While some people choose a condominium over a single family residence (SFR) because of the convenience condo living provides, people tend to prefer a detached house with a yard. But with the price of SFRs becoming more and more out of reach for many first-time buyers, condos offer a less expensive opportunity to enter the housing market and enjoy the appreciation and tax advantages of homeownership. In fact, for a growing number of people, condos have become their only option.

My first purchase was a condo for that very reason. While I truly wanted a front and back yard, with no one living above or below me, to get it my financial situation would have forced me to accept a geographical location I considered unacceptable. In the end, I chose location over an SFR, and it paid off handsomely. Six years later, my wife and I sold the condo with enough profit to buy a 3-bedroom, 2-bathroom home right where we wanted to live. For us, the condo was a short-term stepping stone to better things.

Someone thinking of buying a condo, either for price or convenience, should know that the convenience comes in the form of a homeowners association that is usually responsible for maintaining everything except the interior of the condo. The homeowner has the right to enjoy common areas, such as the pool, landscaped sitting areas, tennis courts, and clubhouse, without the need to perform any of the repetitive tasks that go hand-in-hand with an SFR. Condo owners have a more a lock-and-go lifestyle, in which they can prepare their home to be vacant for weeks just by locking their door before heading to LAX.

HOA common area operation and maintenance come at a cost, but the cost is usually on a par with SFRs that have comparable features. HOA fees can range from as little as $150 per month to hundreds of dollars per month, depending on the facilities and services the condo community provides. Part of the monthly fee goes toward current operation, and the rest is placed in a reserve fund for future maintenance.

Owners of SFRs don't pay monthly reserve maintenance fees (although putting money aside each month for future costs is prudent budgeting). Instead, they incur the costs in full at the time the work is needed.

There are some important questions that all buyers should ask when considering the purchase of a condo.Some of these questions may be much more relevant than others to you:

• How much is the monthly HOA fee? Some folks may be more comfortable with a smaller fee, and be willing to forgo a community with amenities such as a tennis court and an entrance guarded by security personnel 24 hours/day, to get it. Lenders also include the fees as part of their calculations to determine the amount a buyer is qualified to spend, so the amount of the HOA fee might eliminate some of the condos on your list of communities to consider.
• How much and how often can the fee be increased? The answer is determined by the written regulations used to govern the community, so it will vary from condo to condo. The decision to increase fees is made by the community's board of directors that meet on a monthly basis. Every owner has a right to run for a position on the board and have a say in the decision.
• What services does the HOA fee cover? They normally cover hazard insurance, trash removal, security, and operation and maintenance of the common grounds, but the fee sometimes includes utilities such as hot water and cable television.
• How much money is in the reserve fund? Good question, and the answer underscores the importance of not placing too much value on a low HOA fee. A community that has been collecting a sufficient amount of money from homeowners each month is financially prepared for any maintenance that lies ahead. A complex that has not diligently forecasted future costs and provided for them on a month-to-month basis is not so lucky. The board of directors will have little choice but to levy a "special assessment" against all homeowners to make up the difference between what they have and what they need. The assessment is usually spread over a period as long as a year, and it may increase monthly HOA fees substantially during that temporary period. The exact amount of the increase depends on the amount of the shortfall, but it is obviously better to avoid special assessments by planning ahead with an HOA fee set at the proper level to begin with.
• What rules are residents required to follow? In order to protect the desirability of the complex, future market value, and the enjoyment of its owners, an HOA has rules that must be followed. The rules can vary widely, such as disallowing structural modifications within a unit and cosmetic modifications external to the unit, number and size of pets, noise levels, and the hours during which a pool may not be used. It's vital that potential owners review these rules to be sure they are compatible with their lifestyles.
• What is the renter-to-owner occupancy ratio? The fewer the number of renters, the more stable and better maintained the community will be. In fact, most lenders will not provide a home loan within a community in which renters make up more than 20% of the occupants.
• What is the population density? Larger communities tend to offer more amenities and are professionally managed. Smaller complexes tend to manage themselves with owner-volunteers, and have lower HOA fees. In addition to considering how personally involved a potential owner may want to become in the management of the community, there is also the issue of enough privacy to suit personal tastes.

A buyer thinking of submitting an offer on a particular condo can learn the amount of the HOA fees, the services provided by the HOA, pet restrictions, and population density before deciding to submit the offer. The history of fee increases, the amount of money on reserve, a thorough overview of resident rules, and the renter-to-owner occupancy ratio are frequently disclosed to the buyer through documentation provided by the HOA after an offer is accepted and the condo is in escrow.

The reason for this timing is cost: an HOA charges the current owner approximately $250 to prepare the documentation, and sellers are reluctant to pay the cost until they have accepted an offer. All condo buyers should be aware that they have the right to review the HOA documentation, no matter when they receive it, and their approval should be a contingency of their offer.