3. Look for name recognition.
Long before Donald Trump said "You're fired," on NBC's "The Apprentice," he was well-known in real-estate circles. Because of his brand, his residential projects, such as Trump International Hotel & Tower -- hotel-condominium buildings in Chicago, New York and Las Vegas, tend to generate more buyer interest, Mr. Gross says.
"There are investors, especially foreign investors, who will follow certain developers," says Mr. Gross. "You look at someone like Trump, who, like him or not, in the foreign market, has a great reputation with investors." Foreign investors like to buy condos in Trump buildings, which helps build value for other condo owners in those buildings, he says.
Recently, more high-end projects are being built by well-known designers or architects. For example, French interior and product designer Philippe Starck is teaming up with developer Jorge Perez to create Icon Brickell, a condominium complex in Miami. In Manhattan, Downtown by Philippe Starck, across the street from the New York Stock Exchange, is a residential development with interiors designed by Mr. Starck. Other well-known names who have gotten into the condo act include Richard Meier, the architect for the Getty Center in Los Angeles, home of the J. Paul Getty Museum, and Michael Graves, the post-modern architect who designed, among other buildings, the Swan and Dolphin hotels at Walt Disney World in Orlando, Fla. Both architects have condo projects in the works in Miami and Manhattan.
If your builder is not a household name -- and most aren't -- try to make sure that the builder is at least reputable. "You don't want to buy into a building with a developer who has a reputation of doing a poor job and having problems," says Mr. Gross.
4. Weigh old versus new.
Whether an older complex or a new one will be a better investment depends on the building's condition and maintenance, the market and your handyman skills. If you are buying in an older condo complex, make sure that the building and its grounds have been kept in good condition. Just as a beautiful home in a so-so neighborhood will sell for less than a similar home in a better locale, if your building is not kept up properly, your unit will be less attractive to buyers.
New condos -- which should be in good condition and are more likely to have the latest amenities and features -- will have wide appeal. When buying a condo as a short-term investment and banking on quick price appreciation, the better bet is to buy a new condo, preferably in a complex's initial offering, Ms. Shapiro says. "A new condo, if you can get it, will always increase, with the price of construction going up," she explains.
If you are willing to invest some elbow grease, purchasing a condo that needs TLC might be the way to go, says Nick Patterson, a real-estate agent with Coldwell Banker Residential Brokerage in Chicago, who works with many first-time condo buyers. In a market such as Chicago, where the yearly condo price appreciation is about 4%, he says, "to make money off new construction is harder, because you are banking on appreciation." He suggests buying a condo that needs work and then putting in about $10,000 to $20,000 into the kitchen and baths to push the unit's value up by about $60,000.
5. Buy in a building with a good condo association.
A good condo association is crucial to maintaining your condo's value. A condo owner owns the space between the unit's walls; the building itself and any common space are held by the condo homeowners' association. As an owner in a complex, you will belong to its association and pay a homeowner's fee. The association will cover expenses to insure and maintain the property, so it is important that it is professionally managed and has the funds to make needed repairs. The type of fixes can vary widely, from fresh interior paint in the common areas to a new roof, so a condo association's reserve funds are important.
"If you don't have good management on-site or adequate [financial reserves], the probability is, if something small happens, they will overlook it. It might be landscaping or a small crack, but if you overlook those things, greater problems will tend to occur," says Maurice Veissi, a regional vice president for the National Association of Realtors and the president of Veissi & Associates in Miami. "That will detract from your condo's value."
Take a good look at the association's budget, because this will help determine the services you will receive, and the assessments you will be charged. Assessments are generally mandatory and collected monthly, quarterly or annually. If you don't pay these fees, a lien may be placed against your property. Find out what the assessments cover and don't cover (for example, maintenance of common areas and trash collection), and see how these assessments compare with similar condo associations in your area. The budget should have a reserve fund for major expenditures. If not, condo owners may be hit with special assessments for major repairs.
Look for any "simmering issues" between residents and the elected board, says Frank Rathbun, vice president of communications for the Community Associations Institute in Alexandra,Va. Speaking to current residents also may yield telling insights. "Talk to the people and ask them if the association is well-managed and if they like living there," he suggests.
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Will Your Condo Retain Its Value? (part II)
