CONDO WORLD

Hot properties: high-tech condos

2005-11-07T20:59:00.000-05:00

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.

2005-10-31T12:30:00.000-05:00

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!

2005-10-10T00:17:00.000-04:00

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

2005-09-18T19:14:00.000-04:00

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

2005-09-18T11:51:00.000-04:00

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

2005-09-13T20:43:00.000-04:00

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!

2005-09-13T20:38:00.000-04:00

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

2005-09-13T20:33:00.000-04:00

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

2005-08-24T00:16:00.000-04:00

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

2005-06-01T22:53:00.000-04:00

"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

2005-06-01T22:43:00.000-04:00

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!

2005-06-01T06:47:00.000-04:00

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.

Amazing Condo Search Engine!

2005-05-27T08:01:00.000-04:00

I found a extremely useful condo search engine at yourCONDOco.com!

If you plan to buy or sell a condo in the near future, it's worth a look. I have not found any other site that has the detail that is found here and it's Free! Free to post a condo or development and Free to browse about without giving up any personal information.

Condos
Great Condo Search Engine

Real Estate
Great Condo Search Engine

CONDO FACTS 101

2005-05-26T11:35:00.000-04:00

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

2005-05-26T10:29:00.000-04:00

• 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!

Condo Assessments...watch out!

2005-05-13T06:15:00.000-04:00

Typically, a condominium will levy a monthly assessment (Association Fees) to pay for common area elements, such as the lobby, parking lot, security, and any building employees, such as doormen, parking lot attendants or building engineers. What many first-time condo buyers don't realize is that the amount of your monthly assessment has a direct impact on how much you can afford to spend on your mortgage. For example, if your lender said you could spend $1,000 per month on your mortgage, homeowner's insurance premium and real estate taxes, and the monthly assessment of the condo you want to buy is $150, you'll only be able to spend $850 on your mortgage, taxes and insurance. In other words, the amount of the assessment is subtracted from the total amount you can spend on your mortgage, taxes and insurance.

How is the Assessment calculated?
Assessments are based on the annual estimated expenses for the property. The assessments are calculated by using what is known as the Percentage of Ownership. The Percentage of Ownership is based on the square footage of the individual units, and the monthly assessment is proportioned by the size of the condominium. Assessments are always subject to increase or decrease based on changes in budgeted expenses

Special Assessments
Sometimes the condo corporation falls short of money needed to cover all of the complex expenses usually due to an unexpected expense occurring. In this case the board members after careful consideration will put out a call for a special assessment on every owner in the complex. The money collected will be used to cover those expenses. Another example of why a special assessment may be put forward is to help build up the reserve fund in order to keep on target with the reserve fund study. Owners are all expected to pay the required assessment and if they fail to do so the condo corporation can put a lien on their condo unit. The amount of the assessment or otherwise known as the cash call can sometimes be very large and payable at once. Payment schedules are usually set up to soften the blow but not always.

Single Women & Condos

2005-05-13T06:11:00.000-04:00

According to a recent study, single women now make up about 47 percent of the condominium market. Why are condos so popular with women?

Try security, convenience, and near-maintenance free living.

For single women living alone, many condominiums offer such security features as round-the-clock doormen, a live-in engineer (or two, if there are several condo buildings on the property), and either attached, enclosed, or gated parking.

The convenience factor is important as well. In many condo developments, someone is there to receive packages, dry cleaning, and other deliveries. Larger condominium properties may offer a small grocery store, dry cleaners, car washing, and other services that make life a little easier for working women.

Single family homes require ongoing maintenance. Your house may need painting every three to five years, and weekly yard work. If you live in a snowy climate, there's winter work as well.

While you're financially responsible for the maintenance and upkeep of a condominium's common area, typically condo associations oversee the day-to-day management of the property. So if the roof leaks, individual condo owners aren't called upon to find someone to fix it. (Of course, if you want to volunteer for the maintenance committee, you'll probably be welcome.)

Check The Books!!

2005-05-13T06:02:00.000-04:00

How Good Are Your Homeowner Associations Financials?

Buying a Condo or Townhome is like buying shares in a nonprofit Real Estate holding corporation. You don't just buy a home, you enter into a partnership. Check the Associations financials before buying, or you may end up in one of three homeowner associations (HOA's) unable to make major repairs because of insufficient reserves, according to the company, Association Reserves Inc., a company that performs reserve studies for residential and resort properties. This company backs its claim with more than 10,000 reserves studies in 43 states.

What's at Stake?
Condo's, townhomes and some single-family communities are common-interest developments. You own your unit, or at least everything on your side of the walls. But you also own a share in common areas, and sometimes also the exterior walls of living units - and you're responsible for their upkeep.

Guided by a board of directors, the HOA manages dues and other money collected to fund the annual budget. Monies are dispersed for repairs and upkeep of common areas, buildings, other structures, landscaping, lighting, walks, paving, pools, decks and the like, and other operating expenses. If a shortfall develops, the HOA looks to homeowners for more funds, usually by special assessment. This one time fee or short-term increase to monthly dues can run thousands of dollars per owner.

Percent of Reserves Funded
A part of the HOA's budget called the Reserve Fund, available from HOA management, reveals how much cash is available for future obligations. The level of reserves is based on the size, age, construction type, maintenance level and type of community. The American Institute of Certified Public Accountants recommends associations conduct annual reserve studies to guage fiscal fitness, but only a few states mandate them. Generally, if an HOA has 70% or more of the reserves a study says it needs, it's in good condition and there's little chance of an assessment. With 30% to 70% funding, reserves are in fair condition and an assessment may be needed. Under 30%, the reserves are in poor condition and an assessment is likely.

Ask about Owner-Occupancy & Delinquencies
Low reserves aren't the only assessment risk. More owner-occupied units foster a community's well-being. With 75% or more units occupied by owners, conditions are good. At 60% to 75%, more upkeep may be required. Below 60%, there's a greater risk not only of extra assessments, but less community participation and more infractions of association rules.
Monthly dues fund the HOA budget. If 5% to 10% of dues are late, it's a warning call. More than 10% late is a red flag signaling poor budget management and more risk of assesssments.

In summary, get solid answers to these questions before you buy a condo or townhome.
*How much does the HOA have in reserves, and what percent of its obligation is that?
*What percent of living units are owner-occupied?
*What percent of owners are 60 days or more delinqent in their dues?
*Finally, are there any outstanding lawsuits against the HOA? If so, for how much?

Do your homework, and you'll likely make a wise purchase.

Are U Ready?...Condo QUIZ!

2005-05-13T05:45:00.000-04:00

Are you a good neighbor?
Like apartment tenants, condominium residents share walls, floors/ceilings, hallways, entrances and parking areas with their neighbors. Respect for other people's right to the quiet enjoyment of their homes is part of the arrangement. Your neighbors will appreciate (and hopefully reciprocate) your efforts to turn down the volume, walk softly, close your doors quietly and limit your vacuuming to reasonable hours. If you're a noisy neighbor, you won't be welcome.

Are you willing to play by the rules?
Condominium owners are bound by the association's covenants, conditions and restrictions (CC&Rs). These thick legal documents cover everything from special assessments and the election of the association's officers to the allocation of parking spaces and the use of recreational facilities. Owners who fail to follow the rules can be fined, and most associations have the power to attach a lien to an owner's property if the fines or assessments aren't paid. If you're willing to follow the rules and regulations, you might be happy living in a condominium setting.

Are you comfortable with joint financial responsibility?
Single-family homeowners needn't consult their neighbors about financial decisions with respect to their own property. Condominium owners, on the other hand, must come to an agreement (by consensus or voting) on a variety of maintenance and repair matters. Should an older roof, unreliable security gate or ancient water heater be replaced this year or next year? Should a special assessment be collected for an emergency repair or extra service? How much money should be spent on landscaping? How often should the garbage be collected? If you relish the opportunity to make responsible decisions along with others, condo living could be a good choice for you.

Are you prepared to volunteer?
True, some condominium owners never volunteer. However, your lack of participation will be noticed by your neighbors, particularly in a smaller building. Being part of the community means you should take your turn at serving on the board of directors, joining a special committee, getting estimates for repairs or taking responsibility for other tasks that benefit the group as a whole. If you're willing to pitch in, you'll earn the gratitude and respect of your fellow owners.

Condo Insurance??

2005-05-13T05:27:00.000-04:00

Condo associations insure your "outside."
You have to insure your "inside"

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. These policies usually cover the actual structure of your home, so you don't need to purchase this coverage separately.

However, a condo association policy doesn't cover your personal property or your legal responsibility and may not cover improvements or custom work on your unit.

Some condominium programs are designed to protect your prized possessions, protect you against any personal liability, and provide assistance should your home become damaged or unlivable. A quality Condominium policy will include the following protections:

Your personal property up to the limits you choose to purchase.
Your primary dwelling (replacement cost value of your residential unit and certain permanent attachments) up to $5,000 or 10%* of your personal property limit, depending on the state you live in.
Coverage for loss of use (reimbursing you for expenses for loss of use of your home caused by named perils up to 40%* of your personal property limit with no time limit).
Medical expenses (paying up to $1,000* per person if someone is injured on your property).
Liability exposures (protecting you against certain risks up to $100,000* per accident for bodily injury or property damage).
Expense of loss assessment by the association against the unit-owners, up to $1,500*
Protection from damages resulting from freezing of plumbing, vandalism, and other causes.

Consider Condos to Cut Student Housing Costs

2005-05-13T05:20:00.000-04:00

Most parents don't have much choice about their children's college living arrangements. When the kids gravitate to dormitories, fraternity or sorority houses or off-campus apartments, their parents get stuck with the tab, which can be $10,000 or more a year. It is an outlay that is never recouped. But some lucky parents, particularly those of students attending schools in major cities, have given themselves a crash course in beating the high cost of college housing. Call it Condo-Buying 101.

These folks have purchased condominiums and installed their fledgling scholars in them. The parents can write off mortgage and loan interest costs, providing a nice tax benefit. More important, prices of most urban condos have been rising steadily in recent years. By the time their offspring leave the costly groves of academe, the apartment's market value might have risen considerably. The parents can then sell the unit or keep it for use as a pied-a-terre.

Of course, there are dangers. The student might drop out or decide to attend a college elsewhere. Or the property market might decline. But even if prices do fall, the parents might not be any worse off than they would have been paying for a dorm room for four years. In any case, it's a gamble many people are willing to take.

A Condo Story….New digs, new life

2005-05-13T05:08:00.000-04:00

Many market observers see the condo phenomenon as early in its life cycle, with some optimistic estimates putting the number of residents switching to an urban lifestyle growing by perhaps another 15 or 20% in the next five years.

While the condo boom is foremost a real estate story, it carries wide-ranging ramifications for the way some will live and interact, for the future of some city neighborhoods and for the health of a city’s finances.

For buyers, condominium living can mean freedom from frustrating commutes, proximity to downtown entertainment and ownership without all the chores of a single-family home. But it also can mean a substantial, even difficult, transition for people who have never lived in an urban area, never lived in multifamily housing or in spaces quite this small.

"It will be interesting to see how individuals adapt to living in an association environment," said Tom Russ, executive director of Park West Inc. The neighborhood is home to the Fishburn Park development and several other condo towers. "Historically, there have not been a lot of big condo associations. [Condo owners] will have to adapt to a situation in which some decisions are made apart from them by a board."

Still, many people seem ready to embrace the change. Daisy Clinton, senior designer for Metro Furniture and Studio, said most of her condo clients are consciously closing a chapter of their lives and opening a new one. Many are so eager to chuck everything from their former homes that Clinton frequently has to talk them into keeping at least a few pieces.

"It's a huge transition, and to make a successful transition and a move without remorse, they have to bring some of the history with them," she said.

Jan Bergstein figures that she and her husband, Roger, probably got rid of 80 percent of what they owned when they moved about a year and a half ago from a home near Lake Champlain in south Milwaukee to the Riverview Lofts, a condo next door to the new Broadway Theater in the 5th ward district.

The Bergstein’s -- she's an doctor, he's a teacher at West end tech College -- had been contemplating the move for years, but they waited until their two children were out of college.
"We were just ready to try something very different," she said. "We moved from a lot of house care to freedom."

Their new home has less space than the house they moved from, about 2,000 square feet, but Roger Bergstein said he likes the other trade-offs.

"I don't miss the shoveling, mowing, raking and trying to make grass grow under huge oak trees," he said. He also enjoys the contrasts of the city. "The really nice times are when it's quiet on Sunday morning, and the opposite, when there is a football game and tailgaters or it's the Fourth of July."

As for the Worble’s, they live in about 1,500 square feet now, down from the 2,500 they once had.

"That's been an adjustment," John Worble admitted. "Material possessions have gotten to be a lot less important."

John, a cafe manager, now commutes once a week to mequon and telecommutes the rest of the time. Joan works in the Murryvile Public Schools as a science teacher.
"We were surprised by how much we liked it," John Worble said of their new life. "We walk to just about everything, to Bradley Center for a Buc’s game, to Pabst Theater and to the Lakefront. I'm shedding pounds."

Joanne Dern, a Realwest mortgage broker, said that many clients she has worked with have a condo in the city and a cabin elsewhere, so they can keep their gardening habit. She's considering the same thing now that she's bought a condo.

Dern, who lives in a 4,500-square-foot home in Westgate with her son, has bought a 21st-story unit in the Metronome project near the Milwaukee River. It will be ready in late 2006.
"I have a great house for a family, with a pool and a hot tub," she said in talking about why she's moving. "The dog has his own floor, and my son, when he is home from college, has his own floor."

Dern was impressed with the Metronome and bought in early to secure her unit. She likes the idea of little maintenance and a "walking lifestyle," with downtown, the river and the Near North Side close by.
She's excited about making the move, and as someone in the real estate business, she plans to keep an eye both on how the downtown condo market performs and how Minnesotans adapt to the condo lifestyle.
"This is really new to this marketplace," she said. "It's not like it is in Chicago."
Benefits for the city

Some city neighborhoods, such as 5th Ward, are taking on a new feel as condo buildings are finished.

"A lot of good things come with more density," Dern said. 5th Ward "was a neighborhood that was trending toward the poverty line. Now it has a chance to really be a mixed-income neighborhood. [Along with the condos] we have some high-quality, low-income housing that is locked into the neighborhood with tax credits."

One small indication that the neighborhood is on the upswing: "Pulski Park allowed dogs from the start, and that made a difference for street traffic," Dern said. "You see a lot of people walking their dogs."

For Milwaukee as a whole, an influx of downtown residents is welcome because it means a bigger residential tax base (most of the condo projects received no city subsidies). It also brings a bigger commercial tax base generated by new businesses serving the residents, and a generally higher activity level, which increases safety and attracts more entertainment options.
"It makes [downtown] a more interesting place to go to," Tybak said. "There are now two or three new grocery stores. There are more interesting shops and restaurants. It's also important in a period of increasing gridlock. Every person who moves into a downtown condo and walks to work is one less person in front of you in traffic."

However, not everyone moving to the downtown represents a new taxpayer. Bodski noted that many of the people he's met from Chance Park moved to the tower from elsewhere in Milwaukee. Mortgage banker Dern said many of her condo buyers are moving from older downtown condos to newer ones.

Frerezzo is pragmatic about his upcoming move. While he's eager to make the change, he knows he'll miss some aspects of life in Pewakee, such as the Rice Line bike trail and nearby parks. He doesn't necessarily see condo living as a forever proposition.

"If I get married, I don't think I want to try to raise kids in a one-bedroom condo downtown."

Key Questions Condo Buyers Should Ask

2005-04-30T23:45:00.000-04:00

1. How do the monthly condo fees compare with similar, nearby complexes?
A sharp buyer's agent should have the monthly condo fees for comparable nearby condo complexes easily available. Be sure to ask what services are included for each complex because that can make a big difference.
For example, a condo may have a monthly fee that includes heat, but not air conditioning and other utilities. Also, they may vote to annually raise the monthly fees by 5 percent to increase the maintenance reserves. That wise policy would come in handy next year when the elevator needs $23,000 of repairs, which would easily be paid from the reserves without a special assessment.

2. What is the financial condition of the homeowner's association?
Before making a purchase offer for a specific condo, the seller or the listing agent should give each serious prospective buyer a copy of the CC&Rs (conditions, covenants and restrictions), the by-laws, rules, recent financial statement and minutes of the board of directors meetings for the last six months.Prospective condo buyers should ask lots of questions, such as, "Are any special assessments or increases in the monthly fees under discussion?" Also inquire about the maintenance reserves. There is no absolute minimum replacement reserve guideline, but two standards are (a) at least two to three thousand dollars per condo unit, and (b) 25 percent of the annual gross income for the homeowner's association should be in the reserve account.

3. Is the condo association professionally managed?
Except for very small condo complexes, the best condo complexes have professional outside managers. Be very wary of buying in any condo complex where one of the condo owners is the manager.Ask how long the professional manager has managed the complex; the longer the better.Professional managers usually save the association the amount of their fees by obtaining low bids on quality services and by offering expert advice based on their experience.

4. What is the percentage of renters and the percentage of owner-occupants?
If the answer is more than 10 percent renters, that's not a good sign. When there are more than 20 percent to 30 percent renters, most mortgage lenders either refuse to make mortgage loans or they charge above-market interest rates. The result is, condo resales can be hurt.

5. Ask several residents "What do you like best and least about living here?"
Most condo owners are very friendly. They don't mind telling prospective buyers what they like best and least about their condo. Better yet, ask current condo owners, "Would you buy here again?"If you receive satisfactory answers to these five key questions, plus others you want answered, it's time to make your written purchase offer. However, be sure your condo or townhouse purchase contract includes a professional inspection clause. That means, after the seller accepts your purchase offer, you have 10 to 15 days to obtain a professional inspection of the specific condo and the visible common areas.When buying a brand-new condo, be cautious of any builder or developer who refuses to allow such a professional inspection. Perhaps the builder is concealing defects or serious construction mistakes, which a professional inspector will discover.

Summary: Buying a condo is not as easy as purchasing a single-family detached house.
But it can be a very rewarding experience if you ask the right questions and receive the right answers. More details are in his special report, "How to Avoid Buying a Bad Condo or Co-op," available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at (800) 736-1736 or instant internet PDF download at www.bobbruss.com.

Before You Buy A Condo...5 Things To Know!

2005-04-30T21:40:00.000-04:00

1. What are the most important criteria in purchasing a condominium?
Location, building services, "air," "light" and "space" are the top aesthetic criteria, according to Neil Binder, a principal of Bellmarc Companies, a residential brokerage and management company in New York City. His definition of air, light and space encompasses a dynamic floor plan, a feeling of openness, a desirable view and the size of the unit's main living areas.

2. What are the most important financial criteria?
Binder suggests weighing the total monthly cost of ownership, rather than the price of the condo unit. In addition to mortgage payments, condominium owners are responsible for property taxes, insurance, monthly maintenance or homeowners association fees and any special assessments. "One ingredient is the amount of cash you'll need to buy the home and the other ingredient is how much you'll need [each month] to [own] it. Don't be deceived by a low price with high maintenance charges," he warns.

3. What are the pros and cons of condominium living?
A condominium can be attractive and affordable, yet buyers should understand the drawbacks. "One of the great attributes of a condominium is that you don't have to mow the lawn or fix the [building's] plumbing. However, people are [living] in close quarters, and the people living next to you will be able to sell or rent their unit without your input. There is a degree of uncertainty about your neighbors," Binder says.

4. What are CC&Rs?
Homeowners association governing documents and rules go by different names in different parts of the country. Examples include "covenants, conditions and restrictions" (CC&Rs), "bylaws," "the master deed," "the rules and regulations" or "the house rules." Condominium buyers should thoroughly read and digest the governing documents and rules that are binding on all the owners. Co-op buyers should inquire about "right of first refusal," which may give the board the right to evaluate prospective owners and acquire a for-sale unit in their shoes if they are deemed unacceptable.

5. Who pays for the insurance?
An owner's financial interests should be protected by two insurance policies. The homeowners association policy should cover the structure of the building, the common areas and liability for any injuries that occur in the common areas. The owner's policy should cover his or her personal property and liability for any injuries that occur inside his or her unit. Always consult an insurance professional for advice about your personal situation.

Coulple Of Good Tips On Buying a Condo for Investment

2005-04-30T21:35:00.000-04:00

When buying a condo, a copy of the CC&R's (The covenants, conditions and restrictions (CC&Rs) are the governing documents that dictate how the homeowners association operates and what rules the owners -- and their tenants and guests -- must obey) should be made available to you. It should include a history of the building as well as any upcoming work that needs to be done. If the work order is already in effect then it is not your financial responsibiity, however you should be aware of the amount of reserve funds available in that building and know whether they are in excess of the upcoming work with adequate reserves for future expenses.

This information is required to be disclosed, but there are other precautions that you may want to pursue. The first, of course is doing your own visual inspection of the common areas. If the building itself appears to be run down, it is best to inquire as to why it is in that condition and what things, if any, do they plan to do in the future to correct these conditions.

Whenever possible, talk to the neighbors!
If they have lived there for a period of time, they can tell you how ofen the board meets to evaluate the conditions and how they function to keep the building in good working order.

It is also a good idea to find out the percentage of tenants living in the building who are renters. That is often a big factor in the building's maintenance. Sometimes when the building is predominately occupied by renters, it is indicative of an owner/investment situation and often the premises are not as well kept as a building where the occupants are primarly the owners. The breakdown can also effect the type and amount of mortgage you will be able to obtain. If over 50% of the tenants are renters, you are most often than not required to put up a much larger downpayment.

Remember, when you are purchasing a condo, you are essentially responsible, in part, for all the common areas, so don't be afraid to ask questions!

Condos Continue to Lead Market Index

2005-04-22T11:45:00.000-04:00

SPRING 2005
The popularity of condominiums continues to surge, and conditions in the rental apartment market are finally showing signs of improvement, according to the National Association of Home Builders' Multifamily Market Index (MMI), a quarterly gauge of multifamily market activity and builder confidence.

“People across the country are realizing that condos can be an ideal choice for people who want to enjoy the financial advantages of homeownership while maintaining the amenity-rich, low-maintenance apartment lifestyle”; said NAHB President Bobby Rayburn, a home and apartment builder from Jackson, Miss. “We expect that the demand for condos will continue to rise, especially in urban areas, and particularly while excellent financing opportunities”

The for-sale component of the MMI climbed to 59.5, up six points from the previous quarter and up eight points from one year ago. Multifamily builders also expressed confidence that the demand for condos would continue-the index gauging expected for sale starts over the next six months jumped to 62.0.

The MMI is based on a survey of multifamily developers, owners and managers, whose answers to a series of questions are assigned numerical values in order to calculate separate indices that track both supply and demand. An index value over 50 indicates that more respondents view market conditions as good rather than poor.

Although the rental market remained sluggish in the fourth quarter, with indexes tracking demand below 50 for all classes of apartments, conditions are improving slightly. Demand for Class A apartments was up almost 5 points to 40.0 on the MMI from the previous quarter, and multifamily builders appear optimistic that the next six months will show continued improvement for both market-rate and affordable apartments.

The indexes tracking builder expectations rose dramatically to 58.4, 58.3 and 58.0 respectively for Class A, Class B and Class C apartments. Survey respondents said the volume of calls from prospective renters was up and that 66 percent of their new units rented within 90 days during the fourth quarter of 2003, compared to 57.9 percent in the previous quarter.

“Historically, rental apartment demand has been dependent on job growth”; said NAHB Chief Economist David Seiders. “While the recession has been over for a while, we haven't seen enough job growth to fuel strong rental demand, but with improving economic indicators, we hope to see a turnaround soon.”

Why Condos Are 'Prime' Realty Investment

2005-04-22T11:17:00.000-04:00

It's not just that condos are comparatively cheaper and relatively more easy to maintain than a single-family home. In recent years, they've become the prime residential real estate investment and the best may be yet to come Since 1996, condos have increased in value 23 percent, at an annual rate of 5.1 percent compared to new homes rising 21 percent since 1996 or 4.8 percent a year and resale homes rising 20 percent since 1996 or 4.7 percent a year, according to the National Association of Realtors. The median price for existing condos was $122,600 for 2001, up 9.7 percent from $111,800 in 2000. During the fourth quarter, the typical condo price was $125,000, 9.8 percent higher than the same quarter in 2000, NAR said. By comparison, the median-priced existing single-family home was $148,000 in the fourth quarter. “Due to the lower cost, lower risk nature of the condominium market, condos are far more insulated from economic declines than most other markets”; said Kevin J. Thorpe, an NAR research economist who penned “Going Condo: The Prime Real Estate Investment of 2001”; for the December, 2004 issue of NAR's Real Estate Outlook magazine.

Despite the return on your money, condos aren't for every home buyer

Condominiums (Latin for “common ownership”; or “common control”), town homes and even some zero-lot, single-family developments, typically are built in higher densities than traditional single-family homes with lots. If you don't like living close to your neighbors, you may not want a condo. Also condos and townhome housing is often constructed as what's called “common interest developments” (CIDs) -- you own everything in your unit on your side of the walls. As a mandatory dues-paying member of the governing homeowners association, you are a shareholder in the remainder of the buildings, grounds and other facilities, which are maintained by the association. You might like the idea that you won't have to maintain the landscaping or perform maintenance outside of your unit. There are also planned unit developments (PUDs), often townhomes or zero- to small-lot homes that allow you to own the patch of land beneath your unit, in which case you may have to perform maintenance and upkeep of your structure and grounds, but not the common areas.

Condo home not your castle

The decisions about running the development and the budget are based on reams of rules, regulations and other operating guidelines not unlike those used to regulate a business. Those rules may prevent you from doing some things you can do if you own a single-family home. For instance, while federal law mandates the HOA to permit you to have a satellite TV dish within the boundaries of your unit, the dish may not be in position to receive the signal and the association may prohibit you from putting the dish on the roof or other common area where the dish could receive the signal. You likely also will have rules regarding pets, parking and home improvements you won't face if you own a single-family home.

The Disadvantages of Condominium Ownership

2005-04-01T22:35:00.000-05:00

For some homebuyers, condominiums are a godsend.
They provide a means of building equity without the hassles of yardwork and other outdoor maintenance projects, as well as many of the indoor chores and financial responsibilities that single-family homeowners typically face.

But condo ownership isn't for everyone. And before you sign on the dotted line and enter into this agreement of communal ownership -- which is exactly what you're doing when you purchase a condominium -- you'll need to consider a few factors first. Not to burst your bubble, of course, but life in a condo brings with it a few hassles with which single-family homeowners feel grateful they don't have to contend.

For starters, as we alluded to last week in a related article, condominium owners share common walls. How many common walls you share depends upon whether you purchase a flat (meaning you have a neighbor living either underneath you or above you, as well as on one or both sides of your unit) or a townhome (which you gives you the reassurance that both upstairs and downstairs are yours -- although some high-rise-style townhomes are built in a manner in which residents may still have neighbors living either above or below their own units).
Comon walls are reminiscent of apartment life, which is something that homebuyers often are anxious to flee when they've reached the life stage at which a home purchase is attainable. If you have quiet and considerate neighbors, common walls become a non-issue. But it's a game of Russian roulette when you sign on the dotted line. You have no idea how considerate those neighbors will be until you spend your first night in that unit you're considering. And unfortunately, if your neighbors are obnoxious, you have little recourse as a condominium owner but to call the police.

Unlike apartment communities, in which renters may often pick up the phone and call a leasing office or an on-call security staff to report excessive noise, condominium owners have no such protection. They're faced with the sticky dilemma of going downstairs, upstairs or next door and democratically working out the problem neighbor to neighbor (which, let's face it, isn't easy to muster up the courage to do -- particularly if you're new to the condominium community) or calling the police. That's quite a way to introduce yourself to your new neighbors if they determine who blew the whistle on their late-night revelries.

Aside from the common wall issue, you'll also need to consider that if your local real estate market experiences a downturn, condominiums usually are the first casualties in those sagging economic times. Condominiums sometimes are pigeonholed into a "niche" market, and when the real estate market slows to a trickle, the few transactions taking place usually involve single-family homes. And of course, during slow periods, asking prices for single-family homes drop, making it possible for many aspiring homebuyers who previously thought a condominium was the maximum they could afford to move up to a single-family home, instead.

Then, of course, there's the entire issue of the condominium association. Their effectiveness and cost varies greatly from property to property. In a single-family home, you'll never be presented with a sudden fee which you must pay for communal property repairs. Take the case of a condo owner with whom I recently spoke, who told me her condo association recently informed her that, in order to pay for roof repairs to the entire complex -- her building included -- she and every fellow condominium owner in her development would have to cough up $650 on the double. That was in addition to her $120 monthly condo association fees -- and, of course, her mortgage.

A condominium association, in theory, is an excellent insurance policy for the continued maintenance of your exterior property -- not to mention a protection for keeping the property values high. On occasion, however, these associations become quite political, governing everything from the Christmas lights you string on your porch to whether or not you can keep a 50-pound dog in your unit. This communal lifestyle holds you accountable to a mini government of sorts. As an owner, you may, of course, make your views heard during monthly meetings, but there's no guarantee as to whether or not you'll be successful and affect change.

If you're informed about all of your obligations as a condominium owner before you sign the contract and are agreeable to them, you just may have found yourself the home you've always wanted. As with every major financial commitment, you'll have to weigh the pros and cons of the agreement you're preparing to enter.

Perhaps the most important thing to remember as you make your decision is to take your time.

Demand full disclosure of condo association fees and exactly what they cover. Know up front what your monthly expenses are expected to be; it can vary considerably among different condominium developments. Shop around, and get some perspective on how different properties approach their residents. Ask your REALTOR if he or she has sold units in this development before, and what kind of feedback he/she has gotten from his clients after they moved in. If your Realtor hasn't conducted a transaction at this development, ask him/her to call fellow Realtors and find out if they've sold units at the condominium complex you're eyeing. First-hand reports are invaluable tools during your home search process, and you'd be wise to take them to heart.