In height of the phenomenal success of condominium in real estate market, there are still “loopholes” on the side that need to look at. For a newbie and unfamiliar investor of property like me, security is the topmost concern that needs to please. If the person is a conservative or unaggressive investor, it is unbecoming for him to take the risk specially if the resources is very limited (meaning from a single saving or from a small savings only). For this, I would like to take my stand in condominium that holds back me from acquiring any so here are my issues that may help other when planning investment through real property.
From the start, condominium has no attraction to me. Except that it is strategically rise in urban areas to bring the majority career working people closer to places of work and commercial areas to meet the means of coping up in this fast-phase life, I don’t see condo as an asset that can give me peace of mind. Here are the reasons why I must say that.
1. Condominium actually has issue in the security of tenancy. Buy now, demolish later. There is life span for condominium for let say 50 years because every structure at that age will need to demolish for security reason. When the time comes, the unit owners have to choose: do they want to sell the depreciated building and divide the amount among themselves or call a developer to build a new condominium on the same land. In both you may lose your tenancy by repaying again.
2. It is indeed has limited tenancy, your ownership in the condominium is actually limited to your unit only. You all occupants, you cannot say per se you own the lot where the condo stands. It is still the real estate who owns the land and handles the title. Unit owners possess only their ownership to their unit. Imagine a ten - storey condo with a typical 50 sq. m. every unit. Citing an example your unit as owning the corner space of the building, you ten consecutive owners of the corner space of each floor are owning only your 50 sqm space and not the 50 sqm lot. Imagining these 10 people hanging in the space from first floor straight up to the tenth floor, that is how their ownership to illustrate.
3. In fortuitous events and emergency situations like fire, earthquake, flood or chemical leak incident, it seems that in most previous cases the building owners were not fully obliged for the property indemnity damages. The building owners do not re-build the buildings, this may means you lost your property. There are even some hearsay that the owners intentionally arson the building if it is almost 50 years for they are not practically profitable any longer, to collect insurance, to recruit another buyers into a higher price etc. —
4. In condominium, you are losing some amount of freedom and enjoying less privacy. There are so much prohibitions that occupants are bounded and need to abide like the rules and regulations about having pets, inviting visitors, tossing parties, planning minor renovation, annoying neighbours, restriction on sounds, and even cooking distinctive foods or kind of curtains to put. There are set of rules, regulations, codes and restrictions that may not suit your lifestyle.
5. It is costly to stay in condo. This is the big turn off to me. Aside from the amount you paid for your unit, there are regular maintenance fees that you need too to pay such as security, elevator, maintenance, parking area, building insurance, laundry and drying area fee, etc. Depends on the type of condo if it is low cost, you may not have that much dues but those high cost condos are most likely collecting lots of monthly and annual dues. Of course whether you like it or not, you have the monthly electric, water and communication bills.
Sad to say condominium becomes status quo of our economic level rather than a real necessity asset. I would rather get a townhouse where I can clearly read my name as the duly owner of the property, stay there for the rest of my life, use it in a bank transaction, and transfer it to my children in my last will. It is better in the sense that it will last longer as in it can be a family property from one generation to another generations.
By Alex V. VillamayorMay 10, 2016