Is a condo at the shore worth it?

Ask NJMoneyHelp

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Q. I’m thinking of buying a condo in a shore community. I won’t need a mortgage but I will have to pay monthly maintenance fees. How can I decide if the fee is fair and if it’s worth the money?
— Money unsure

A. As winter approaches, it’s a great time to think about shore properties.

But your question is somewhat subjective.

First, can you afford to own a second home?

“The fact that you `won’t need’ a mortgage suggests that you have sufficient assets to purchase the condo for cash,” said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield. “In this low interest rate environment you may want to do the analytics to determine if, in fact, that is the best economic decision.”

There are times when it makes more sense to take a mortgage. You can benefit from tax-deductible mortgage interest payments, and the funds you would have used to purchase the property outright may earn more in the stock market than a mortgage would cost you.

You also didn’t say whether or not you plan to rent out the condo, and if you consider it an investment property or a second home. That’s important, too, because rental income can help defray the operating costs, and how you classify the proprrty will impact what other tax deductions you may be able to take.

Deciding whether or not the monthly maintenance fees are “fair” is a tough one. You need to research similar properties in the area in order to determine if your fees are in line with the others, Gobo said. You want to make sure you’re getting something for that money, so consider working with a real estate agent who knows the area well.

Whether or not the condo is “worth it” is a question only you can answer.

“If you have ever owned a home you know the annual costs required to maintain that home, not to mention the occasional `one time’ purchase on repairs,” Gobo said. “Compare those costs with your new maintenance fees and that will give you a real good sense in determining if they are `worth it.’”

Good luck!

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NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.