Last week, we discussed some of the basic differences between owning your own single family home and owning a condominium. Here are some of the many questions that you should ask and the many issues you should be aware of before you buy your home. After all, for most families, it is the biggest purchase of their entire life.

You (and anyone else purchasing this home with you) have a right to be fully informed of all the facts before you make your final decision. There is an old (well, of course, it is old, Latin is a dead language) Latin expression, just as true today as it was thousands of years ago `caveat emptor'. Let the buyer beware.

Suggested Items to Research on Condominiums What is the composition of the other owners in the condominium complex? You already know who you are! a. Number of units with Absentee owners, and their nationalities, living here or living abroad? b. Number of units with Tenants, are they long-term leases or short-term leases? c. How many units Unoccupied at any one time and length of time remaining so? d. How many units are owner-occupied and the length of time they have been there, on average? Why are these questions a factor? Consider: a) above - If there is a downturn in the economy and the absentee owner runs into financial difficulty, either here or abroad; say he /she loses a job. It may become impossible to make all the payments, the absentee owner wants to hang on to the unit, so pays the mortgage, but starts skipping the monthly condo fee. Ever try collecting anything from someone living in another country? b) What happens if the absentee owner cannot keep a tenant in the unit, this is a double whammy. He /she may not be able to meet the mortgage payment either; the unit lies empty and starts to take on that neglected look.

c) Empty rental units for longer than market average and turnover in rentals indicates that there may be problems with the complex itself. Ask more questions.

d) Generally, the more units that are owner-occupied statistically, the more stable a complex. Everyone, when owning their own home they have worked, scrimped, and saved for, has pride of place.

You do not want to be placed in the position of carrying the ball for other owners. Neglected units may affect the value of your unit.

Condominium owners are assessed monthly Condominium fees. Just what are these fees for? They run the Condo Association that supervises the complex as well as taking care of ordinary maintenance and expenses. Some Condo Associations do not want the bother of this type of business and hire a management company to supervise for them.

1. Ask how are the fees are split between the Condo Association capital reserve and operating expenses? 2. What are the operating expenses of the Association? Try to get comparisons with other Condo Associations in Bermuda to see if per unit, these are of comparative average value, not too high, and just as important, not too low.

You don't want to have to contribute more later, just when your own budget is strained.

3. Have all Condo Owners paid their Condo fees on time? If not, why not? And what steps has the Condo Association taken to get them to pay up? How many are in arrears and for how many months? These are not nosy questions. They all have a direct bearing on the overall financial health of the Condominium complex as is explained further.

Capital Reserve: Just about every Condominium Association has one. It is basically saving for a rainy day on a grand scale. There are always certain major projects that have to be undertaken every few years: re-tarring the road, roof and wall painting, major septic repairs, water filtration and leakage issues, sport facility and playground construction, things of that nature. In general, capital expenditures add value to your group of homes.

Ask if the Condo Association is planning any major expansion, for how long, and how incapacitated the present owners will be? Construction schedules can run amok for many, many reasons. You don't want to be without water, sewer, driving over rubble and sand or not be able to go outside for months at a time.

You will also want to know the following: 4. Who authorises capital reserve expenditures and when? Board of Directors? Management Company? 5. What decision do you have as an owner, in approving these expenditures? 4.When was the capital reserve last used? How much was it? How much is left? 5.When is next capital project expected to need to be done? 6. Is the capital reserve adequate for this project? If not, why not? These projected amounts should be built into the monthly condo fee and accrued in an interest bearing account.

7. What is the interest rate on the capital reserve? 8. If there was not enough in the capital reserve, did the Condominium Association have to call a 'special assessments' levy? 9. When was that and why was everyone assessed? 10. Has everyone who was called on the special assessment paid? If not, how much is still owed? Why do I bring these issues up? In one condominium complex that I dealt with (12 units), all owners were called on for a special assessment. It was a major repair project and it hurt every pocketbook. Eleven out of the twelve owners paid. The twelfth did not, although his family continued to drive the Mercedes, the SUV and take trips. So, what do you do? How do you force someone like that to pay their share? Not patch that roof, not pave that part of the road? Ostracise the family? It all reflects upon your home as well.

Associations must be run as a professional business.

Financial Health of the Condominium Association: You have a right to: 1.Ask for and review the balance sheet, income statement? If these are not your forte, get an accountant friend, or pay to have someone look at these, trust me, it is worth the expense to know that your future home association is solvent.

BALANCE SHEET 2.Look for accounts receivable balance. How much and old are they? This is a good indicator of the health of the owners and the Association because receivables are indicators of the amount of condo fees that have not yet been paid.

3.How much cash in checking account? 4.How much actual capital reserve held in cash? Is the capital reserve allotment being set aside each month? You might want to have a couple of years financial statements to look at.

5.Is the Condo Association Audited? 6.Who has access to the accounts and the checkbook? 7.Look for Accounts Payable balance. How much and how old are they? 8. Who are the Major Vendors? Do they have conflict of interest with The Board or Owners? This means, are individuals on the Board of Directors also are performing work for the Association? Is the work bid out? INCOME STATEMENT 9. Does Condo Fee Revenue for the year appear about right? Try the average Condo fee times number of units times 12 months and see if it appears reasonable.

10. Do any expenses look excessive on the income statement? Look at accounts called miscellaneous. If large numbers, ask what those entail? 11. Did the Association have a surplus at the end of their fiscal year? A lot, a little? Too large a surplus means that Condo fees could be lowered, or it could mean that the Association is trying to build additional reserves.

10.Does the Association have a yearly budget and is it meeting its budgetary goals? 11. Are there any stated or unstated liens on the Association? Or lawsuits? If the Association uses a Management Company? 1. Place look well maintained? 2.How old are the units? Show evidence of careful maintenance? 3.Who performs the maintenance? Are repairs handled in a timely manner? 4.How are the utilities handled? 5.Where is the water supply, how metered, do you share with another owner? 6. How often spray for pest control, etc 7. Ask other owners if they are happy with maintenance done and the Management Company.

8. Any noticeably bad odours? One complex visited many times here in Bermuda over the course of year never solved a septic problem in the entire time. It was not, and I repeat, not a great place to come home to.

Some condo owners have eventually fired their management company and taken over the maintenance themselves, almost like real single family homeowners.

They have lowered their condo fees and feel more in control of their lives.

Last, But Not Least: Take the time to interview other tenants if you can, preferable renters, regarding their overall impression about living there long-term Find out average number of days any units for sale have been on the market.

Are the units appreciating in value? Check all the covenants in the Association documents.

Watch for poor construction, particle board that eventually blows up in the humidity and thickness of privacy walls. At that same odiferous complex, one could hear the neighbour going up and down stairs at all hours of day and night. Very thin walls.

Pay a few visits at odd or different times. Things still look good? Give it the image test. Does the place feel like, look like (smell like) home? If it doesn't, you know what to do. Keep Looking! Next week we answer reader questions about options and investing online. We explore some investor psychology and we meet our guest 'financial advisor' Lenore Simons, First Bermuda Securities, discussing some of her latest stock picks. If you, as a financial advisor, would like to be a guest, please contact me at the address below. Readers want to be able to make informed choices about their financial security.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or any other investments, including real estate. Readers needing specific assistance should seek professional advice from their financial advisor and a professional real estate agent.

Martha Myron CPA is a Bermudian, a Comprehensive Financial Planner, holds NASD Series 7 license, and is a US tax practitioner. She is Programming Chair for the Financial Planning Association of Bermuda. Questions regarding this article may be sent to Email: marthamyron y northrock.bm A home of your own: While many aspire to owning their own piece of the rock there are many pitfalls to look out for when purchasing property.