Condo FAQs

A home is an investment that has the potential to go up in value over time. When you rent, you write your monthly check and that money is gone forever. You are also bound by the lease you sign with your landlord, which can restrict your ability to have pets, choose your own maintenance providers when necessary, or decorate or modify your living environment to suit your needs and wants. By owning your condo, you have more freedom to shape your home to your own personal style and needs, and direct access to any homeowners associations in your community to help make decisions for the building your property is located in.

Buying your condo also allows you to deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. As interest payments will make up the majority of your monthly payments for the duration of your mortgage, this can save you a lot of money in the long term. You can also deduct the property taxes you pay as a homeowner, and depending on homeowners association bylaws of the property your new condo is located in, you will have the option to potentially rent your condo out to others when you are ready to move, giving you another avenue for potential profit.

There are several components to the condo purchase transaction that are the same as buying a house. However, there are quite a few differences as well! There are different things you have to consider (including Association structure, the financial position of the building, reserve study, and possible restrictions on pets, parking, unit use, rentals, etc.).

One major difference is the often higher Homeowners Association fees that come with condo ownership. It is important to consider this added cost into your decision to purchase, but also to remember that there is a reason for this fee. Unlike a home, the common space outside of your unit in a condo community is maintained by the Homeowners Association which uses those fees to conduct routine maintenance, repairs, and upgrades to the building, common areas in the building, and the landscaping and amenities included in the property. When you factor in the costs of maintaining these features in a home, the higher Homeowners Association fees begin to make more sense.

These and other differences between buying a house and buying a condo are why it is important to work with a Realtor who has experience buying and selling condos, as they will be able to help guide you through the process of purchasing a condo and will know the important questions to ask to find the right condo community for you!

Absolutely! A good real estate professional will guide you through the entire process and make the experience much easier. A real estate broker or agent will be well-acquainted with all the important things you’ll want to know about a neighborhood you may be considering. He or she will help you figure the price range you can afford and search the multiple listing services for condos you’ll want to see.

With immediate access to condos as soon as they’re put on the market, the broker or agent will save you hours of wasted driving-around time and can help suggest properties that meet your needs and wants that you may not have known were available otherwise. When it’s time to make an offer on a condo, the broker or agent can point out ways to structure your deal to save you money and will explain the advantages and disadvantages of different purchase offer tactics, guide you through the paperwork and resale documents, and be there to hold your hand and answer last-minute questions when you sign the final papers at closing. 

Many people use second homes as a source of income by renting them out. Condos can be a great way to begin or expand your rental property portfolio and build an additional source of income, but it is important to choose the right condo.

Some condo associations do not allow the use of condos within their community as rental properties, and others are in locations that can be difficult to find renters in a price point that allows you to make profit. A good real estate broker or agent with experience buying and selling condos will be able to help you find the right condo to begin or expand your rental property portfolio.

When purchasing a second property to use as a rental property, it is also important to consider the work involved in being a landlord, as while the Homeowners Association may take care of much of the property maintenance in communal areas, as the owner you will still be responsible for scheduling regular and emergency maintenance within the condo itself, along with ensuring that a lease is drafted and signed, rent is paid, and resolving any potential issues your tenant has with other residents or other residents have with your tenant.

For those who are not interested in taking on the high level of time and effort involved in being a landlord, or those living in a different city, state, or country from their rental property who are unable to easily manage the property, it may be worthwhile to consider a property management company. There are many different companies that operate on a national or local level who can take over many of the more difficult aspects of managing a rental property on your behalf for a small fee, typically taken out of the rent of the property. 

Well, that depends on a number of factors, including the cost of the condo and the type of mortgage you get. In general, you need to come up with enough money to cover three costs:

• Earnest money – the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the condo
• Down payment – a percentage of the cost of the condo that you must pay when you go to settlement
• Closing costs – the costs associated with processing the paperwork to buy a condo (the earnest money you pay in the beginning will go towards paying your total closing costs at the end).

When you make an offer on a condo, your real estate broker or agent will deposit your earnest money with an escrow company, a neutral third party that will handle the financial part of the transaction. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies and is generally between 1% and 5% of the condo purchase price. The more money you can put into your down payment, the lower your mortgage payments will be. Some types of conventional loans require 10-20% of the purchase price. Other loans require only 3% to 5% down – and sometimes less. Ask your broker to refer you to a mortgage specialist that will help you structure your future mortgage.

Closing costs – which you will pay at settlement – average 2-3% of the price of your condo. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won’t be caught by surprise. It is also important to consider additional expenses like Homeowners Association fees, any potential renovation costs for repairs and renovations that aren’t included in your purchase agreement, and moving costs. A good broker or agent will help you plan accordingly and will make sure you are aware of all costs and fees at the start of your condo purchasing process and will be able to help you answer any questions you might have regarding the costs of purchasing a condo.

Whether you’re looking to move somewhere new, buy a second home for yourself, or expand your rental property portfolio, Memphis is a fantastic city to buy a condo! From charming historical renovations to brand new construction full of luxury amenities, there are condos to suit every style, desired location, and preference.

Beyond the condos themselves, Memphis is a vibrant community with a wide variety of options for working, dining, and entertainment including a large number of local businesses that give a unique feel to this historic city. With a great local food scene, a wide variety of public park space both in the city and in the surrounding areas, and entertainment options from Major League Soccer and Minor League Baseball teams to two local ballet troupes, a symphony, and a wide range of museums, Memphis has something for everyone.

Home to 14 colleges and universities including several graduate programs, St. Jude Children’s Research Hospital, a major FedEx transportation hub, and thousands of small local businesses, Memphis is also a great city to live in for work or school as well! Not sure which neighborhood may be right for you? Take a look at our community pages to learn more about each area of Downtown Memphis!