What to consider when buying into an apartment building?
Buying an apartment also means buying into a building, and oftentimes the building itself will affect your quality of life much more than the appearance and comfort of your home. What are some things to consider? Monthly Costs When shopping for an apartment, keep in mind that maintenance or common charges may affect your pocket book much more directly than price. Buyers tend to be very sensitive to price, but consider that a $100,000 difference in price equates to roughly $500 each month in additional mortgage payments. By contrast, maintenance or common charges among comparable units can vary widely. When looking at monthly charges, be sure to consider the trend in the building: if the monthly charges are already on the high-side of the acceptable range, but there have been regular steep increases, it may not bode well for your monthly budget and for resale. Similarly, keep in mind what amenities you truly want or need; most buyers inquire about amenities, but few actually use the roof deck or gym. Owner Occupancy One of the best reasons to buy rather than rent is having neighbors who are likewise vested in the well-being of the building. When buying a condo, especially if you intend to live there, it is important to consider the mix of owner-occupied vs. rented apartments. Beyond losing a sense of community, a low rate of owner-occupancy may limit financing options. This is less of a concern with coops, which usually discourage -- or even outright prohibit -- sublets or pied-a-terres. Building Rules No matter your personal feelings about sublets or dogs, overly prohibitive building rules can inhibit you as your circumstances change and will limit the market for resale. I recommend making sure building policies are in-line with norms in the area -- some subletting should be permitted, alterations should be governed by a process (but a reasonable one), co-purchasing and guarantors should be permitted in certain cases ... Appearance Curb appeal is one of the most important factors in buying or selling a house, but less important for an apartment building (luckily for me and my 1960s postwar brick coop). For an apartment building, it is the interior spaces that matter -- for example, the lobby, hallways, and elevators. Again, balance is key. Over-the-top renovations, which unduly increase monthly costs for owners, are unnecessary and counterproductive, but common areas should definitely be neat, clean, bright, and maintained.
Health of the building Many buildings have issues -- some may have ongoing litigation, facade issues, low reserves, a boiler past its prime -- but I don't recommend looking at any single factor as determinative. Keep in mind the big picture and your goals and circumstances. A building that has issues that are being actively resolved by a responsible Board may provide a value proposition with upside down the line.