Thinking about downsizing to a condo? Hold off on buying if any of these traits sounds like you.

3 minute read

Is it part of your retirement plan to sell your current home and downsize to a condominium when you retire? After all, someone else could take care of all that pesky yard work and keep up with landscaping. That way, you’ll have more time to enjoy the pool, clubhouse, tennis courts, fitness center or other amenities that may come with your new condo. On top of that, you may be able to add to your retirement fund from the proceeds of selling your house.

There are plenty of advantages to living in a condo in retirement, such as being part of a community, having access to amenities and often paying less for homeowner’s insurance and property taxes. However, not everyone is cut out for the condo life in retirement.

1. You enjoy plenty of space and privacy

If the thing you like best about your house is that it’s on a corner lot, so you’re not squeezed between two neighbors breathing down your neck or being noisy on weekends, your condo dream may turn into a nightmare once you move in. Sure, you’ll have plenty of privacy inside your condo, but you’ll also be surrounded by a lot of other people with varying noise levels or other annoyances.

If you’re an extrovert who loves to socialize with your neighbors, that can be a good thing. But if you’ve grown accustomed to having lots of space and privacy, and truly enjoy those things, living in a condo could test your tolerance.

Find out: 5 Alternatives to Relocating in Retirement

2. You don’t like unexpected financial surprises

Nobody likes to be surprised with a big bill, but condo owners could end up paying a lot more than expected if the HOA board isn’t on its management toes. You may think you’ve got all expenses for the condo community covered by dutifully paying the HOA fee each month. HOA fees pay for grounds maintenance, such as mowing, landscaping and snow removal. However, the HOA board should also put a portion of money received for HOA dues into a separate account known as a “reserve fund” to pay for things like new roofing, insurance or major repairs.

If the HOA board hasn’t set aside enough money for large expenditures, as a condo owner, you could be hit with a “special assessment” for thousands of dollars. To help prevent getting slammed with a huge bill for improvements or repairs, ask the seller before you buy for a copy of the independent reserve study that the board likely commissioned at some point.

The reserve study analyzes whether the reserve fund currently has enough money for anticipated expenditures. Ideally, the reserve fund should contain at least 10% of the capital budget.

Find out: 6 Ways Downsizing can Stretch Retirement Income

3. You’re not much for sharing

Did you know that when you purchase a condo, you share ownership with all the other condominium owners? So, unlike when you own a house in a neighborhood that has no HOA, you can’t just decide to paint your fence a different color, decorate your front door any way you like or allow your dog to bark too much. When you break condo rules, the HOA may serve a notice, impose a fine or even take legal action against you.

Find out: 6 Affordable Housing Options to Explore in Retirement

4. You’re not big on answering to an HOA

Condos typically are run by the condo community’s homeowner’s association (HOA). With a condo, you’ll be on the hook for monthly homeowner’s association fees, which can be as little as a couple hundred dollars, or several hundred dollars a month. Plus, you’ll probably have to get approval from the HOA board before making exterior improvements or moving or adding plumbing or electrical services for a kitchen or bath remodel.

As if having a condo board watching your every move isn’t bad enough, there’s also a good chance that your HOA dues will go up over time, increasing your monthly expenses.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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