For some people, condos make a good investment. First time home buyers, downsizers, singles, and parents of university students often find that condos make sensible real estate purchases.
Condo apartments and townhouses often are more affordable than single family detached homes, and some people love not having to worry about upkeep.
But it’s important to remember that not all condos make financial sense. It’s important to examine each condo on a case by case basis and ensure that all of the costs and obligations make sense for you.
Here’s list of what to look for and what to avoid in a condo purchase.
Things To Look For
1. The Right Price Tag for Resale
According to the Ottawa Real Estate Board statistics, the most popular price range for condos in Ottawa in 2016 was $150,000 – $249,999. This range made up a bit more than 55% of the condo resale market.
2. Affordable Condo Fees That Provide Good Value
Condo fees can vary wildly. Some townhouse complexes have fees in the low $200 range, but fees can be more than $600 for some buildings.
Is it worth it? It all depends on what you get for your money. Apartment buildings with an on-site gym and swimming pool may earn those fees, if the amenities are what you want. Some fees include property taxes or shared utilities like heating or water, although this isn’t common.
Be wary of super low monthly fees, however. The condo may not be putting money away to pay for major repairs, and if something happens you could end up with a large surprise bill.
Also, do the math: the more units, the more people to share the costs, and therefore the lower the fees should be. In a large condo with hundreds of units, the cost for that gym and pool should be lower than in a complex of 30 units.
3. A Healthy Reserve Fund
All condos have major improvements they need to do from time to time, like replacing roofs or upgrading windows. Ask for documentation on the financial health of the condo, and have your lawyer look it over.
The older the condo, the larger the fund should be in order to take care of overhauls. A complex over 15 years old should be putting about 20% – 35% of the monthly fees into the reserve fund. If it’s even older, that number should go up. Look for evidence that major expenses are anticipated and budgeted for.
No matter what kind of real estate you buy, location is a factor. In general, a condo should be near transit routes if you ever plan to sell. The closer to downtown the better.
Keep in mind the overall neighbourhood environment. A central location isn’t always the end of the story – ensure the rest of the neighbourhood is pleasant and safe.
5. Parking Spaces
Not all condos come with a parking space…let alone the two that some families need. If you need parking, make sure spaces either come with the condo or can be rented from other owners. Keep in mind that if you rent, that agreement can come to an end.
If you don’t need a parking space, try to get one anyway. They can be handy for guests, or you can rent it out.
6. Lots of Storage Space
If the condo is in an apartment building, find out if there is a storage locker for your unit, and ask to see it. Some condos have excellent storage, including bicycle rooms and a nice big locker for every unit. Some, on the other hand, have nothing, and you will need to be a Zen monk to live there.
7. An Effective Condo Board
Even if you don’t want to serve on the condo board, you want to make sure that someone is supervising and providing direction for the property management company. Find out how often they meet, if they invite guests, and learn what the culture is like. A great way to do this is talk to existing owners and find out if they’re happy.
Also ask to see board meeting minutes, and ensure they’re on top of issues like chasing after people who are behind on condo fees, and solving whatever problems inevitably face the group. While you’re looking over the documents, pay attention to things like budgeting and insurance coverage.
Some condo boards are like groups of old friends who can’t wait to get together, other boards have trouble making quorum for the meetings. Either way it’s important that someone’s steering the ship.
8. A Good Mix of Owners and Tenants With a Similar Lifestyle
If you plan to live in the condo yourself, try and find out who the neighbours are. While there are many people who make wonderful tenants and landlords, live-in owners often take more pride in the upkeep of their units.
Whether they’re owners or renters, look for people you can get along with. If you like peace and quiet, a building full of 20 – and 30- somethings who want a perpetual party may not be a good fit for you.
Things to Watch Out For
1. Large Jumps in Condo Fees
The problem with condo fees is that they have a tendency to go up. And up. And up.
Ask to see a fee history, and ask questions about why costs go up. It could be completely legitimate: increasing costs for any utilities included may play a role, or the need to make unexpected repairs (called a “special assessment”).
2. Not Enough Rooms
Studio and one-bedroom condos can be harder to sell, as a general rule. If they’re in a highly desirable upscale location, however, that may not necessarily be the case, especially if the condo is a massive place with lots of open space.
3. Unpleasant View
Whether you’re in a highrise or a townhouse, you want to be able to look out the window without cringing. Views of the dumpster may not be the most inspiring thing to see first thing in the morning.
Exposure can be important too. There’s no right or wrong, but you should choose something that works with your preferences. Early risers will enjoy an eastern exposure, for an example, but people who get overheated easily won’t like a southern exposure in the summer.
4. Not Enough Upkeep
Don’t just look at the unit you’re buying, look around the rest of the condo grounds.
If there’s a lobby, do you want it to be the first thing you see when you arrive? If there is landscaping or a parking lot, does it look well cared for?
5. Being Too Close to Common Areas
In an apartment, try to avoid the units beside or across from elevators or garbage chutes.
In townhouse complexes, try not to be right in front of common parking areas. In winter, you’ll hear everyone who’s scraping their cars before driving to work at 6 AM.
6. Rules that You Can’t Live With
Some condos have rules like no pets allowed, or restrictions on colour choices for anything other people can see. Whatever the rules are, make sure you know them in advance and can accept them.
Considering a Condo? Get a Real Estate Pro on Your Side
Whether you’re buying a condo as a personal home or an investment property, it helps to get an experienced realtor on your side.
The Paul Rushforth Team is made up of over 30 specialists who sell hundreds of homes every year. Unlike most other groups, we share information so we’re all up to date on the latest market trends.
We also offer a unique guarantee: Love Your Home – or We’ll Buy it Back.