Buying a condo for the first time can be overwhelming, but it can also be pretty exciting! Whether you plan to invest in a condo to rent out and get passive income, or you want to buy so that you can finally stop renting, it’s a big step and a tremendous responsibility that you’re ready to commit.
But in your hurry to finally get a condo in your name, you may have overlooked some things. In this guide, we’ll walk you through the common mistakes first-time condo buyers make and what you should be doing instead.
Don’t give in to FOMO
A piece of advice that has always been reiterated is to ensure you’re prepared for the financial responsibilities of owning a condo.
But how do you know when you’re ready? Financial stability is one consideration. Many young adults, once they’ve achieved their desired income, make the jump to condo ownership without considering the other costs associated with it.
While they may have the money to pay the reservation fee and monthly down payments, they don’t factor in the change in their monthly amortization once bank financing kicks in, as well as other expenses like condo dues, real property taxes, and transfer of title fees.
This ends up in the buyer selling at a loss, which is never good. If you aren’t financially able to commit, don’t give in to pressure or the fear of missing out.
Do your due diligence
Aside from the monthly expenses, you should exercise due diligence and research the community you will be part of. Some condos look nice when advertised, but you’d be surprised by the number of complaints residents have about the building management, the HOA, and even other neighbors.
Once you find the condo you like, don’t just go in and fork over the reservation fee and down payment. Instead, do your research on the developer and the community.
Is the developer reputable? Are you buying property in an upscale neighborhood? Can you identify the developer’s target market? Is there an established HOA? Can you talk to anyone who can share their experiences with you, whether with the developer or the HOA?
Save yourself the trouble of dealing with problems firsthand by asking the right questions to the right people.
Don’t say yes to just any agent
When choosing a real estate agent to help you through the buying process, you’d want to partner with someone knowledgeable about the market and whom you can trust to help you make sound decisions.
Your broker can make or break your buying experience. Experts like DMCI Homes Property Advisors are ideal partners, in that they will work with you to determine the best condo tailored to your budget and financial capability.
Don’t buy a condo if you want your ‘passive income’ to pay it off
Many buyers invest in a condo with the intention of renting it out and having their monthly income pay off the monthly amortization. Now, this isn’t a bad idea as most condo buyers do this already, and they eventually sell off the property once they’ve gained their return on investment (ROI).
But doing this is a terrible idea if you’re relying on just the income you make to pay off the condo entirely. Just like what happened with the 2020 lockdowns, a lot of people lost their incomes and could barely afford to pay rent — what happens to your unit if something like this happened again?
Or what if your tenants suddenly decide to leave, and you can’t find another to take their place in time — who pays for the unit then?
Getting a condo as a rental is a great investment, but that’s only if you don’t rely on a potential income to sustain it.
Remember that your monthly amortization isn’t the only expense that you’ll need to cover. You have condo fees, property taxes, and repair and maintenance costs to consider, too.
Be prepared for your condo goals
Buying a condo is almost the same as getting married — you can’t just back out once you’re in. Don’t make the same oversights that many new buyers have made.
Aside from doing your research, talk to your DMCI Homes Property Advisor, who will give you solid advice on the next steps you should take to avoid making these common mistakes.
But if you’re ready and able to start your condo journey this 2023, then let’s go! Check out the ongoing promos happening right now at DMCI Homes.