5 Hidden Pitfalls to AVOID When Buying a Condo in San Francisco

Buying a condo is a perfect way to enter the San Francisco real estate market… But is it as easy as people make it out to be?

Whether you’re priced out of a single-family home, looking for less maintenance, or want that amenity-rich lifestyle, condos can be a great option for living in San Francisco. However, lots of buyers fall into the same pitfalls over and over again, and I think it’s time we put an end to that.

I’m going to be telling you all about the five most common condo-buying pitfalls and how you can avoid every single one of them.

1. Stop Overlooking Expensive HOA Fees When Buying a Condo

You’ve probably heard about HOA fees – they’re one of the first things that come up when you’re buying a condo in San Francisco, after all.

These are “Homeowners Association” fees, and they can vary quite a lot depending on the type of condo you’re buying.

Many people picture a large high-rise when they think of condos, but San Francisco actually offers lots of different styles, and they all come with their own fees. You get everything from boutique historic buildings with just a few units to towering developments with hundreds of condos.

• Boutique historic condos: These are smaller buildings and have a unique charm to them. They also tend to have lower HOA fees, ranging from $250 to $600 a month. Keep in mind that a lot of them are managed by the owners themselves, so you may get more autonomy but less professional management.
• Larger condo developments: These types of condos typically come with higher HOA fees, sometimes as high as $3,000 a month for luxury buildings. You get more amenities, like valet parking, concierge services, and top-notch gyms, but you’ll have less of a say in how things are run.
• Now that you have HOAs in mind, should you consider going down the rental route instead of purchasing your condo? This is what we have to say.

I can’t stress how important it is to factor these fees into your monthly housing costs before buying. While the mortgage might fit your budget, the HOA can quickly push your payment

beyond your comfort zone.

Pro tip: HOA fees can rise over time, so it’s good to check how often these increases happen and what the reserves look like.

2. Avoid This Costly Mistake: Condos Don’t Always Appreciate Fast

Are you purchasing a condo thinking that it will appreciate similarly to a single-family home? Think twice.

In San Francisco’s real estate, condos tend to appreciate more slowly, and during market downturns, they can lose value more quickly. You might want to reconsider if your main goal is a long-term investment.

• Slower appreciation: Condos in San Francisco are currently selling at prices from 2015 to 2018. If you’re hoping for a quick return on investment, you could be waiting longer than expected.
• Longer days on the market: Condos typically take longer to sell than single-family homes. The median days on the market for condos is around 58 days, compared to 24 days for single-family homes. That extra month can be costly, especially if you’re paying a mortgage and HOA fees while waiting for a buyer.

These are all common condo-buying misconceptions, but how about home-buying misconceptions? Read this to avoid falling into them!

3. Uncover Hidden Costs in HOA Financials Before You Buy

Not everyone is able to understand the financials within HOA documents, but a lot of buyers certainly wish they had!

When buying a condo, you’ll get a thick stack of papers covering everything from the annual budget to reserve studies. These documents are key to getting a clear picture of the building’s financial health.

So, what should you be looking out for?

• Special assessments: The building might need significant repairs, like a new roof or exterior maintenance. Sometimes, there isn’t enough money in reserves for this, so the HOA may issue a special assessment. This is a one-time fee that owners must pay to cover the costs.
• Upcoming repairs: Also, check for any planned repairs that could increase your expenses in the future. Say, if a major roof repair is needed, you’ll want to know whether there’s enough in the reserves to cover it or if you’ll be on the hook for a costly assessment.

Make sure you go over these documents with your agent! They will help you understand if the building is well-maintained and whether there are any financial red flags to be aware of.

4. Stop Ignoring Shared Space Issues with Neighbors

Lots of people don’t realize that buying a condo isn’t just purchasing the space within your walls. You’re also buying into common areas, and you’ll have to interact with your neighbors more frequently than you might in a single-family home.

There are many challenges that come with this, and if you’re not aware of them early on, you might end up making a decision that’s ultimately bad for you!

For example, you’ll need to rely on your co-owners or the HOA board to make decisions about the building’s upkeep. If your neighbors aren’t as invested in maintaining the property, it could hurt the overall value of your unit.

Also, sharing walls with neighbors means less privacy. You could be sensitive to noise or concerned about neighbors’ lifestyles – don’t underestimate the things that make you uncomfortable!

5. Don’t Overlook the Importance of Reviewing House Rules (CC&Rs)

Many buyers don’t understand the rules and restrictions that come with condo ownership and decide to go forward without taking these into account. Big mistake!

You’ll find these rules in the so-called CC&Rs (Covenants, Conditions & Restrictions). In many cases, they could even impact your ability to rent out your unit or make renovations, so digging deep into every detail is key to your purchase.

• Some buildings don’t allow short-term rentals such as Airbnb, and many others have strict rules about how long a tenant can stay. Be sure to check these rules if you plan on renting out your condo.
• Condo associations have rules about what types of renovations are allowed, especially if those changes impact shared walls or structural elements of the building. You’ll need to get approval from the HOA before going forward with any significant renovations.
• Some condos also limit the number of pets you can have or set restrictions on pet size. If you have pets, make sure the condo allows them and that their policies fit your needs.

The Key To Avoiding These Pitfalls

At the end of the day, being able to go past these five pitfalls comes down to knowing what you want, what your priorities are, and what you’re looking to get out of your condo.

Now, if five is too low of a number for you, how about ten? Check this out to learn about five more things to avoid at all costs when buying your condo.

San Francisco is full of options for you, so if you want a more personalized look at the market, let’s chat! You can reach out at hello@ruthkrishnangroup.com, or text 415-735-5867 for custom guidance, and we’ll be there to make the most of your condo-buying journey!

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Frequently Asked Questions

Is a condo a good option for first-time homebuyers in San Francisco?

Yes! For many first-time buyers, condos can be a more affordable entry point into the Bay Area real estate market. However, it’s important to weigh the pros and cons. HOA fees, appreciation rates, and any restrictions imposed by the HOA are things every buyer needs to keep in mind.

What’s the difference between a self-managed condo and a professionally managed condo?

You often find self-managed condos in smaller buildings. These are maintained by the owners themselves, giving residents more control over decisions but less professional oversight.

Professionally managed condos are more common in larger developments and have external companies handling maintenance and finances. However, this also means that residents have less say in how things are run.

What’s the resale potential of boutique condos compared to larger developments?

There’s definitely a niche market for boutique condos, especially if they have historic charm tied to them. Meanwhile, larger developments tend to have more competition and don’t appreciate as quickly, even with all their luxury amenities. It’s important to consider the type of buyer your condo will attract when thinking about resale.

What’s a “walk-up” condo, and how is it different from other units?

A “walk-up” condo is a unit where you enter directly from the street or a small stairway instead of going through a large lobby or common area. These types of condos are more common in boutique buildings.

They provide a more single-family home feel, with extra points for privacy and a unique charm that lots of buyers love.