D - Buying a Condo




With close to a 1,000 condos for sale at any given time in Orange Beach, Gulf Shores, Perdido Key, and Pensacola Beach, they offer a great opportunity to own property on the Gulf Coast. Condos provide an affordable alternative to single family home ownership, and usually allow for a simpler lifestyle with less upkeep. While the advantages to owning a condo are plentiful, there are some important factors that need to be given close consideration when buying a condo so that you are sure to buy the perfect unit in the ideal complex.


How do you intend to use the condo?

First, you must determine your reason for buying a condo. Are you interested in owning a condo to use it personally, to rent it, or a little of both? If you will strictly be using the condo for personal use, then you certainly need to approach your search from the standpoint of what is going to make you happy and satisfy all of your needs. You may want to give consideration to such variables as rental restrictions, the location of the condo, the size of the complex, the number of units, the floor you want to be on, and how many bedrooms and baths you need.

If your intention is to rent the unit, you will want to approach your buying decision from a renter’s viewpoint and give higher consideration to the complex amenities, the rental history, the expenses associated with owning and renting, cash flow, wear and tear on the unit, and the supply and demand for different sized units. If you know what you hope to get out of owning a condo and have given consideration to all of the advantages and disadvantages to both personal and rental uses, your search for the perfect unit will become much easier and you will be ready to focus on the other aspects of condo ownership such as the condo association, covenants & restrictions, and associations dues.

Is the association operated well, is it financially sound, and what covenants & restrictions are in place?

Purchasing in a complex with a condo association that is operated efficiently and is in a healthy financial position is paramount to your enjoyment of the unit and a successful financial investment. Before finalizing any offer to purchase a condo, you will want to be sure to review the covenants & restrictions and detailed financials of the association. The covenants & restrictions will allow you to be sure that the rules and regulations of the complex are in line with the way you intend to use the unit. The financials will tell you whether or not the association has a surplus of funds, if most unit owners are paying their dues, what expenses the association incurs, and how well the association handles their funds. If an association or complex is poorly managed, has a deficit, is undergoing large common area renovations or plans to do such in the near future, is in need of repair, is currently levying special assessments against their unit owners or has a history of doing so, you may want to beware.

How much are the association dues/fees and what do they include?

With regard to the association dues/fees, you will want to inquire as to how much they will cost and what they cover. When you buy a condo, you own the space inside the unit, while the association owns all other aspects of the building and complex. This is what allows for a simpler lifestyle with less personal upkeep, but condo owners pay for this luxury via association dues. Dues will typically include the cost of property and liability insurance for the complex, upkeep and maintenance of all common areas, management of the association if managed by a third party, security, and utilities for all common areas. In the event of new construction, renovation, or damage caused to a building that is not covered by insurance, special assessments will usually be levied on each unit owner to pay for such.

What is the age of the building, how is it constructed, and how will these items affect your insurance?

Lastly, you will need to consider the age of the building and the method of construction. Older complexes that have not been renovated and are built of wood are much more susceptible to damage by coastal storms and will likely be much slower to be repaired and back in service after a major storm. In addition, the age and quality of construction will also greatly affect the cost of insurance. Newer buildings with superior construction will be offered much lower premiums not only for the association’s policy, but also for your personal insurance. While insurance for the common areas is paid for through association dues, you still need to strongly consider obtaining a HO6 policy in order to cover your contents and liability within the unit, as well as additional dwelling coverage, medical payments, and loss of rents/use.

While the majority of this guide is focused on pitfalls to avoid when buying a condo rather than the many advantages of condo ownership, it has been written to help protect you and make sure that you get exactly what you desire from your condo purchase. The Niel Group is intimately familiar with almost every complex on the Gulf Coast and is happy to help guide you towards a condo unit and complex that will best suit your needs.

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