Here are basic questions and answers for folks considering buying an Austin condo. By no means, is this a complete list, nor am I an expert, but her are commonly asked questions.
Are condos a good investment? Some condos have experienced rapid appreciation. People that bought condos in 2007 shortly after the last economic down turn, have made a nice little profit. Rates of return are slower than in the past, but still show ability to increase in value. As new condos are built, this may change. At the moment, more people want to live downtown than there are available units. This has put exceptional pressure on existing units.
What about all that vacant land downtown? Most of it is already spoken for: 1) Capital View Corridor (development is prohibited to block view from Texas State Capital) 2) Historic Sites with restrictive use 3) Current projects under construction or waiting for City of Austin approval.
How many more condos will be built downtown? Are there plans for more residential development? Downtown Austin is locked between Lady Bird Lake to the South, The University of Texas to the North, Interstate 35 to the East and Lamar to the West. These geographical constraints make it increasing difficult to build large scale developments. Most vacant land downtown is already spoken for, its been purchased and waiting for City of Austin planning approval. Current projects underway include Waller Park Place (office, apartments, condo and hotel), 70 Rainey St (condos), The Independent (condos), Austin Proper Residences (condo and hotel), 99 Trinity (apartments), The Bowie (condos and office), Seven Apartments, Seaholm (expected completion late 2015) and 5th and West (expected completion 2017).
What does the term, Warrantable Condo mean? A warrantable condo simply means it is eligible for Fannie Mae or Freddie Mac loans. A non-warrantable condo can not use these government home loan programs and instead require non-traditional financing or a cash. Why would a condo be non-warrantable? There can be a variety of reasons, but the most common are: 1) One person owns more than 10% of the units 2) Not enough of the units are owner occupied (rental property). These protections are in place to protect the owners in the event of economic down turn or other financial crisis. A non-warrantable condo is considered more risky for the borrowers, thus requiring cash or special financing with higher interest rates and down payments.
What are HOA's? Also known as Home Owner Associations, condo owners are required to pay a monthly fee to a board that oversees the cost of maintaining the buildings common areas such as swimming pools, elevators, lobbies, social halls and building exterior. The associate also has the authority to raise special assessments to pay for large projects like installing a new roof. On occasion, HOA fees may include exterior dwelling insurance, internet or gas service. Each building downtown varies in coverage and monthly dues. Downtown Austin Condos current HOA fees average .47 cents ($0.47) per square foot, per month.
What costs are involved in owning a condo? Based on a one bedroom condo (750 square feet) costing $400,000, you may expect $400 in monthly HOA fees, $780 property taxes and $70 insurance. Unlike owning a single-family home, condo expenses are relatively fixed. Owning a single family home comes with more risk in repair costs.