For many aspiring homeowners in Chicago, buying a condo is a way to break into the market without breaking the budget. Condos offer the rewards of ownership with less maintenance than a single-family home, and they're often the best option for those looking to buy in highly desirable neighborhoods.
However, with Chicago's real estate market only growing hotter, condo buyers need to do their due diligence to ensure they're making a worthwhile investment.
According to some of Chicago's top real estate agents, here are six things to consider before buying a condo in Chicago.
Keep track of the renters. While the ability to rent your condo could be valuable if you're in a pinch or buying as an investment, renters occupying too high a percentage of a building can have a negative effect. "If it's over 50 percent rented, you could have trouble getting a loan," says Jennifer Mills Klatt with the Berkshire Hathaway HomeServices KoenigRubloff Realty Group.
Even if you are able to get a loan, moving into a building with a lot of renters may not be an ideal situation. Haakon Knutson, director of sales for The MG Group, notes that renters don't always have the same level of care for their units as property owners, which could ultimately affect your common space.
"Owners, especially in smaller, self-managed buildings, have a vested financial interest in making capital improvements to a property along with investing their own sweat equity," Knutson explains. "On the other hand, part of the benefit to renting is that a tenant is not typically responsible for making improvements to the property or doing things like shoveling snow, raking leaves or cleaning the common hallways."
Meanwhile, a high renter-to-owner ratio can also limit your ability to get things fixed around the building, as owners who aren't living on-site may be less likely to vote to spend money on improvements. This could make selling your condo more difficult in the future.
Check the parking. Finding a place to park your car is rarely easy in Chicago. So even if a seller (or a seller's agent) tells you parking will be no problem, don't take his or her word for it. For buyers who will depend on street parking, Knutson recommends driving to where you will be parking at the time you expect to arrive home from work. And he recommends doing it more than once.
So much can vary with Chicago parking. Parking in places like Wrigleyville can be impossible during a Cubs game but easy in the offseason, so it's always best to check out the parking situations on various days. "One individual's definition of 'easy street parking' may vary from another's, so it's always best to confirm in person," Knutson says.
Even if your condo purchase includes a designated parking spot, Knutson advises actually pulling into the spot before finalizing the deal. Some buyers may not notice how tight a spot is, or if there is a dumpster or column nearby that may limit the size of the car you park.
Review the condo association meeting minutes. Purchasing a condo can take a lot of work, which doesn't end once you go under contract. When Mills Klatt's clients hit the attorney review stage, she has one final piece of advice: Check the condo association's meeting minutes. "That's when you're really going to find out the low-down with the building," she says.
Because residents report complaints to the condo association, meeting minutes will often let you in on the secrets of the building, such as the presence of loud dogs, crazy neighbors or consistent phone calls to the police department.
Consider the neighborhood. As you're looking for the perfect location, it's best to check things out for yourself as opposed to relying on what you think you may know about a neighborhood.
Emily Sachs Wong, real estate broker with @properties, tells her clients to take a deep dive into the neighborhoods they like and get to know specific areas within each. "Every four blocks in Chicago is its own little micro neighborhood," she says. This will help you decide which environment is right for you. For example, do you want to live right in the middle of the hustle and bustle, or be a few blocks away on a tree-lined street? These are all important aspects to identify.
"Get out of your car and walk around," Sachs Wong recommends. "Then, if you like that location or intersection, then draw and circle around there" and limit your search to that area.
Look into the assessments. Many Chicago condo buildings have a lot of extra bells and whistles – such as gyms, pools and doormen – that can be attractive to buyers. But it's important to consider the cost.
Some Chicago high-rises have assessments of $1,000 per month or more. Knutson notes, "That cost gets up there pretty quick." If you don't mind investing in a gym membership or shoveling your own walk in the winter, you can save a lot of money.
The monthly costs can be daunting on their own, but special assessments can do even more damage to your bank account. If things like an elevator or roof need work, condo owners may be hit with special assessment costs reaching tens of thousands of dollars. Before making a purchase, Knutson recommends looking into a condo association's monetary reserves to see if it could absorb the cost of a big project.
Inspect before you sign. Some homebuyers make the mistake of conducting a walk-through of the condo after they've already signed a contract. Instead, hire a professional to conduct a thorough inspection of the property before you finalize the sale. That way, you learn about any issues before you agree to buy the property – and any fixes you need to negotiate into the contract.
While hiring an inspector has become commonplace for condo buyers, not everyone is bringing in an inspector with the latest and greatest technology. For example, Mills Klatt makes sure her buyers hire an inspector who uses an infrared gun, which indicates temperature differentials that could potentially show moisture penetration that could lead to mold problems.
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