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| Vertical Living |
About the Purchasing Process
Be sure you ask at each property if the developer or builder is taking reservations or are they going straight to contract? What are the deposit requirements and does your deposit earn interest? Does your due diligence need to be performed by a specific date? If so, what is the date? What about the timeframe for a rescission period and for close of escrow? Determine whether the property will be signed in the name of an LLC or a trust versus an individual. Additionally ask questions about whether you can close your property as an LLC or trust vs. an individual. To properly budget your closing costs in advance, get an estimate on Homeowners’ Association (HOA) dues, additional assessments and estimated taxes that will be due. Your Realtor® will be invaluable in navigating you through all of this.
Assessments
When considering properties, find out what the assessment covers and what it doesn’t cover. Typically, assessments can cover expenses for items such as maintenance of common areas, trash collection, recreational facilities and other amenities. In some communities, assessments cover exterior maintenance to units. In some communities, assessments cover interior maintenance to units.
Determine if the budget includes a reserve fund for major expenditures. Most communities will require large expenditures at some time – roofs replaced or private roads and parking areas resurfaced, for example. If there is no reserve fund, the association will likely have to impose special assessments when major projects become necessary which can be an expensive and unanticipated financial burden.
Managing Your Expectations
You’ve identified your ideal home. You’ve done your homework. You’re ready to buy. But there’s one more thing on your checklist: Resolve to manage your own expectations. Like any endeavor involving people, community association living is not utopia. With all their inherent advantages, community associations are not unlike any human enterprise. Judgments are subjective and subject to change. Decisions are not always met with unanimous approval. Mistakes are made.
Understanding HOA's
For those new to high-rise home shopping, HOA agreements are probably the least understood. It’s important to know what HOA fees cover, typically the cost of the swimming pool, insurance for the exterior of the property and maintenance manager’s salary, for instance. But the question to ask is how much is in the reserve fund? A percentage of the HOA fee is placed into the reserve fund to cover current and future building expenses. As a potential buyer, you should be sure there is enough money in that fund especially if you’re planning to buy a home in an existing building.
If it’s an old building, ask about the amount of reserve for making repairs. If the roof needs replacement, is there enough money to replace it? If not, the roof is replaced and a special assessment is made to the homeowners. This can be thousands of additional dollars that were not budgeted. Overall, though, HOA fees are usually less than the cost to maintain a single-family home.
High-Rise Condominiums
Due to the high cost of steel and concrete construction, this category is primarily luxury housing. Standard interiors will include stainless steel appliances, granite countertops, hard woods and other options. Buyers may find higher maintenance fees, which are driven by amenities. Professional couples and singles are attracted to this lifestyle as they want to be where the action is, but they still want their privacy, security and service. Amenities such as valet parking, porter service to deliver groceries and mail collection are key factors along with other amenities such as a swimming pool, party room and health club/workout facility.
Within this category are condominiums built above major hotels. Condo owners have their own amenities apart from the hotel but can also utilize the hotel services, such as room service.
Condo-Hotel
While this type of property is also above a hotel, it differs from a high-rise condominium described above in that a buyer may choose the property for rental or purchase. A condo-hotel owner would buy a unit and place it back into the hotel’s rental pool from which the owner would derive income. The owner would typically be able to use the property four weeks out of the year, for example. As expected, the interiors will all be high-end luxury and homeowner association fees will usually be higher than a luxury condo. This option attracts very wealthy people who are attracted to the amenities, including the availability of hotel room service. Examples of this category include Cosmopolitan, Trump Tower, the Residences at MGM Grand, MGM CityCenter and the Platinum.
Midrise
Also called “sticks and bricks” construction or a garden-style condo, a midrise is usually constructed without steel or concrete and is under 100 feet. There is usually garage-type parking underground, and the floor plans are smaller. With this type of property, not many amenities are offered. Buyers may find lower maintenance fees for mid-rises versus luxury high-rise properties.
Be sure you ask at each property if the developer or builder is taking reservations or are they going straight to contract? What are the deposit requirements and does your deposit earn interest? Does your due diligence need to be performed by a specific date? If so, what is the date? What about the timeframe for a rescission period and for close of escrow? Determine whether the property will be signed in the name of an LLC or a trust versus an individual. Additionally ask questions about whether you can close your property as an LLC or trust vs. an individual. To properly budget your closing costs in advance, get an estimate on Homeowners’ Association (HOA) dues, additional assessments and estimated taxes that will be due. Your Realtor® will be invaluable in navigating you through all of this.
Assessments
When considering properties, find out what the assessment covers and what it doesn’t cover. Typically, assessments can cover expenses for items such as maintenance of common areas, trash collection, recreational facilities and other amenities. In some communities, assessments cover exterior maintenance to units. In some communities, assessments cover interior maintenance to units.
Determine if the budget includes a reserve fund for major expenditures. Most communities will require large expenditures at some time – roofs replaced or private roads and parking areas resurfaced, for example. If there is no reserve fund, the association will likely have to impose special assessments when major projects become necessary which can be an expensive and unanticipated financial burden.
Managing Your Expectations
You’ve identified your ideal home. You’ve done your homework. You’re ready to buy. But there’s one more thing on your checklist: Resolve to manage your own expectations. Like any endeavor involving people, community association living is not utopia. With all their inherent advantages, community associations are not unlike any human enterprise. Judgments are subjective and subject to change. Decisions are not always met with unanimous approval. Mistakes are made.
Understanding HOA's
For those new to high-rise home shopping, HOA agreements are probably the least understood. It’s important to know what HOA fees cover, typically the cost of the swimming pool, insurance for the exterior of the property and maintenance manager’s salary, for instance. But the question to ask is how much is in the reserve fund? A percentage of the HOA fee is placed into the reserve fund to cover current and future building expenses. As a potential buyer, you should be sure there is enough money in that fund especially if you’re planning to buy a home in an existing building.
If it’s an old building, ask about the amount of reserve for making repairs. If the roof needs replacement, is there enough money to replace it? If not, the roof is replaced and a special assessment is made to the homeowners. This can be thousands of additional dollars that were not budgeted. Overall, though, HOA fees are usually less than the cost to maintain a single-family home.
High-Rise Condominiums
Due to the high cost of steel and concrete construction, this category is primarily luxury housing. Standard interiors will include stainless steel appliances, granite countertops, hard woods and other options. Buyers may find higher maintenance fees, which are driven by amenities. Professional couples and singles are attracted to this lifestyle as they want to be where the action is, but they still want their privacy, security and service. Amenities such as valet parking, porter service to deliver groceries and mail collection are key factors along with other amenities such as a swimming pool, party room and health club/workout facility.
Within this category are condominiums built above major hotels. Condo owners have their own amenities apart from the hotel but can also utilize the hotel services, such as room service.
Condo-Hotel
While this type of property is also above a hotel, it differs from a high-rise condominium described above in that a buyer may choose the property for rental or purchase. A condo-hotel owner would buy a unit and place it back into the hotel’s rental pool from which the owner would derive income. The owner would typically be able to use the property four weeks out of the year, for example. As expected, the interiors will all be high-end luxury and homeowner association fees will usually be higher than a luxury condo. This option attracts very wealthy people who are attracted to the amenities, including the availability of hotel room service. Examples of this category include Cosmopolitan, Trump Tower, the Residences at MGM Grand, MGM CityCenter and the Platinum.
Midrise
Also called “sticks and bricks” construction or a garden-style condo, a midrise is usually constructed without steel or concrete and is under 100 feet. There is usually garage-type parking underground, and the floor plans are smaller. With this type of property, not many amenities are offered. Buyers may find lower maintenance fees for mid-rises versus luxury high-rise properties.
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