January 24, 2020
Nevada’s home prices keep rising and the hunt for affordable options is becoming more and more challenging. Enter the condominium (aka condo) and townhouse. Typically priced below detached, single-family houses, these housing units are a more affordable option for many Nevadans.
Mosi Gatling, a sales manager with Loan Depot, is the preferred lender for Touchstone Homes in Las Vegas. One of their newest developments, Mosaic, will eventually include 800 two and three-story townhomes near the south Strip. Prices start around $230,000, which is a healthy 24% less expensive than the current Las Vegas median home value of $302,437, and 38% less than the Reno median price of $370,600, according to Zillow.com.
Read: Buying a Home Can Be A Good Option for Single Parents
“[Touchstone] was building bigger homes, but they decided to go with condos and townhomes to address the need in our area,” Gatling says. “A lot of buyers are getting left out of the current market, so this is one way to fill the need for sub-$300 homes.”
Intrigued? Get the deets.
With a condo, you own your individual unit and you share joint ownership of the building with the other owners. That joint ownership includes any amenities included in the condo community, like a clubhouse, gym or swimming pool.
Townhomes are more like stand-alone homes in that you own the structure and the land it sits on, but you do share common walls.
Both condos and townhomes include monthly dues for a Homeownership Association (aka HOA). HOAs are run by a board of tenants, which could include you (if making rules and enforcing them is your thing). The HOA board uses dues to maintain the overall property and establishes rules for the community – everything from noise levels and pet ownership to whether you can rent out your home. So you can see why being on the board might work in your favor.
“It’s important to do all of your research before you buy,” Gatling says. “Understand what the rules are and how much your monthly fees are going to be. And then decide if this is something you want to do.”
Owning a condo or townhome has a lot in common with owning a detached home, but there are some differences you should be aware of before signing on the dotted line.
- Save money. Condos and townhomes tend to be less expensive to buy than stand-alone homes. They also tend to be less expensive to maintain as there is typically less (or no) exterior maintenance. The caveat is the HOA. Make sure you know what your monthly dues will be and what they cover.
- Save even more money. The HOA is responsible for planning for larger repairs like roofing or paint, so you’re essentially paying it forward with your dues. As Mosi says, “The roof is covered and you shouldn’t ever have to paint the exterior. This means you don’t have to come up with $30,000 for a new roof after a big windstorm, like you would in a stand-alone home.”
- Convenient location. New condo and townhome projects tend to be adjacent to shopping, restaurants, transportation and schools.
- More free time. Because the HOA is responsible for maintaining the complex, there’s less mowing of lawns or cleaning of swimming pools. “It’s a lifestyle product,” Gatling explains. “It allows you to travel more with less responsibility. You can get out and enjoy life a little bit more.”
- Included amenities. Memberships to gyms, pools and clubhouses can really add up when you have to purchase them separately. If the condo HOA includes the amenities you really want, you might be saving quite a bit of out-of-pocket expense. Plus, they’re right in your backyard.
- Potential investment property. If you decide to turn your property into a rental unit down the line, you have a built-in property manager.
Now for the challenges:
- Financing. Because of past problems with condos and townhomes, it can be difficult to get financing for them. As with any new home purchase, Gatling advises prospective homeowners to get qualified with a lender first. The lender can then do the research to ensure the property is approved by the Federal Housing Administration (FHA), Fannie Mae, the Veterans Administration (VA) or Freddie Mac. You can visit HUD.gov to search approved projects, but things are changing all the time so it’s probably easier to just have your lender do it.
Read: FHA to make financing easier for condo owners
- New unit availability. There aren’t that many new condo projects available in Las Vegas or Reno. “After the recession, the approvals for most condo projects expired,” Gatling says. While some developers are shifting back to condos and townhomes, this can be a slow process.
- HOAs. Many of the building approvals mentioned above, expired because of litigation, which included class action lawsuits by owners against their HOAs. “They might not have been providing the services that were promised or maybe budgets were out of whack,” Gatling says. It’s important to really understand what the HOA is responsible for and to make sure they’re actually being responsible. If you’re considering a specific development, ask around to find out if the HOA is doing what they say they are.
- Potential noise. You’re sharing a wall with other homeowners, perhaps more than one. This means you’re much closer to your neighbor’s noise, but they’re also affected by yours. This can really matter if you don’t share the same taste in music, like to entertain or work from home and require quiet during certain hours.
Read: How To Be A Good Neighbor
- Limited profitability: Condos and townhomes don’t tend to go up in value as quickly as stand-alone homes. Of course, this is also part of what makes them more affordable.
- Rules. As part of a community, you have to abide by community rules. This could affect your ability to get a pet, designate your property as an Airbnb or even paint your door.
If you’re ready to buy a home of your own, start by visiting our list of HIP-qualified lenders, who can evaluate your situation and let you know how much house you can afford. They can also help you figure out which HIP down payment assistance program works best for you. Then call a HIP-qualified real estate agent to get out there with you to find the home sweet home of your dreams.