Ten Non-Negotiable Questions To Secure Your Investment

10 Essential Questions to Ask Before Buying a Condo in Atlanta

Buying a condo in Atlanta is an exciting investment, but it comes with unique considerations compared to purchasing a single-family home. To make an informed decision, here are ten crucial questions you should ask before signing on the dotted line.

1. What Are the Monthly HOA Fees, and What Do They Cover?

HOA (Homeowners Association) fees can vary significantly from one building to another. These fees typically cover expenses such as landscaping, exterior maintenance, security, and amenities like pools, gyms, and concierge services. Some HOAs may also include utilities like water, gas, or internet. Understanding the breakdown of these costs will help you evaluate whether they align with your budget and the value they provide.

Additionally, it’s crucial to understand what happens if you fail to pay your HOA fees. Associations have the authority to impose late fees, restrict access to amenities, and, in extreme cases, place a lien on your property or initiate foreclosure proceedings. Ensuring you can comfortably afford these fees is essential to avoiding financial and legal complications.

2. Are There Any Special Assessments?

Special assessments are additional charges imposed by the HOA to cover major repairs, renovations, or unforeseen expenses that exceed the association’s reserve funds. These can be significant, often amounting to thousands of dollars per unit. Ask about any upcoming or recent special assessments to gauge whether you may face unexpected costs soon after purchasing.

If you find yourself unable to afford a special assessment, many HOAs offer payment plans to help owners spread out the cost over time. However, if no payment plan is available or if the amount is too high, you may need to consider selling your unit. In extreme cases, failure to pay special assessments could result in legal action, liens on your property, or foreclosure, similar to unpaid HOA dues. It’s crucial to factor in potential assessments when evaluating your financial readiness for condo ownership.

It is also important to understand how the HOA defines a special assessment. Some associations may only classify a fee as an “assessment” once it has been formally approved by the board, meaning that pending or “on the horizon” assessments may not legally require disclosure by a seller. While this may be technically permissible, buyers should exercise caution and ask direct questions about any known potential expenses that could impact ownership costs in the near future.

3. What Are the Building’s Rules and Restrictions?

Each condo community operates under a set of rules outlined by the HOA. These rules may govern pet ownership, rental policies, renovation approvals, noise levels, and common area usage. Some buildings may have strict guidelines regarding short-term rentals, while others may prohibit certain breeds of pets. Reviewing these regulations in advance ensures that your lifestyle and future plans align with the community’s policies.

It’s also important to understand what happens if you, your guests, or a tenant violate these rules. Depending on the infraction, consequences may range from warning notices and fines to restrictions on access to amenities. Repeated or severe violations could lead to legal action or, in extreme cases, a forced sale of the unit. If you plan to rent out your condo, ensure that your tenants are fully aware of the building’s regulations to avoid potential conflicts and liabilities.

4. How Financially Stable Is the HOA?

A financially healthy HOA is crucial for maintaining property values and ensuring the building is well-maintained. Requesting the HOA’s latest financial statements, reserve fund balance, and budget can provide insight into its fiscal health. A poorly managed or underfunded HOA could result in increased fees or unexpected special assessments in the future.

One key indicator of financial stability is the HOA’s reserve fund. This fund is set aside for major repairs and unforeseen expenses, such as roof replacements, elevator repairs, or structural issues. A well-funded reserve reduces the likelihood of special assessments being imposed on owners. Ask for the most recent reserve study, which evaluates whether the HOA has adequate funds for long-term maintenance.

Additionally, reviewing past financial records can reveal patterns of mismanagement, excessive debt, or frequent fee increases. If the HOA has a history of financial instability, it could mean future financial burdens for owners. It’s also wise to check if the HOA has ever been involved in lawsuits, as legal battles can drain resources and lead to higher fees.

Lastly, understanding the HOA’s delinquency rate is essential. A high percentage of owners who are behind on their dues may indicate financial trouble. If too many owners default on payments, the HOA may struggle to cover necessary expenses, potentially leading to fee hikes or a decline in property upkeep. Ensuring the HOA is financially stable will help protect your investment and maintain the quality of life in the community.

5. What Is the Building’s Maintenance History?

Understanding the building’s maintenance and repair history can reveal potential red flags. Inquire about the age of major systems like the roof, elevators, HVAC, and plumbing. Frequent repairs or a history of deferred maintenance could signal upcoming expenses or structural issues that might affect your investment. Most often, this is reflected in the HOA Meeting Minutes.

Buyers typically need to request this information through the current owner, as maintenance records are not always publicly accessible. The seller can request documents from the HOA or property management company, which may include a history of major repairs, planned maintenance, and any outstanding issues. Some HOAs may also provide a reserve study that outlines future maintenance needs and associated costs.

In addition to official records, it’s helpful to talk to current residents about their experiences with maintenance. Are repairs handled promptly? Have there been recurring issues with plumbing, elevators, or other infrastructure? Poor maintenance can be a sign of financial mismanagement or a lack of adequate reserves, which could lead to higher costs for owners in the future. Conducting a thorough review of the building’s upkeep will help ensure you’re making a sound investment.

6. What Are the Resale and Rental Restrictions?

Most all condo associations have restrictions on renting units to maintain a stable community and protect property values. Ask whether there is a rental cap, waiting list, or minimum lease duration. If you plan to resell in the future, find out if there are any resale restrictions, such as right-of-first-refusal clauses or mandatory HOA approval processes, which could impact your ability to sell quickly.

Rental restrictions can be particularly challenging, especially if you plan to use the condo as an investment property. Many HOAs enforce rental caps, meaning only a certain percentage of units can be rented out at a given time. If the rental limit has been reached, you may need to join a waiting list before you can lease your unit. Additionally, short-term rentals, such as Airbnb, are often prohibited or heavily regulated.

Some HOAs offer hardship permits, which allow owners to rent their units under special circumstances, such as job relocation or financial distress. However, these permits can be notoriously difficult to obtain and may require board approval along with documentation proving hardship. If rental flexibility is important to you, carefully review the HOA’s policies before purchasing to ensure they align with your plans.

7. Is the Condo FHA or VA Approved?

If you’re considering financing options like an FHA or VA loan, it’s essential to check whether the building is approved for these types of loans. FHA and VA loan approval makes homeownership more accessible for buyers with lower down payments, but not all condo buildings meet the necessary criteria. In fact, the number of approved buildings is becoming smaller. You can verify the building’s eligibility on the HUD or VA website or by asking your lender.

Having an FHA-approved building can be advantageous because it allows buyers to secure financing with lower down payments (as little as 3.5%) and more lenient credit requirements compared to conventional loans. Additionally, FHA loans often have lower interest rates and allow for higher debt-to-income ratios, making homeownership more feasible for many buyers (like first-time buyers). VA loans, available to eligible veterans and active-duty service members, provide benefits like zero down payment and no private mortgage insurance (PMI), making them an attractive option.

For buildings that are not FHA-approved, buyers may still have options through FHA Spot-Approvals. This process allows individual units within a non-approved building to be considered for FHA financing on a case-by-case basis, provided the building meets specific eligibility requirements. However, Spot-Approvals can be more challenging to obtain and may require additional documentation and approval from the lender. If you’re relying on FHA financing, it’s crucial to verify approval status before making an offer to avoid financing complications.

8. Is the Condo Part of a Hotel or Mixed-Use Building?

In Atlanta, some condos are located within hotel or mixed-use developments, which can significantly impact the living experience and costs. If the condo is part of a hotel, amenities such as pools, gyms, and concierge services may be shared with hotel guests. While this can provide a luxury experience, it may also mean more foot traffic, limited access during peak hotel seasons, and higher maintenance demands.

Living in a mixed-use building, which may include retail shops, offices, or restaurants, can offer convenience but also comes with unique challenges. Noise levels, security concerns, and increased wear and tear on shared spaces can affect residents differently than a traditional residential-only building.

HOA fees in these types of buildings tend to be higher due to the cost of maintaining premium services and shared facilities. Some buildings charge additional fees for access to hotel amenities, while others may include them in standard dues. Before purchasing, it’s essential to understand how shared spaces are managed, whether there are separate access points for residents, and if the hotel or commercial operations have any say in HOA decisions. This can help you determine if the benefits outweigh the potential drawbacks.

9. How Many Units Are Owner-Occupied?

The percentage of owner-occupied units can heavily impact financing options, HOA stability, and community atmosphere. Lenders often prefer buildings with higher owner-occupancy rates, as they are viewed as lower risk. Additionally, buildings with a majority of owner-occupants tend to have stronger community engagement, better-maintained common areas, and lower turnover rates.

From a financing perspective, many lenders have minimum owner-occupancy requirements for approving loans. If too many units in a building are investor-owned or rented out, securing a conventional mortgage may be more challenging, as lenders perceive these properties as higher risk. Some loan programs, such as FHA and VA loans, have strict owner-occupancy thresholds, so verifying these percentages before purchasing is essential.

A low owner-occupancy rate can also impact your ability to sell in the future. Buyers using financing may face difficulties securing loans, limiting the pool of potential purchasers. This could lead to longer selling times or reduced resale values. If you plan to sell down the line, choosing a building with a balanced mix of owner-occupied and rental units can help protect your investment.

10. What Is the Surrounding Area Like?

Location is key when purchasing a condo. Research the neighborhood’s walkability, crime rates, access to public transportation, and proximity to dining, shopping, and entertainment. Consider the area’s long-term growth potential and any planned developments that could impact property values. A well-situated condo in a thriving area will likely appreciate over time, making it a smarter investment. To get a true sense of the area, explore it at different times of the day, night and week.

Final Thoughts

Asking these questions can help you avoid common pitfalls and ensure that your Atlanta condo purchase is a smart and sustainable investment. Working with an experienced real estate professional can also provide additional insights tailored to your specific needs. Whether you’re a first-time buyer or a seasoned investor, due diligence is key to securing a property that aligns with your financial and lifestyle goals.

However, beyond financial considerations, it’s equally important to be happy with your purchase. The real estate market will naturally fluctuate over time, but choosing a condo that truly fits your lifestyle, preferences, and long-term needs will make all the difference. If you feel confident in your choice, a market dip won’t impact your day-to-day happiness, and an eventual upswing will only strengthen your investment. Ultimately, your condo should be more than just a financial asset—it should be a place where you feel at home.