How to Buy a Condo (It’s Different From Buying a House)

how to buy a condo

We totally get why people buy condos: They’re cheaper and require less maintenance than a traditional house (no mowing grass!). Plus, they’re often stacked with cool common amenities from pools to gyms. What’s not to love? Yet while condo living might seem carefree, buying one is not necessarily a simple task.

Here’s how to buy a condo, how it’s different from buying a house, and a few insider tips to pave the way to ownership.

Consider your unit’s surroundings

While the condo unit itself is a key consideration, it’s also important to carefully check out the environment around it—particularly when it comes to noise. Remember, you’ll be sharing walls with your neighbors, and perhaps even ceilings and floors.

“I always suggest my buyers book a showing during typically ‘louder’ times of the day, such as dinner time when kids are home, to see how well the walls actually dampen the noise,” says David Nelson with the Imperial Home Team in Minneapolis. He also recommends asking a few of the neighbors about general property noise, such as how loud the traffic and surrounding neighborhood are, and if they can hear their neighbors through the walls.

The unit you choose can play a large role as well.

“End units share fewer walls than those in the middle, which can lessen neighbor noise,” says Nelson. Of course, that’s also one of the reasons why end units and top-floor units are more coveted—and often pricier—but if you’re sensitive to noise, that could be money well spent.

Check out the condo association

When you buy a condo, you’re buying into the entire community—including its rules on everything from when and where it’s OK to let your dogs off the leash to whether RVs are allowed in your driveway. Most states will have a designated rescission period to peruse these documents. During this period, you’ll want to carefully read through the community’s regulations (called covenants, conditions, and restrictions, or CC&Rs) as well as penalties for not following them.

 “When a buyer agrees to the association documents, he or she is automatically bound to the condo board’s rules,” says Nelson. These typically entail parking space allowances, regulations related to pets, and homeowner responsibilities for repairs and maintenance.

“If there is something in the association bylaws that you as a buyer don’t agree with, and it is still within the rescission period, you can back out of the home purchase and usually get a full refund of any earnest money,” says Nelson.

Prospective condo buyers should also do their due diligence on the condo association’s finances, because this will affect your odds of getting a loan (more on that next).

Secure financing

In some cases, it can be trickier to secure a mortgage for a condo than a traditional home because the health of the condo development hinges on multiple owners paying their bills. Your mortgage lender is apt to conduct a thorough review of the condo complex as a whole, including documents relating to the overall health of the building and the condo association. The good news is that you can consider this an extra layer of due diligence to protect your own investment.

Prep for your condo interview

Sure, you’re checking them out, but they’re checking you out, too. Once your offer is accepted, many condo associations require prospective buyers to interview with the condo board. Don’t worry: These interviews must comply with all regulations against unlawful discrimination—the goal is to ensure that you can afford the home and fully understand condo rules. This is also your chance to ask questions about any of those rules, and also get a feel for some of the people you’ll be living with—so consider it less of a firing squad and more like a first date.

By Cathie Ericson

How to Become a Landlord: Do You Have What It Takes?

become a landlord

In today’s hot housing market, rents are on the rise, which may have you wondering whether it’s time to consider becoming a landlord. After all, who doesn’t like the idea of raking in rent checks every month? Still, being a landlord isn’t a cakewalk; it takes work, and sometimes it may seem like you’re shelling out more than you’re bringing in.

Just so you know what you’re getting into, here are the steps on learning how to get into the landlord game.

Step 1: Figure out what you can afford

Renting out an apartment on which you’re paying a mortgage is a balancing act: You have to make sure that the money coming in covers what goes out—or else you’re operating at a loss.

Prepare for the worst: Since your place may sit vacant occasionally or require repairs, having a decent financial cushion is key. Most experts say that properties should be able to rake in enough rent in 10 months to cover your yearly costs.

Another rule of thumb is the 2% rule, where your monthly rent should be least 2% of the price of the property. So if an apartment cost you $100,000, the rent should be at least $2,000 to cover your costs. Crunch your own numbers on what you can afford with our home affordability calculator, then compare that to what places are renting for at

Step 2: Pick the right kind of property

Many components go into property selection, so make sure you identify your primary goal, says Ed Laine, partner/broker of Miller Laine Properties in the Seattle area.

“Is it good cash flow that you’re looking for, or do you just want something that’s low maintenance?” he asks. All other things being equal, you will want to choose a property close to your home, which allows you to check on tenants and house maintenance easily.

Laine recommends asking yourself, “If the wind blew a tree limb through my tenant’s window at 2 a.m., how far would I be willing to drive to deal with it?”

You’ll also want to make sure the property meets all applicable codes. This handy rental property checklist helps you to assess a property with a critical eye to make sure it’s “rent-worthy” and—later on—helps you to double-check the property once your renter leaves to make sure it was left in the condition in which it was found.

Step 3: How to screen tenants

Having good tenants can make or break your experience, Laine notes. Make sure to interview and screen them thoroughly. Tenant screening companies make that easy, but there are some steps you can take yourself. First, ask prospects to agree for you to check their credit: Section 604 of the Fair Credit Reporting Act requires that landlords ask permission before running a credit check. You can also check your state and county’s website, since most court information is public record.

Last but not least, you will want tenants to sign a lease delineating the rent, when it’s due, and actions that could lead to late fees and eviction .

Step 4: Understand landlord liabilities

As the landlord, you’ll need to know the local laws that pertain to your property, which you can read up on at,, and

Also know that you can be held liable for tenant injuries, so be sure you seek adequate coverage, such as landlord liability insurance and landlord property insurance. These are different from a regular homeowners policy and should be obtained if you are renting out a home regularly. Check with your insurance agent to see the options you can add to your regular homeowners policy.

Step 5: Know a landlord’s responsibilities

You can’t just give tenants the keys and check out. Landlords are legally required to make repairs to their property—but that doesn’t mean you need to jump every time a lightbulb needs replacing, either. The key is whether the issue affects habitability. For example, if a property is without electricity, water, or heat for more than 24 hours, it will generally be considered uninhabitable, and you’re responsible for finding alternative temporary housing for the tenants until this issue is fixed.

But if the flaw doesn’t make living there unbearable or is merely cosmetic, then the landlord is under no time constraint or any obligation at all to fix it.

“So if your tenants say the floor squeaks and it’s driving them crazy, or if they’ve asked for the ancient shower head to be replaced, if it still works, the landlord doesn’t have to fix it,” says Laine.

However, happy tenants tend to stay put, so you may want to consider responding to smaller requests if it’s no big deal.

“If as a landlord you are responsive and address concerns,” Laine says, “they will take better care of your property, guaranteed.”

Step 6: Weigh the pros and cons of a property manager

Did the responsibilities above give you pause? You have to know your limits. If this all sounds like too much hassle, consider hiring a property manager, who can handle those details. It might be well worth the investment—typically 8% to 12% of the monthly rental fees—for the headaches it could save you down the road.

By Cathie Ericson

What You Need to Buy a House: Do You Have It All?

What you need to buy a house

You’ve been drooling over local listings and saving every penny for a down payment. You’re ready. But before you begin your new home hunt in earnest, it’s helpful to know exactly what you need for a purchase. Do you have it all, or are you missing something that could throw a wrench in your dream of owning a home?

After all, you can’t just slap down a credit card to buy a house, particularly if you need a mortgage—your lender will want to check your financial background to size up whether you can afford the place you’re eyeing. That means you’ll have to round up some paperwork as proof.

So here’s a handy checklist of what you’ll need to sail through this process without a hitch.

Tax returns

To ensure you have the income history to buy a house, most lenders will ask for two years’ worth of tax returns, two years of W-2s, or both. This is definitely the case for freelancers and self-employed borrowers, but full-time employees may be asked for all of this paperwork as well. Your lender may even retrieve your tax returns themselves straight from the IRS  (with your written permission, of course), since this cuts down on potential fraud. Still, it’s a good idea to get those documents in order just in case.

Pay stubs

Tax returns won’t be where your proof of income ends. You will also need to rustle up copies of your past two months of pay stubs, according to Martha Witte, vice president of FM Home Loans. If you’re self-employed or freelancing, things get a bit more complicated.

 “Most of the time, contract employees receive a 1099 and file a Schedule C on their personal returns. In this instance, we would take a two-year average of the Schedule C income,” Witte says.

Also be prepared to show a projected balance sheet, detailing what you’ve earned this year and what you plan to earn in the coming months.

“It doesn’t need to be fancy, but it should ideally support that you are on track to have consistent income in the current year, when compared to other years,” Witte says.

Financial statements

You will also need to show two months of asset statements—think your checking and savings accounts. This one is a biggie because your lender will use these statements to prove you have enough money available to buy a home and then some.

“You will need liquid funds available for the down payment and to cover closing costs. You will also need reserves after closing, which means you can’t be left with $0 once you buy the home,” Witte says. While the reserve amounts vary, two to four months of reserves is enough for most conventional loans, she says.

Getting a down payment gift?

Finally, if you’re planning on getting a portion of your down payment as a gift (you lucky dog, you), plan on getting some documentation from the gift-givers, like copies of their checking or savings account monthly statements. “We need to also verify the donor’s ability to give the gift,” Witte says.

When in doubt, follow this simple rule of thumb from Witte: “Follow the rule of twos,” meaning you’ll need a two-year snapshot of your income and finances.

By Angela Colley

What Is a Multifamily Home? A Budget-Friendly Way to Own, Rent, or Invest in Real Estate

What is a multi-family home?

What is a multifamily home? It’s a building with more than one unit where people can live, each with their own separate kitchens, living rooms, electric bills, and so forth. Also called a multidwelling unit, or MDU, they are typically found in densely populated areas such as cities where space is at a premium. Multifamily homes can be rented, be owned, or serve as an investment property where landlords can collect rent from tenants. Continue reading

Learn These Basic Rules of Seller Disclosure So You Don’t Get Sued


Seller disclosure is a tricky maze to navigate. If you’ve recently decided to put your home on the market, you might feel hesitant to reveal problems (minor though they might be) which could discourage potential buyers. But not revealing them could get you in a world of legal trouble. Continue reading

Number of Home Flippers Hits Pre-Crash Level, but Don’t Panic Yet


As we’ve watched homeowners buy, remodel, and cash out over the years on shows like “Flip This House” to “Flip or Flop” to “Flipping Out,” house flipping has come to seem like just another variation on the American dream of homeownership and financial stability. Continue reading

All the Times of the Day You Should Visit a Home Before You Buy

same house at night and day

“Every morning at 4 a.m. a low—and very, very loud—jetliner arriving from China roars overhead my house,” says Murray Suid, who lives in Inverness, CA. He wouldn’t go so far as to say he would have backed away from buying his home if he’d known this in advance, but he has come to a firm conclusion: “Different times of day really change the reality of a home.” Continue reading

What Is a Probate Sale? A Home You’ll Have to Win in Court


If you’re looking to buy a home on the cheap, you might have stumbled across a probate sale. But what exactly is a probate sale? Basically it means that the homeowner died without a will bequeathing the house to an heir. In most cases, this means that an estate attorney or representative has to sell the property in order to liquidate the asset and distribute the money to family members—and that can spell a major bargain for you. Continue reading