By Mike Heayn Real Estate 101
BUYING A HOME CAN BE A SCARY venture for anyone, but with the right help it doesn’t have to be. In southern California, before someone buys a home, they must decide what type to purchase. Two common types of homes are a single family house and a condominium.
A house — in the traditional sense — is an improvement, dwelling or structure on a plat of land.When you think of a house, you probably think of four walls and a roof,which is not too far from the truth. One benefit to owning a house over a condominium is not having to share any amenities such as a pool, laundry room, etc. However, homes do have drawbacks. One of the largest issues many new homeowners have with houses are the maintenance costs. When you own a single-family residence, you are the sole person responsible for the property. Another possible downside is that houses in Southern California fetch a premium, but tend to hold their value better than condominiums in down markets.
While a house has many benefits, condominiums — or condos — have their own benefits. A condo, defined as individual ownership in a building with shared common areas, is a good house alternative. To cover building maintenance, property insurance and other costs in a condominium, individual owners pay monthly assessments, also known as condo dues or fees. The benefit, in theory, to having dues is that recurring building maintenance is taken care of when needed without having to reassess the owners. Some condo associations delay regular maintenance, which can lead to higher dues in the future. However, if larger improvements are needed or requested such as a gym, owners can vote to raise their dues to cover the cost. As much as sharing the cost of common areas is a benefit, it can also be a drawback. If sharing a laundry room or pool, you may have to wait for quiet times to enjoy them. Of course, a condo will tend to be less costly than a house.
Although a house with the same square footage as a condo in the same area will usually cost more, financing is not always in favor of the condo. One thing people tend to forget about when calculating a mortgage payment are the condo fees. Condo fees affect the amount of a loan a person can afford. At 6.50 percent, $350 condo fees would equal $55,000 in loan dollars, meaning you could get a condo with a loan of $545,000 or a house with a loan of $600,000 and have the same payment.
More often than not, people would rather have a house over a condo.
Regardless of which type of home you purchase, having a home gives you a place to call your own. With a home, you gain tax benefits that few other non-real estate investments give you. If you are in the market for a home, talk to a real estate professional such as a real estate agent. A realtor will be able to give great information quickly. Realtors also know a real estate market since they deal with it day in and day out. A realtor is your best bet to finding that first condo or the home of your dreams.
MIKE HEAYN is a Washington Mutual multi-family loan consultant. He (310) 428-1342 or
Originally published in the Santa Monica Daily Press print edition on April 25, 2007. Read the original PDF.