When you're on the hunt for a home, you'll come across all kinds of options. Single family? Co-op? Condo? Here's a guide that will help.
Types of property
- Single-family home: This is normally a stand-alone structure. And unless you're in a planned community, the owner foots the bill for maintenance, landscaping, utilities, and any other expenses incurred from owning a home. Generally houses (and multi-floor townhouses in urban areas) are more expensive to buy than coops or condos.
- Multifamily units: These are sometimes referred to as “income properties" and can be in the form of duplexes, triplexes, or other structures with more than one dwelling. Before you buy, understand the condition of the units, the local rental laws, how much rent you can realistically garner, and what it takes to be a landlord.
- Undeveloped land: This is a piece of land without a permanent structure. It's critical to know if there is easy access to water (or a well), sewer, natural gas, and electricity, so you understand how much money, time and permitting it would take to bring those elements to the land so it can be developed. You can also hold land as-is and resell it at a later date. Loan options may be different for land than homes; make sure you have a survey and all your research in order before you ask for financing.
- Condominium: Also known as a “condo," this is an apartment that is owned by an individual.
- Cooperative: Also known as “co-op," this is an arrangement in which the unit owners buy shares in the building or in a single-family home in a community. Usually, new residents must be approved by a board, and the acceptance process can be arduous.
- Manufactured or mobile home: You own the structure, and if it's situated in a planned community, you usually lease the plot it's on, and pay dues to the association. The structures typically depreciate faster and aren't worth as much as traditional homes; the upside is that you may be able to afford a better neighborhood, and that you'll pay less in taxes if you don't own the land.
- Properties within communities or associations: While you own your home, condo or co-op unit, if it is in a gated subdivision, community, or managed building, it probably has an HOA (homeowners' association). HOA dues can cover property marketing and management costs; amenity maintenance and fees; garbage collection; and sometimes utilities. Maintenance of common areas such as hallways, courtyards, sidewalks, pools, workout areas, and laundry rooms also are maintained by the HOA and covered by dues.
Make sure you understand what is covered by the monthly fee, and what you must cover financially. Major projects, such as a roof replacement for a condo, might require an “assessment," in which each owner contributes extra funds to cover common-area repairs, so it helps to study the association's financials to see if there's enough in a reserve account to cover major initiatives.
Also ask to see the CCRs (covenants, conditions and restrictions) document, which is binding for owners, and make sure you can live by the rules. These may include language about pets, renting out your unit, quiet time, landscaping guidelines, and even the color you can paint your door or shutters.
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