If you have ever looked at the real estate market in Chicago, you\u2019ll notice that there are almost twice as many condos for sale than there are single family homes.\u00a0 As of June 2019, Chicago had 6,177 condo units on the market, compared to 3,499 single family homes.\u00a0 With that many more options, why wouldn\u2019t you explore a condo for your first or next real estate purchase? \u00a0\u00a0But before you buy, make sure you understand these 10 things first!<\/p>\r\n\r\n\r\n\r\n
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In Chicago, you will see condominiums have monthly assessments ranging from $100-$1,500+.\u00a0 These monthly Home Owners Association (HOA) dues are used to cover the building\u2019s operating expenses for all the shared areas.\u00a0 As a condo owner, you only own what is enclosed between the walls of your unit, the remainder of the space is all considered shared.\u00a0 The most common shared operating expenses are building insurance, common area electric & gas, water, garbage services, and maintenance.\u00a0 Some buildings may also include within their monthly dues, services for landscaping, snow removal, and janitorial cleaning.<\/p>\r\n\r\n\r\n\r\n
Smaller condominiums with only a hand full of units typically can afford lower due payments, especially if there is a healthy reserve account on the HOA\u2019s balance sheet.\u00a0 Large, skyscrapers often are on the high end of the assessment amount, since they are much more expensive to maintain and require additional services such as a doorman, security staff, etc.<\/p>\r\n\r\n\r\n\r\n
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The reserve account balance is arguably the most crucial aspect of a condominium.\u00a0 This amount will give you insight into the level of risk you are about to enter when you purchase the unit for sale.\u00a0 If there is not enough money in the reserves to cover an unexpected roof expense, the association will issue a special assessment to offset the cost of the roof repair.\u00a0 Depending on the work involved, this could be a hefty surprise bill that each unit owner is required to pay.<\/p>\r\n\r\n\r\n\r\n
How much should an association have in reserves to be satisfactory?\u00a0 It\u2019s never easy to say, but a rule of thumb has been about $2,000 per unit in the building.\u00a0 If there are 10 total units, you would want to see approximately $20,000 in reserves in addition to the money used for operating expenses. \u00a0A lesser amount could mean trouble if major expenses such as the roof, tuckpointing, or main boiler has not been maintained or replaced in many years.<\/p>\r\n\r\n\r\n\r\n
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Special assessments are the surprise expenses that no one in the building planned for.\u00a0 They are the unexpected problems that come with maintaining a building.\u00a0 If the reserves are not healthy enough to support the unforeseen cost, the association will vote to initiate a special assessment, which is divided by each unit based on their percentage of ownership in the building.\u00a0 For example, if your new condo has a 35% ownership in the building, a $10,000 total expense will see $3,500 of it paid by you.<\/p>\r\n\r\n\r\n\r\n
If special assessments are occurring while a unit is being sold, make sure the seller covers the entire special assessment before transferring ownership, otherwise the new owner will be required to pay the remaining special assessment balance that was assigned to the unit.<\/p>\r\n\r\n\r\n\r\n
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As a buyer, you should know that every condominium building has their own set of declarations and by laws.\u00a0 It is very important to ask questions about any building restrictions when purchasing, as one building will likely have different rules than the building next to it.\u00a0 A few common restrictions amongst Chicago condominiums are:<\/p>\r\n\r\n\r\n\r\n
Pet Restrictions<\/em>: Some buildings are cats and small dogs only, nothing over 50 lbs.\u00a0 Other buildings are cats only and absolutely no dogs.\u00a0 Or there are those with no pets allowed at all!\u00a0 Ask this question before submitting any offer on a condo if you own a pet.<\/p>\r\n\r\n\r\n\r\n Rental restrictions<\/em>:\u00a0 This is a big one for those looking at their next condo as a rental investment.\u00a0 Many buildings will have a minimum number of years required to owner occupy the unit before it can be rented, some being 2 years minimum.\u00a0 Additionally, majority of associations have rules on how many units can be rented at one time. \u00a0This is referred to as the rental cap and is often expressed as a percentage of the building.\u00a0 For example, a 30% rental cap would indicate 3 units of a 10-unit building would be eligible to rent, the other 7 are required to be owner occupants.\u00a0 Once the cap has been hit, no other units would be eligible to rent.\u00a0 Further, if you are considering AirBNB, make sure the condo allows it!<\/p>\r\n\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n Find out how many are in the building and what the occupancy mix consists of.\u00a0 Ask for the percentage of rented, owner occupied, and vacant units.<\/p>\r\n\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n You want to buy into a building that has an active form of maintenance.\u00a0 Find out what were some of the recent projects done at the building.\u00a0 If the listing agent does not know this information, many times it can be found in the most recent HOA minutes that are required to be recorded and passed along to a future buyer. The biggest questions always revolve around the roof, tuckpointing, windows, and if there were any plumbing problems during the recent polar vortex.<\/p>\r\n\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n Some HOA\u2019s budgets have a schedule to replace 1 or 2 windows in a unit every few years.\u00a0 A larger building might want control of this in order to keep the exterior of the building looking the same.\u00a0 Other HOA\u2019s don\u2019t budget this expense at all and leave the window replacement up to the unit owner.\u00a0 Make sure to find out who is responsible.<\/p>\r\n\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n Planning to remodel?\u00a0 Make sure you ask the HOA first!\u00a0 They may require a project approval or insist on pulling city permits, which could involve utilizing the services of an architect or structural engineer.\u00a0 Make sure to find out what the process is before pulling the trigger on a condo that needs rehab.<\/p>\r\n\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n Limited common elements are the shared spaces of a condo building.\u00a0 If there is a shared deck space, it is considered a limited common element.\u00a0 Parking may also be viewed as a limited common element.\u00a0 Many times, parking will be assigned to a specific unit but the garage the parking space is within is considered the limited common element.\u00a0 Any maintenance to limited common elements would be the responsibility of the HOA.<\/p>\r\n\r\n\r\n\r\n Smaller unit condos are typically self-managed, meaning the unit owners are the ones responsible to procure maintenance services.\u00a0 Many times, unit owners will decide painting needs to be done and someone on the HOA board will call local painters for bids.\u00a0 The board will then decide on who to hire for the job. \u00a0It can be a time consuming process.\u00a0 The positive of a self-managed building is that the association is not paying a management fee and you can have a lower monthly assessment.<\/p>\r\n\r\n\r\n\r\n A professionally managed condo is ideal for larger buildings with many units.\u00a0 These are outsourced companies that specialize in property management, from administrative move ins\/outs to hiring building maintenance.\u00a0 They typically already have contractors they use on a regular basis to take care of upkeep and execute large projects.<\/p>\r\n\r\n\r\n\r\n <\/p>\r\n","protected":false},"excerpt":{"rendered":" If you have ever looked at the real estate market […]<\/p>\n","protected":false},"author":1,"featured_media":412,"comment_status":"open","ping_status":"open","sticky":false,"template":"epic_custom_post_template-317","format":"standard","meta":{"footnotes":""},"categories":[8,6],"tags":[10],"class_list":["post-366","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-first-time-buyer","category-rent","tag-property-taxes"],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\n\n\t\n5) Number Of Units In The Building:<\/strong><\/h2>\r\n\r\n\r\n\r\n
6)\u00a0Recent Maintenance:<\/strong><\/h2>\r\n\r\n\r\n\r\n
7)\u00a0Window Responsibility:<\/strong><\/h2>\r\n\r\n\r\n\r\n
8)\u00a0Renovation Process:<\/strong><\/h2>\r\n\r\n\r\n\r\n
9)\u00a0Limited Common Elements:<\/strong><\/h2>\r\n\r\n\r\n\r\n
10)\u00a0Self-Managed vs Professionally Managed Buildings:<\/strong><\/h2>\r\n\r\n\r\n\r\n