Portland Buyers: Condo or Single-Family Home?
It’s easy for a first-time buyer to feel the lure of a condo. I know this: I am a first-time buyer too. As proverbial virgins to the game of real estate, we see condos as less intimidating because we aren’t going in alone: The Home Owners Association (better known as HOA) protects us. Together with the rest of the owners on a property, we conquer big headache issues like roof replacement, upgrading electrical systems, security, landscaping and pest control. In Portland specifically, complex and/or laborious (and sometimes expensive) issues regularly facing homeowners are decommissioning oil tanks, cleaning street and roof gutters of leaves before the rains come, proper weatherizing, and tree trimming/safety. As renters, we didn’t deal with these issues much: our landlords usually handled-- and paid for-- them. The idea of taking on so much home maintenance, along with a mortgage, can be overwhelming.
Therein lies the appeal of a condo, and with it, the other condo owners, and with them, the HOA. HOAs also mean monthly dues, but in one sense, these dues can be comforting, because they seem to have “thought of everything” a new homeowner may still be trying to understand. In Portland, dues typically pay for water, sewer, trash, management, insurance and exterior maintenance. Occasionally HOAs may cover such things as cable, electricity, and security. The actual amount you will pay monthly for your HOA varies wildly from one property to the next, anywhere from a hundred to several hundred or more. Obviously, your lender will have to consider your HOA dues when deciding how much you can borrow.
You should know, however, that unlike mortgage interest, HOA dues aren't tax-deductible. Also, in most cases, HOA dues don't cover anything inside your personal unit, such as water damage or a break-in. You will still most likely need your own insurance policy, and you might want something included in that policy that will help you cover the deductible (if there is one) on the HOA’s shared policy that protects the property as a whole.
Part 2 of this series studies that you can get for your condo money in Portland this winter season, and the additional expenses to keep in mind with these kinds of properties.