Hot properties: high-tech condos

What's Hot

Vamsi Sistla, director of broadband, digital home and digital media at ABI Research's New York branch, says the future value of condominiums "will be impacted dramatically by the kinds of technological amenities they come with. From a value standpoint, having them is a huge bonanza."

ABI Research provides market analyses for manufacturers and service providers of emerging technologies.

Among the services now considered essential, Sistla says, are broadband and cable TV service. Smart developers are forging deals with leading service providers to cut the initial costs associated with such infrastructure, knowing that they will get additional revenues because of what they can offer.

Sistla foresees a trend where residential condo associations partner with phone companies, such as Verizon or Vonage, that provide an Internet-based telephone service called VOIP, or voice over Internet protocol.

"That would be a very smart move for the provider," Sistla says, "because they could have a more centralized process in place. And the association could get a cut whenever someone opted for fiber optics."

VOIP, a rapidly growing alternative to traditional phone service, is considered, by some analysts, a harbinger of things to come.
"Vonage has a million customers today," says Lende. "AT&T already has a VOIP product, and BellSouth says they're going to have it. When the BellSouths of the world start getting into something like this, builders must respond."

Internet solutions to delivering voice, video and high-speed data services require the installation of optical fiber, Lender says, and that's something that can't be retrofitted to an individual unit once a structure is built, because a condo has solid floors and walls with no attic or crawl space.
"It's very important," Lender says, "to have a network in your unit with a smart-box interface so that you have data connections, cable connections and satellite connections at every outlet."
Ethernet is the most common such network, he says. Ethernet ports, used in many offices, can be used to connect one computer to another computer, a local network or an external DSL, digital subscriber line, or cable modem.

The best way to make sure you have the right backbone for emerging technologies, Lender says, is to hedge your bets by choosing a building that offers a hybrid solution -- Ethernet plus wireless.

"If condo builders don't come up with a wireless solution," he says, "people are going to buy their own routers. In a town house or high-rise, that's a formula for disaster. Since the units are close together, if everybody gets their own wireless solution, nobody's is going to work right."

Buying Your First Condo.

Where do I get information on condos?
The major interest group for condominium projects and other so-called common-interest developments is the nonprofit Community Associations Institute,1630 Duke St., Alexandria, VA 22314; (703) 548-8600. Also, check the Internet, where CAI operates an informative site, as does CIDNetworks.

How do you choose between condos and single-family homes?
Using appreciation as a measure, condominiums in some areas have been as profitable an investment as single-family homes in the last five years. And in some markets, condos appreciated even more, according to some experts.
While single-family homes have been the preferred investment by home buyers, changing demographics are helping make condos more popular, especially among single home buyers, empty nesters and first-time buyers in high-priced markets.
Also, the condominium community has worked hard in the last few years to overcome image problems brought on by homeowners association and developer disputes as well as all too frequent construction-defect litigation.

Are condos a good investment?
Condominiums have held their value as an investment despite economic downturns and problems with some associations. In fact, condos have appreciated more in the last few years than when they first came on the scene in the late 1970s and early 1980s, experts say.
While there are lots of reports about homeowners association disputes and construction-defect problems, the industry has worked hard to turn its image around. Elected volunteers who serve on association boards are better trained at handling complex budget and legal issues, for example, while many boards go to great lengths to avoid the kind of protracted and expensive litigation that has hurt resale value in the past.
Meanwhile, changing demographics are making condominiums more attractive investments for single home buyers, empty nesters and first-time buyers in expensive markets.

Are condominiums risky to buy?
While condos never had the kind of appreciation experienced by single-family homes in the 1980s, most ultimately have not lost value, say some experts. And with high prices in many urban markets and more single home buyers in the market than ever before, the market for condos is strong. (Is this good for potential buyers?)
As with any home purchase, you should do your homework about the neighborhood or development before you buy. In the case of condominiums, it is important to read the past six months of homeowners association minutes to see how effective the board is and to learn about any possibly detracting issues (such as protracted litigation with the developer).
The condominium community has worked hard in the last few years to overcome image problems brought on by disputes and lawsuits. Associations are becoming more sophisticated about property management and taking steps to prevent legal problems and disputes.

Are one-bedroom condominiums a good investment?
One-bedroom condominiums historically have not been considered as good an investment as condos with two bedrooms or more. But in high-cost markets, such as Manhattan or the San Francisco Bay Area, one-bedroom condos have proven to be equally good investments. Helping that along are changing demographic trends. With more single home buyers in the market today than at any time in history, there is more demand for one-bedroom condos.

"The Condominium Bluebook" by Branden E. Bickel, B&B Publications, San Francisco, CA; 1994; call (415) 433-1233).
Community Associations Institute, Alexandria, VA; (703) 548-8600.

Condos surprises... Dont Get Burned!

Special assessments
Special assessments to cover repairs and replacements of building components aren't the only potential surprises looming for buyers of converted condos.
Other surprises that might pop up...

Restrictive covenants
Every condominium project has rules and restrictions that govern what unit owners can do. Got a pet? Make sure your building is pet-friendly. Want to rent out your unit? Confirm that the building allows rentals and the minimum term required.

Empty buildings
With speculators buying as much as 70 percent of some condominium projects, a purchaser might be in for a rude awakening when he realizes that the building is nearly vacant. Gone are the opportunities for socializing and making new friends; instead, the building might be frequented by real estate agents trying to resell units.

Too many tenants
If speculators cannot resell their condominiums - as some analysts predict if the market becomes saturated - they'll seek to cover their monthly expenses by renting the units. In that case, a building in which a developer sold a large number of units to speculators and investors could potentially be filled with renters. That can create friction with condo owners in the same building and lead to maintenance issues.

10 INSIDER CONDO BUYING TIPS

1. Square footage can be measured any number of ways in condominium plans. Don't believe numbers presented to you. If exact measure is important, carry a measuring tape, and work consistently from the inside measure of condo apartments. Divide the asking price by the number of square feet to arrive at dollar-per-foot costs that you can compare.

2. Parking can be an uncovered stall, a covered stall, indoors but unheated or indoors heated and secured. Its legal status can be either assigned common-area space, or legally-titled ownership. If it is assigned, it should be protected by a formal lease agreement.


3. Construction of condominiums can vary dramatically. Concrete obviously is more long lasting and generally quieter than frame construction, but "post-tensioned" concrete construction can have problems requiring maintenance. Concrete transmits tapping sounds, while wood-frame buildings can quiver slightly under heavy footsteps. Quality will be your best investment, and I can identify the construction types and any sound issues as you shop.

4. Conversion of rental buildings to condominium ownership has created both opportunities and pitfalls. Some older high-quality concrete buildings have become condos at very affordable prices. As well, some well-built wood-frame rental buildings are being sold as condo apartments at prices that compete with the cost of renting! Yet some low-quality rental buildings converted to condominium ownership are simply not worth buying into.


5. Heating is an important issue in cold weather condo buildings. In apartment condos it is usually central hot-water heat, which means the cost is absorbed by your monthly condo fees. Older hot-water heating systems can at times be noisy, but I still prefer it! Electric heat is convenient, quiet and controllable in each room, but it's expensive. New in-floor radiant hot-water heat is wonderful for warm toes, but if you turn the temperature down, it takes a while to respond.

6. Renters will be found in any condo building, as renting of units can no longer be prohibited by condo bylaws in Alberta. That's good for your flexibility as an owner, but find out how many renters are in the building. If it's primarily renters, largely investors own the building, and they may not share your standards of operation and maintenance. You may also find less of a sense of community in the building and on the board of directors.

7. Age mix of owners might seem a strange consideration, but if you're a yuppie, do you want to live in a retirement home? And if you're enjoying a quiet retirement, you probably want neighbors you can relate to and make friends with. In short, condominium projects can become small communities where—if you choose the right one—you can make many friends and enjoy an in-house social life.

8. Condo documents are necessary to evaluate any condominium project before you buy. Sellers should have them on hand for you to review on site, and if you have an agreement to purchase, they should be handed to you without hesitation. These include the Condominium Plan, financial statements and budget, the reserve fund study, minutes of the recent annual general meeting and even board meeting minutes, so you have insight into how the complex is being run. If you purchase, your lawyer will obtain an estoppel certificate before closing, which will guarantee no surprises in the monthly condo fee or charges owed by the seller.

9. Orientation of the condo is important if it's an apartment facing only one direction, less so if it's a townhouse or duplex bungalow condominium with more exposures. How much sun does the home receive, and is that sun hitting your bedroom windows at 5 a.m. during the summer? You may prefer it, or you might hate it, so be aware of which way/s a home faces and whether it will be bright enough, too hot or too dark for your needs.

10. Real estate agents may be licensed to sell condominiums as well as houses, but do they know what they're doing? Use a Realtor who has taken condominium courses. If you are buying, Realtor services are at no cost to you, as the selling party pays commission, so you might as well receive qualified representation and advice. Whether buying or selling, you want nothing less than top-quality condominium credentials, ability, experience and market knowledge from your Realtor.

Condos Vs. Condo Hotels For Vacation Home

Condo hotels, also called condotels, are a relatively new concept in vacation home ownership. Rapidly gaining popularity, numerous condo hotels are now being built in Florida, Las Vegas, Chicago, Toronto, the Caribbean and many other locales around the U.S. and the world. To help illustrate the unique qualities of condo hotels, here's a look at how they compare with traditional condos.

AMENITIES
Condos - The average condo has a community pool and some common areas.
Condo Hotels - A condo hotel has many of the amenities you would find at a four- or five-star hotel. In addition to a pool (or pools), there is probably an on-site restaurant (possibly several), a lounge, a full-service spa, a state-of-the-art exercise facility, poolside bar, etc. The amenities in a condo hotel are far greater than what you would typically find in a condo.

FURNISHINGS
Condos - Condos are usually sold unfurnished. You may decorate your unit as you like, and you pay for all furnishings.
Condo Hotels - A condo hotel unit is delivered to you completely furnished, typically with high-end furniture, appliances and fixtures selected by a professional interior designer. All units are decorated the same, more or less, much like hotel rooms. Condo hotel units are delivered user-ready upon receipt. The cost for furnishings is included in the price of the condo hotel unit.

SERVICES
Condos - You are responsible for your own housekeeping and unit upkeep. Services are usually limited to maintenance and possibly security.
Condo Hotels - You get daily housekeeping as you would in a luxury hotel. You have access to room service, concierge services, maintenance services and check-in services. The vast majority of condo hotels are operated by big-name hoteliers like Ritz Carlton and Hilton, the consummate professionals when it comes to customer service. Most of the same services available at their high-end hotels are offered at their condo hotels.

LOCATION
Condos - Condos can be found in almost every major market across the country. Some condo developments are in resort areas, while others are not.
Condo Hotels - At this time condo hotels are only available in a handful of locations, all of which are major vacation destinations or highly desirable cities, such as South Florida, Las Vegas and Chicago. Condo hotels are usually built on the most desirable pieces of land such as on a golf course, overlooking the ocean or in the heart of a major city.

PRICE
Condos - Prices for condos can start as low as $70,000.
Condo Hotels - Units start at $200,000, and most are substantially more. An oceanfront four- or five-star condo hotel unit can cost $500,000 to over $1,000,000.

RENTAL INCOME POTENTIAL
Condos - You have the option of renting out your unit when not using it. However, you are responsible for finding your own renters, preparing the unit for those renters, dealing with any maintenance issues that arise and collecting the rent. The condo association’s approval may be required on renter issues. You keep 100% of the rental revenue.

Condo Hotels - All details are handled for you. When you’re not using your condo hotel unit, you simply place it in the rental program. Renters would be found for you, and all aspects of the renters’ stay would be handled by the hotel management company. The entire process would be hassle-free for you.

You would receive a portion of the rent revenue, typically 40%-50%; the balance would go to the management company. Because the condo hotel most likely is a national or international hotel chain (such as Hilton or Ritz Carlton), it has a global sales force, multimillion dollar marketing campaigns, loyalty programs, a centralized reservation system and a strong Internet presence, all of which suggest that the property’s management would probably have better success at keeping your unit rented than you would as an individual condo owner.

APPRECIATION POTENTIAL
Condos – Whether your condo will appreciate or depreciate depends strongly on its location. Because there are so many condos on the market, the rules of supply and demand often help keep prices down. For the same reason, condos can be hard to resell.

Condo Hotels – Because condo hotels are a relatively new type of property investment, they are limited to just a handful of locales across the country. The supply is small and demand is currently high and growing, all of which contribute rapid and significant appreciation. Another factor to keep in mind when reselling a condo hotel unit is that you’re selling not only the actual unit but also the luxury lifestyle that comes with an amenity-filled, high-service property.
Many condo hotels are sold out in pre-construction. Often the developers, sensing the high demand, will themselves raise prices many times before all units are gone.

For example, The Mutiny condo hotel located in Coconut Grove, Florida was the first condo hotel to be built in South Florida. From the time the developer began accepting deposits until it sold out in pre-construction, there were nine price increases. People who bought early did exceptionally well.

Joel Greene is the President of Condo Hotel Center, a licensed real estate brokerage that specializes in the sale of condo hotels. For more information on condo hotels -- including property listings, photos and prices -- visit his website at http://www.condohotelcenter.com/.
Be sure to sign up for the Property Alert e-newsletter at http://www.condohotelcenter.com/ to receive notification when new condo hotels come on the market and are available at pre-construction pricing.
By Joel Greene

The three myths of condo investing

MYTH: Get in early and you'll be guaranteed a profit.

Remember the lust for Internet IPOs? Ordinary investors bid up the stocks of hot little companies that hadn't even registered their first sale yet. Today's version is a preconstruction condo, where investors jockey to get into a project not yet built, certain the units will jump in value when completed.

But getting in early doesn't guarantee riches anymore. That's because developers have caught on to the demand and are now selling preconstruction properties at market prices, says Kimberly Kirschner, a Miami agent who specializes in new condos.

Also, developers are requiring buyers to reserve their units earlier -- as much as three years in advance. That's an awfully long time to assume a hot condo market will continue to boil.
So when it comes to preconstruction, skip that line. Instead, buy an existing unit. While preconstruction purchasers can wait up to three years with very little to show for it at the end, you can collect 36 months of rent to put toward paying off your mortgage and building equity. If prices continue to appreciate, great. But that's a cherry, not the whole sundae.

MYTH: Creative mortgages lower your payments and guarantee positive cash flow.
New twists on adjustable-rate mortgages and interest-only loans can make condo investing seem like a lark. But some of these things could slaughter you if prices fall when you have to sell.
The riskiest is called an option ARM, which features several payment choices each month, including a standard interest-and-principal payment, an interest-only payment and an interest-only minimum payment that's so low it doesn't cover the month's interest charge. The unpaid interest is rolled into the principal, meaning that -- yes -- you're charged interest on your unpaid interest.

Fort Lauderdale resident Bruce Palmer, 50, recently signed up for an option ARM that cuts his monthly payment on a $417,000 investment condo by $500. As a result, his two-bedroom in Fort Lauderdale should generate a profit of $350 a month.
Palmer, a commercial pilot, says he sees the risk. Paying the interest-only bare minimum means his mortgage is growing, not shrinking. If local prices were to drop, his loan balance could exceed the condo's value.

But Palmer is confident, building a war chest to snap up properties. "If I could leverage more," he says wistfully, "I would."
Gary Eldred, author of "Make Money with Condominiums," worries about such sunny thinking. Most condo investors should avoid option ARMs, he says, and either put down more money to lower the monthly payment or consider buying -- gasp -- a less expensive unit.
Whatever your choice, Eldred says your expected rent should cover at least 70 percent of your total monthly costs. Tax write-offs on condo losses can help close some of that gap, he notes. (Up to $25,000 in losses, excluding mortgage-principal payments, can be charged against total income of less than $150,000.)
And he argues that rising rents should, over time, cover the rest. (With condo prices soaring, Eldred predicts that condo rents will follow as would-be buyers get priced out and rent.) More cautious investors would want their rent to cover 100 percent of carrying costs or more.

MYTH: You should buy in your backyard, where you know the landscape.
Too few condo investors recognize one of the best reasons to buy: It can help diversify your real estate holdings so that your portfolio doesn't rise and fall solely on hometown economics and events. (Even if property is a relative bargain in your area, buying wisely elsewhere can make more sense than buying too much property locally.)

New York City attorney Richard Savitt, 40, never thought about all this 18 months ago, when he abandoned hopes of investing in Big Apple condos and bought in Philadelphia instead.
"We just thought New York prices were crazy," he explains.
But it sure looks wise now. Savitt and four partners bought four one-bedroom condos, each around $300,000. Similar units now list for as much as $450,000.
To help you determine where to invest, take the average price at which units are selling in a city and divide it by the annual rent the average apartment there generates. That will produce a price-to-rent ratio. The lower the better. Houston, Atlanta and Philadelphia, for instance, still look relatively good, while New York City and San Francisco do not.

In Minneapolis, Chris Cowen and four other condo investors who've become pals gather at a bar for their fortnightly meeting. Jahn Dyvik, a 42-year-old engineer who sold his Porsche Boxster to help fund more condo buys, says lower prices in neighboring St. Paul make that city the better bet.
The rest of the group is sticking with Minneapolis, where they think prices will rise faster. Two others have also sold their cars. All have home-equity loans.
Where are prices headed? Cowen's not sure. The long-term case for condos looks good, but all the building out there makes him nervous. "People have unrealistic profit expectations."
Not him, of course. "No one has a crystal ball. But the condos I've bought are going to go up."

Cuckoo for condos!

Get in early! Get out fast! Sound familiar? Everyone knows how the dotcom party ended. Right? Right?

Mix it all together -- rising prices, record levels of construction, fast-and-loose mortgages and swelling ranks of new investors -- and you get a market more volatile than Tom Cruise.

"To some degree, what's driving condo prices is sheer greed," says economist Gleb Nechayev of Torto Wheaton Research, which forecasts a relatively mild drop of as much as 3 percent for U.S. housing prices overall in the next year. "Condo prices have increased faster than single-family homes -- and they will fall faster."

As they did little more than a decade ago. Overbuilt and over-concentrated in city centers, the condo market collapsed in the early '90s, smashing overstretched owners in the process.
No one knows when history will repeat itself. But c'mon: The easy money has been made. The right time to invest is not after a record five-year run-up in prices. It's not when the supply of new product is set to nearly double.

If you're really drawn to the market, you need a deeper understanding of what's driving prices up -- and what can drive them down. Above all, don't confuse what's worked in the recent past with what will work over the long haul.

The case for boom
Condos still have plenty going for them -- namely, 76 million baby boomers. You know the demographic drill by now: As they become empty-nesters and retirees, they'll sell their rambling homes in the burbs and move into yard work-free condos (or at least purchase them as second homes).

They're expected to continue flooding into aging-friendly locales like Arizona, Florida and Nevada, but they'll also be flocking to traditional city centers as downtowns become safer.
Don't forget the children of boomers, adds veteran condo investor and National Association of Realtors chief economist David Lereah. They'll need affordable places to get started, and many already see entry-level-priced condos and townhouses as a great way to build equity so that they can trade up.

"It's hard to concoct a scenario where condo prices collapse in most markets," Lereah argues.
A good condo pick that's soundly financed can be about as hassle-free as real estate investing gets. Gary Eldred, author of "Make Money with Condominiums," notes that association fees typically cover the standard repairs you'd have to oversee on a traditional house.
"Condos," Eldred says, "are perfect for people who want a passive investment."

The case for doom
Even the best investments can get overvalued, however. Condo fans cheer the 15 percent average annual spike in prices these past four years, but fail to remember that number was about 2 percent in the '90s. Last year, for the first time, the median condo cost more than the median home -- $9,500 more.

Prices in some parts of the country look even more ridiculous when you compare them to the low rents that condos currently generate.

In Minneapolis, for instance, the average downtown condo sells for just over $256,000, up 77 percent from mid-2000. But area apartments rent for a measly $915 average a month, down from $918 four years ago, according to Torto Wheaton Research.

Even with a 20 percent down payment, a 30-year fixed-rate mortgage would cost $1,150 a month. This condo investor is $235 a month in the hole -- even before paying association fees and taxes.

Growing fears of overbuilding are also cause for pause. With so many condos being built today, one has to wonder: Who's gonna rent them? Apartment vacancy rates have been rising.
"My guess is construction is growing faster than demand in some markets," says Raphael Bostic of the University of Southern California's Lusk Center for Real Estate.

CONDO CONVERSION CRAZE

The low interest rate affliction that has crippled apartment fundamentals for several quarters is driving the biggest condominium conversion boom in two decades. Condo developers are swarming markets across the country, paying a premium to acquire and transform rental properties into condos.

While the successful sale of condos can generate cash-on-cash returns of between 15% and 30% or more in a matter of months for converters, the trend also enables apartment owners to cash out at the top of the market. In addition, conversions create more affordable housing in areas famous for steep single-family home prices.

How hot is the conversion trade? Through mid-May of this year, condo converters paid $1.6 billion, or $155,400 a unit, according to New York-based Real Capital Analytics. If that pace continues for the balance of the year, the dollar amount paid by converters to acquire apartments will easily surpass last year's total of nearly $2 billion, or $123,575 per unit.
“There's hardly any major or quasi-major market where condo conversions — even downtown loft-type of conversions — haven't caught on,” says Arthur Nevid, managing director of investment and lending for Charlotte, N.C.-based Mountain Funding. The firm provides senior and mezzanine debt, as well as preferred equity, to opportunistic developers for condo conversions and other property types. “Everybody's jumping on the bandwagon to get into the conversion business because it seems so exciting and so robust,” says Nevid. “It's a fever, and it's all over.”

The Strategy Behind Conversions
Converters typically search for apartment-to-condo conversions in desirable locations where they won't directly compete with affordable entry-level homes. Rather, converters want to offer an alternative to pricier single-family homes or to costlier condos in new developments nearby.
Developers figure out how much units will fetch and then determine how much they need to spend to improve the property and units. Upgrades are typically made to the property's exterior and common areas. Amenities such as granite counter tops and wood floors are often added to individual units, for example. The upgrades are built into the condo prices. Armed with that information, converters tabulate how much they can pay for a property and still generate desired returns.

Once converters acquire an apartment property, they generally convince about 10% to 15% of the existing renters to buy — usually at a discount to the price outside buyers will pay — before marketing the remaining condos. One key to selling condos is to convince buyers that they are better off owning versus renting, which is done by pointing out the benefits of the current low interest rates, the mortgage interest tax deduction and how property appreciation increases equity, says Robert Kaplan, managing director in Holliday Fenoglio Fowler's Miami office.

Small Space Solutions

The cramped elevator. The jutting corner in the living room. Even the protruding windowsills.
All are serious obstacles to innovative, urban decorating in the condensed world of condominiums. Plenty of people still crave thousands of square feet, massive gourmet kitchens and room for theater seating as homes continue to swell, but those on the first rung of the real-estate market are facing the exact opposite problem: shrinking floor plans.

These days, the average condominium in the hot urban market is about 750 square feet, according to Warren Ballard, vice president of Williams Marketing, which markets condo developments.

The growth in condo sales has been spurred by a revitalized downtown and even surging energy costs, prompting people to move closer to limit their commute, he said. But the more condominiums are built, the smaller the affordable ones have become. And this extends beyond apartments and condominiums. Cramped rooms in Craftsman homes and bungalows don't always allow much more room for decorating.

Figuring out a design scheme for less-than-generous living space requires some planning and flexibility, and it helps to have taste that leans to contemporary.
With a little creativity and help from stores that cater to urban living, you can master your floor plan.

Deborah Crump, marketing director for home store Kasala, said it's easier than ever to shop for furniture for small spaces.

"The good thing right now with furniture is there's so much wonderful stuff out there that is multifunctional and scaled in different ways," she said.
Here are some things to consider before you head out to shop, broken down by pieces for the living room, dining room and bedroom:

Sofas
Overstuffed sofas work in massive suburban homes, but clean lines work better in small spaces. Width is the biggest constraint for sofas, and modern sofas have thinner arms or no arms at all. They also are typically off the ground for an airier look, Crump said.
Consider:
• Sleeper sofas. These often have a cleaner look than a traditional futon, plus they can transform your living room into a spare bedroom.
• Loveseats. If you are set on a style of sofa that's too wide, a loveseat can accommodate your taste without overwhelming your space.
• Daybeds. These backless sofas can be dressed up with pillows and provide an extra bed for a guest. They add an elegant, slimmed-down look to your home.
• Chairs. Two armless chairs put together can function as a sofa and are convenient for parties, when they can be separated for guests.
• Sectionals. You don't have to give up the comfort of an L-shaped sofa in a smaller home. Sectionals offer a variety of choices, including loveseats next to a chaise, sofas and ottomans.
Jason Hallman, co-owner of modern home store Area 51 in Seattle, recalled that one customer created a 62-inch-wide sectional by combining a chair with a chaise "just to get that L-shape."
"A lot of people like hanging out in the corner," Hallman said. "It's the sweet spot in the sectional."

Tables and chairs
There are fewer compromises for scaled-down tables, however, since most people want a table big enough to entertain several guests. One solution is to buy a table with a leaf or two that allows you to expand it when needed. Tables are more innovative today, with built-in leaves that slide or flip open.
Glass-top tables are another way to open up a room visually. And small "bar," "pub" or "gathering" tables — taller than standard dining-room tables — work for those with limited space. Combine a bar table with stools without backs to lend a feeling of openness and squeeze into spaces where chairs won't fit, said Jön Milazzo, co-owner of Retrofit Home in Seattle.
If you want chairs, think about downsizing, including eliminating arms to save your guests the trouble of squeezing in and out of their seats, said Linda Seefeldt, manager for Dania Home & Office's Southcenter store.

Bedroom furniture
A small bedroom can feel constrained by a substantial bed, and it can be a struggle to keep a bedroom feeling spacious.
Platform beds, which typically are lower to the ground, are one way to open up a room. Some have smaller headboards and storage drawers underneath, Crump said.
Some people have downsized from king-size beds to queen-size to accommodate a smaller room, Hallman said. Many also are reducing nightstands, taking one out or eliminating them altogether, he said.
He suggested replacing a nightstand with a rolling side table. They take up less room and can be moved between the living room, where they work as a side table, and the bedroom, where you can use them for your book and water glass.
"You have to sacrifice somewhere," he said.

Pulling it all together
Milazzo and Lori Pomeranz, Retrofit Home co-owners, recently were hired to decorate a Queen Anne one-bedroom condominium for a real-estate developer who wanted to show potential buyers how to use the space.
Preserving views out the expansive living room windows and showcasing the fireplace were priorities for the design team, but they encountered space issues as a full sofa would have blocked bar stools at the kitchen table.
Instead, they chose two armless sofas set in an L-shape that still offered views out the windows and plenty of seating. And they picked a low coffee table big enough for a gathering but low enough that the fireplace is in full view.
"It's very organized and fairly geometric," Milazzo said. "There's not a lot of room in a small space to have everything be chaotic and overfull."
In the bedroom, they used bamboo nightstands with just a shelf and no drawers to keep the bedset from feeling too big.
And they picked a ladder shelf for the hallway that narrowed at the top and opened up the space.
But before they did any of this, Milazzo and Pomeranz first sketched the furniture onto a floor plan.
Store consultants recommend you do the same. Take plenty of measurements, including doorways, counters, windows, windowsills and elevator doors and sketch where you think items will go.
Once you finish that task, you're ready to shop and then put it all together.
Remember to keep everything symmetrical and open in small spaces.
"You can't put every piece of furniture you ever wanted into a room anymore," said Dania's Seefeldt. "You really have to select it."

7 Questions You Must Ask Before Buying A Condo

"What's the Beef?"
Take a look at the minutes of the association board meetings to see what the owners have been Association griping about. If everyone was complaining about the faulty You plumbing or the gardener's absence, you know that the complex is having management difficulties. Even if there aren't any complaints, reading the minutes will reveal the sorts of projects that are under way at the complex -- projects the seller may have neglected to mention.

"Who's Been Naughty and Who's Been Nice?"
Find out the delinquency rates of present owners. If people aren't paying their association dues on time, that is either a sign of discontent or an indication that the association might be underfunded.

"How Much Is In the Repair Fund?"
Ask if the community has done a reserve-fund review in the past five years. Lester Giese, the author of The 99 Best Residential & Recreational Communities in America, recommends the following formula: If the complex is one to 10 years old, the reserve fund should have 10% of the cost of replaceable items (roofs, roads, tennis courts, etc.). Between 10 and 20 years old, the repair fund should be at 25% to 30%. At 20 years, that amount should be 50% or above. Residents who brag that they don't pay much in maintenance may be in a complex that either is not being kept up well or is living beyond its means.

"Can You Cover Me?"
If you look at nothing else, get a copy of the certificate of insurance, which is a summary of the association's policy. First see if the replacement costs covered by the policy are an accurate estimate of the cost of rebuilding. Then make sure that the policy has a building-ordinance clause, which means that the insurance will cover the cost of bringing the building up to code if there is any rebuilding to be done. On older buildings, there may have been many code upgrades since the time of construction. Finally, make sure that you understand exactly what the association policy covers and what you are responsible for. The smart condo owner will insure his or her personal belongings, along with any other items within the unit that are not covered by the association's policy. If you have trouble understanding the insurance lingo, take the insurance certificate to an agent whom you trust and who understands the state laws.

"Does the Association Present Any Legal Problems?"
Buying a single-family home without a lawyer is no big deal for many people. But with a condo, there's so much more involved. Contact a local real estate lawyer and have him or her go over the bylaws of the association. Do they make sense? Are they consistent with the state laws? Giese, the author, once found that the association bylaws of a large garden-style condo complex had been lifted from the books of a high-rise condo, leaving confused tenants with rules about shared hallway space and the correct use of garbage chutes. Benny Kass, a Washington real estate attorney, recommends that you also have your lawyer screen the association at the local courthouse, to see if any owners have filed suit against it.

"Is the Complex Renter-Friendly?"
If the renter population is over 10%, there should be clear rental policies, either listed in the by laws or tacked on as an amendment. Does the management company find renters for you? If so, do they get enough good renters? Ask other tenants about their experience. In addition, ask to see the association's rental lease, and have a real estate lawyer look it over. Keep one thing in mind, though: An association can change its bylaws to prohibit or restrict renting at any time. The more owners who rent, the less chance that will happen.

"Am I My Community's Keeper?"
Watch out for a condo whose owners manage the place themselves. Although many are operated efficiently, self-management can lead to more hassles for owners -- especially those who live thousands of miles away. If the complex is professionally managed, check out the management company as thoroughly as you check out the association. Ask other owners. Ask people in nearby buildings. And be sure to interview the day-to-day manager directly. If you hook up with a bad manager, you can be sure of this: Your dream condo will keep you up at night.

Nuts & Bolts of Homeowners Associations

What is a homeowners association and why do they exist?

Condominiums, cooperatives, planned communities and other forms of homeowners associations ("HOA") are to allow the owners to administrate and manage their community. One of the main purposes of the HOA is to enforce a set of covenants (promises) which bind all owners. The covenants are usually contained in a document called a Declaration of Covenants, Conditions and Restrictions ("CC&Rs"). Many HOAs include common property, such as pools, greenways and private roads and in the case of condominiums, usually building structure, walls, roofs, plumbing, wiring and other aspects of the building. Individual property owners are required to pay assessments (usually monthly) to enable the HOA to operate the association and maintain the common property.


Who serves on homeowners associations, what do they oversee and how are such associations governed?

HOAs are usually governed by a board of volunteer owners elected by the remaining owners. The board holds regular meetings to enforce the CC&Rs, to establish a budget, authorize expenditures, collect assessments, problem solve, and oversee maintenance of the common property. The board acts in much the same way as a corporate board of directors. Many HOAs also utilize committees to help administer the association. For example, Architectural Control Committees are commonly used to maintain architectural consistency in the neighborhood.


What kind of legal power do such associations have to enforce their rules?

The main source of legal authority allowing an HOA to enforce its rules comes from the recorded CC&Rs and Bylaws. Because the documents are recorded on the county real estate records, home buyers become legally bound by the valid provisions of these documents when they purchase their homes. Condominium and Planned Community HOAs also have the additional backing of state law, which clarifies legal authority in many ways. HOA laws may also provide additional legal authority not contained in the HOA's documents. All condominium HOAs and many subdivision HOAs are governed by specific state law. HOA actions are usually upheld in court if the authority is provided in the documents or by statute and the board acts reasonably in carrying out the authority.


If I buy property in an area governed by a homeowners association, how will I know the rules? And what is my recourse if I disagree with a rule?

The CC&Rs and Bylaws are recorded documents and potential buyers should obtain a current copy and read them before buying. The CC&Rs permit the HOA to make rules and regulations governing the conduct of the members and the use of the common property. The HOA should have copies of all its current documents available for review, or sometimes you can get a copy from a title insurance company.
Homeowners that disagree with a rule should address concerns to the board. Rules can be amended or revoked if they are unreasonable, unnecessary or simply unwanted by most owners. The amendment or revocation will likely require a member vote. Voting requirements are usually found in the documents. If owners disagree with a rule and are unsuccessful in getting it amended or revoked after following the proper procedures within the HOA, the owners can always bring a legal action to declare the rule unenforceable. However, this could become very expensive, especially if you lose since most HOA documents require the owner to pay the HOA's attorney fees if the owner loses.


What are some of the common problems faced by HOA boards? Do you have any suggestions for how such associations might be run more smoothly?

Rule creation and enforcement are an area of concern. Owners need adequate notice of any alleged rule violation, including an opportunity to be heard before any fines are imposed. When owners fail to pay assessments, the board often struggles on how best to get payment. When conducting meetings, it is recommended that the board use a guide like Roberts Rules of Order. This will allow orderly participation of HOA members and assist the board to reach decisions on important issues.

It is not uncommon for volunteer board members to have little experience in running an HOA. For this reason, it is important that all directors become familiar with the governing documents. While the documents often outline the steps necessary for proper action, some situations may require some guidance from someone with more experience. Many HOAs hire management companies to assist with administrative duties. Experienced attorneys also provide needed assistance in interpreting and amending documents, assessment collection, internal dispute resolution and other complex issues.

Finally, and perhaps most importantly, harmony can be sustained by encouraging open communication and cooperation between owners and the board.


Where can I get more information about homeowners associations?

Community Associations Institute (CAI) is a national organization with many state chapters that specialize in HOA issues. CAI publications provide a variety of interesting and relevant information, including tips and guidelines in problem solving. CAI hosts seminars, vendor fairs, and other activities that provide valuable education and information. http://www.caionline.org

Regenesis is the largest homeowner association resource in the world. Among its pages, are links to all available state HOA statutes, books, videos, software, sample policies and forms and much more. http://www.regenesis.net/

Condo associations can be the pits!

These associations typically are run by residents, not professionals. So, all kinds of nightmares can ensue. Petty personal spats can turn into fines that turn into liens or lawsuits that can even turn into seizures and auctions. Even seemingly innocuous issues can become full-fledged battles.

Here’s a small sample of condo-association controversies:

• A Northern Virginia condo association has twice ordered residents to take down American flags that went up after Sept. 11. The first time, the association backed off after protests, but it renewed its demands this year saying the flags are tattered and worn.
• A Houston condo association mounted a four-year legal battle against a resident who complied with his doctor’s advice to install a window-mounted air conditioner. (The complex’s central AC didn’t filter out the dust and mold that aggravated the resident’s breathing difficulties.) The association won the first round when a judge ordered the resident to remove the unit and pay $100,000 in legal fees and costs, but it dropped the fight when the resident won a new trial.
• A Laguna Hills, Calif., condo association is threatening to kick out any residents who don’t pay their shares of an $8.36 million special assessment to repair water and mold damage. The residents say they wouldn’t be facing the $9,000-per-unit assessments if the association had done its job and properly maintained the property.

Those shared maintenance costs, by the way, are a real bugaboo.

It’s nice not to have to mow the lawn yourself and to have someone else clean the pool. But many condo associations do a poor job of keeping up with maintenance and repairs. One out of three associations, according to Association Reserves of Calabasas, Calif., doesn’t have enough money in the bank to pay for needed upkeep.And that affects your bottom line. If your fellow residents let the complex go to pot, your unit’s resale value will suffer.

Your investment is in your neighbors’ hands in another way, as well. If enough of them become landlords, you could have trouble selling your unit. Lenders often balk when renters make up more than a third of a condo complex’s occupancy.Condo owners in hard-hit Southern California learned about this potentially vicious cycle during the last recession in the early 1990s. As real estate values started to drop, those who couldn’t sell their units for what they owed on their mortgages often decided to rent them out instead. That made it harder for those who remained and wanted to sell. The more values dropped, the more renters appeared, and the more lenders refused to offer mortgages to potential buyers.

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CONDO FACTS 101

• Owners of condos hold title to the unit only, not the land beneath the unit, so condos can be stacked on top of each other.
  
• All condo owners share title to common areas. Common areas include land, the exterior of buildings, hallways, roofs, swimming pools -- any area used by multiple owners.
  
• Condominium owners pay property taxes on their individual units.
  A property owners' association usually manages the complex and collects fees from all condo owners in order to maintain common areas.
  
• If you own a condominium, your condo association probably has a master policy that insures all the property and common areas that are collectively owned by the unit owners. You, the unit owner, is responsible for insuring the inside of the unit.
  
• “Condo-Docs" contain the final, exact details including the site plan, floor plans, maintenance, amenities, rules, by-laws, budget, etc. Upon receipt of the condo docs buyers then have 15 days in which to review the documents and have the option under Florida Law to cancel the contract for new condominiums. There is no risk within this 15 day period.
  
• When shopping for previously owned condos you must be provided a current copy of the declaration of condominium (Condo Docs), articles of incorporation of the association, bylaws, rules of the association, a copy of the most recent year-end financial information and the question and answer sheet more than three business days prior to execution of a contract.
  
  Remember, "owning" a condo means you own your possessions inside of it and to a certain extent, the floor and ceiling. But you don't own the walls. You share them and must make concessions because of that fact.
  

Tips For Buying Your Condo As Second Home

• Determine how you will you use your second home. Do you want a second home for vacation, investment or retirement purposes?

• When researching locations consider climate, cost of living, recreational activities and proximity to your family or primary home.

• Choose a location with features that interest you. Do you like the beach? Do you golf or ski? Do you like hiking and nature trails? Do you enjoy the theatre and the arts?

• Determine your ideal travel distance. Can you drive there? Can you afford to fly every time? How close will you be to family and friends?

• Purchase your property through a real estate professional that has experience with second homes. The right agent or broker will make your search more efficient and more enjoyable.

• Make inquires with local residents, visitor centers or chambers of commerce.

• Do your research. There are a lot of resources online today, and some even geared specifically to buying second homes.

• Visit the desired destinations. Eat dinner at the local restaurants, walk through the main part of town, explore nearby parks and outlying communities.

• Get organized and make sure your finances are in order. Check your credit report and be pre-approved.

• Remember to have fun!