditures in some categories. It might seem counter-intuitive, but exceptionally low HOA fees can be a red flag too because they may indicate that an HOA is overly concerned with current costs and not adequately planning for future capital expenditures like roof replacement or street paving.

Check to see if the community is approved for FHA financing at https://entp.hud.gov/idapp/html/condlook.cfm even if you are not planning to get an FHA loan. Condo associations must qualify annually now for FHA financing and marginal communities will not qualify. Obviously, the ability to qualify for FHA financing will also affect your resale potential.

Your agent can also be a valuable resource in helping you to evaluate condos. Look for an agent with experience in listing and selling condos in the area where you wish to live.

There are different considerations for new condo developments, depending on how much longer the developer will be running the association and when it will transition to full homeowner control. It is definitely advisable to have a buyer's agent to help you evaluate condo communities.

Good luck and welcome to the Triangle!
0 votes Thank Flag Link Sun Sep 2, 2012
I just helped find a Townhome for a client. As in any real estate purchase location, location, location is a key consideration. I always tell my buyers you will most likely resale down the road so put yourself in position to take advantage of things you can not change, like location. A townhome will give you a small piece of land which can include a patio or garden and you will most likely get an attached garage. The HOA fees on Townhomes and Condos is an an added expense each month but it is a trade off.
You pay your HOA fees and the HOA is responsible for maintenance of the exterior of the building and landscaping. You have a great downpayment though and if you are putting more than 20% down you will not have to pay PMI (Private Mortgage Insurance), so that can offset your HOA fees. There are also financial incentives for the first time home buyer when it comes to borrowing money and your lender can discuss these with you.
Please feel free to contact me if I can help you.
Pat
0 votes Thank Flag Link Sun Sep 2, 2012
Always look at the hoa dues and ask what they include. Also, location is always the most important thing when looking to purchase a home. It is the biggest investment you will make.
0 votes Thank Flag Link Sun Sep 2, 2012
Location, resale history of the building, walkability and amenities if they are important to you. You should also request all information on the homeowners association with regard to the number of owner occupants/renters, how many of the units are up to date on their dues and any planned assessments.
0 votes Thank Flag Link Tue Aug 28, 2012
I may have a townhouse on the market within the next two weeks. List price - less than $130k. Homeowner dues $122 month. It includes the yard and street maintenance and swimming pool. 27604. 3 bed, 2 1/2 bath.

Look out for street signs in a subdivision that have a small yellow imprint that says "Private road". It means you as a homeowner own that road, along with the others. When ice or snow needs to be removed, DOT won't be doing it - your association will pay a private person/company to do it.

Before writing a contract on a condo, check with your lender. Some lenders will not provide financing for condos that have a high percentage of renters. Also with your HOA, if roofs on townhomes haven't been replaced in 15-20 years, your dues may increase - because the HOA leadership hasn't budgeted well for repairs. http://www.GreaterRaleighRealEstate.com
0 votes Thank Flag Link Tue Aug 28, 2012
overall condition of the property, any future assessments you may have to pay, a termite bond, the monthly dues and what they cover. Some dues are so high they can be mean the difference between owning a single family home and a condo/town home.
0 votes Thank Flag Link Tue Aug 28, 2012
Daniel,

I would make sure to look at the HOA fees. They can range from $60-$200+ dollars in Raleigh. These are monthly fees that are not a part of your monthly payment. Also ask to see what those HOA fees cover i.e amenities, water etc.
Best of luck!

Benjamin
0 votes Thank Flag Link Tue Aug 28, 2012
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