Hello everybody.
Thank you for coming to our weekly video blog, Robert Rico here, California Realty Training.
Thank you so much for coming.
Today I want to talk to you about the difference between a condominium, a condo, and or an
apartment building or an apartment unit.
The main difference is this: now when it comes to physical attributes, they're both pretty
much the same thing.
You got a unit and a condo.
You got a unit and an apartment complex, you rent them out, not a big deal, they both are
very very similar: bedrooms, baths, square footage, all that good stuff.
Now the main difference of course then is the ownership.
Who owns these complexes?
Who owns the units?
When it comes to an apartment, an apartment typically is owned by a huge corporation.
It can be owned by a single entity or one person, but typically it could be owned by
a huge corporation, several units under one umbrella of this apartment complex, not a
big deal.
When it comes to a condominium, it is typically owned by one entity, one person, which is
managed by an HOA, which stands for homeowners' association.
They govern the complex, the home owner owns the unit however.
Now let's just ask ourselves, what is an HOA?
What is a homeowners' association?
Now every condominium complex.
I'm talking a huge complex, some of them have 10 units, some of them 20, heck, some of them
have 50, depending on the size of the complexes, there's several units in these complexes,
several little apartments.
They look like apartments, but they're actual individual units.
When it comes to the cost of a condominium or an apartment unit, they're very similar
again depending on the location, location, location.
Depending on the bedrooms, number of baths, square footage.
They're similar, and of course they'll have very similar costs.
Now when it comes to homeowners' association, it's a government.
It's almost a small government that's going to manage the entire complex, collect the
fees of the entire complex, make up the rules and regulations for this entire complex.
So what is the HOA, homeowners' association?
Each individual home owner in this condominium complex pays their fees to make sure all of
these items are covered.
Typically the HOA fees would include the maintenance of the building, they would include insurance
for the building, the exterior of the building, not inside the units, but the exterior, so
it includes a maintenance, it would include insurance.
It would include maintenance of the pool, and if they have a gym, things of that nature.
So by paying all these homeowners' association dues every single month, they're all covered
for the home owner.
So how does homeowners' association dues affect a listing?
This is huge in the real estate world.
This is very very huge.
This is the deal.
Let's assume you get a listing.
Yay, I get a listing in Westwood.
Westwood, California, Los Angeles.
The listing is for a million dollars.
You say, "Yay, that's great."
So you have a buyer who's interested.
A buyer of course typically would get a home loan.
So he gets his home loan and his lender tells him, "Hey listen, if you want to get a loan
for a million dollars, you're payment's gonna be ... "
Let's assume, for the sake of argument, it's gonna be $5,000 per month.
Yay, that's good.
But you didn't consider the homeowners' association dues that's going to be due every single month.
So on top of the $5,000, there are some homeowners' association dues that could go up to $2,000
per month.
You have to pay the $5,000 on your mortgage, plus the additional $2,000 for the homeowners'
association dues every single month.
That's quite of a drastic change there.
That's $7,000 total.
You didn't expect that extra $2,000 did you?
This is why it's very important that when you do get a home loan, you must make certain
that you know the amount of the homeowners' association dues so you that you can inform,
who?
That's right.
Your lender.
They will take that payment of the homeowners' association dues into consideration when they're
giving you the monthly payment that you qualify for.
Most people want a very low a homeowners' association dues.
But some of them are very very high, but because they are very very high, you do get a lot
more rewards: bigger pool, maybe, bigger amenities.
Some of them even have valet services for you.
So of course, depending on the location, the type of complex, expect the fees go from very
minimal to large.
Thank you so much for coming to our weekly video blog.
Can't wait to see you next week.
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