Condos Above the Center City: How to Buy Smart When Shopping for a Condo
It’s a well-documented demographic trend: growing numbers of Americans, whether 20-somethings or downsizing boomers, want to live as close to their city's downtown as possible.
For homebuyers like 28-year-old information technology specialist Joe Rainone in Atlanta, there’s another, more subtle lure as well: the stimulating sense of being tapped into the energy and excitement of an urban environment bustling with people.
Rainone, who grew up in a small town in central New Jersey, recently purchased a two-bedroom condominium on the 27th floor of a 32-story high-rise in Atlanta. He told me that it’s personally important for him “to feel like I’m in a city” — if not Manhattan, then some place similar. In terms of housing choices, he says that meant one overriding priority: buying on an upper floor of a tall building with “floor to ceiling windows,” great views, lots of people to meet and amenities like a concierge and a pool.
Rainone, who paid $375,000 for his 1,300-square-foot condo after shopping for four months, says that contrary to popular belief, residents in urban high-rise condos — at least like his — are sociable and easy to meet. “I love running into people (in the elevator and in the lobby) who I don’t know,” he says, and with upward of 400 condo units in the building, there are plenty of people to meet.
If he had bought a house in a bedroom suburb, he’d have to drive to work, “have a yard to mow,” along with other homeowner chores. And, he wouldn’t have anywhere near the number of neighbors nor the constant social interactions he has today. “I made the right choice for me, no question,” he says.
Of course, not everybody who buys a condo in an urban high-rise is as enthusiastic about his or her choice as Rainone. But the odds of success improve dramatically when buyers approach the shopping process in a heads-up, smart way and do their homework.
Are you considering or open to a high-rise purchase? If so, here’s a quick overview on how to go about it, plus some red flags about what to avoid:
Once you’ve thought about the general location in the city you’d prefer and how much money you can afford to spend, ask yourself about how big a building you want to live in. Would you, like Joe Rainone, feel comfortable in a huge development with hundreds of neighbors, dozens of floors from ground level? Or do you prefer a smaller, more intimate building no higher than 8 to 10 floors?
New or Old?
Do you want the latest in design, construction quality, soundproofing and amenities? If so, new buildings are for you and you should expect to find the latest amenities at a higher price per square foot. On the other hand, older, remodeled projects may offer larger units, great locations and are likely to cost you less per square foot on average.
One key consideration here: older buildings tend to rack up significant expenses for maintenance and system repairs and replacements. To pay for these, monthly condo fees are often higher to create adequate reserves. When the reserves are insufficient to pay for high-cost projects like installing a new roof or overhauling the elevators, the homeowners association board may need to impose “special assessments” — extra charges paid by all unit owners on top of their regular monthly fees.
Financial Health of the HOA
Condominiums are run by homeowners associations (HOAs), so the financial and legal condition of the association can vitally affect the value of every unit in the complex. If the association doesn’t have substantial reserves in the bank, doesn’t have adequate liability insurance or is facing potentially costly litigation, you need to know about it before you buy.
That means you need to check the association’s books and documents, either on your own or with the help of your real estate agent or a real estate attorney. You also need to make any offer you write contingent on full disclosure of all current and prospective financial or legal problems facing the association.
Condo sales specialist Kevin Grieco, of Atlanta Fine Homes Sotheby International Realty and author of the “atlantaSKYrise” blog, says a good way to ferret out potential problems is to ask the association for copies of the minutes of recent meetings. The minutes, which document the concerns of the condo board and residents, can clue you into controversies that condo sellers might not disclose.
“The minutes are going to tell you whether anything is going on” — budget problems, pending lawsuits and assessments, he says. “What you find may be really important to your decision to buy or not.”
Some easy-to-spot red flags that tip you off that a high-rise project may not be for you:
High Percentage of Renters in the Building
If more than 50 percent of the units are occupied by non-owners, the building can’t qualify for Fannie Mae, Freddie Mac or FHA mortgage financing. Anything above 30 percent should signal caution — the building might be tipping toward renter occupancy rather than owners — which can mean less resident involvement in the activities of the condo association.
Sub-Par Care of Public Spaces
If the lobby of an older building looks dated and faded, the landscaping looks poorly tended or the elevators or interior hallways smell musty, the association might be facing budget pressures.
Parking Lot or Underdeveloped Real Estate Next Door
For high-rise condos, views are crucial — they’re often why people buy into the building. But if there are empty or low-rise properties zoned for potential redevelopment next door, be on guard. If a developer buys the lot next door and puts up a new high rise that blocks your view, the value of your condo — to you and to any future purchaser — could drop.
Be smart and check with zoning authorities on what’s allowed and what the city’s master plan envisions for next door.
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