Single family residential property values are rising, many purchasers are looking towards condo's as an alternative. New buyers love the lower prices. This makes entry into the real estate market seem much more possible. The elderly enjoy the low maintenance aspect and the ability to be connected to a community. Many like the security advantages that the building provides, especially for those who are constantly traveling or on the go.
When purchasing a condominium, you purchase and have title to your individual unit in a multi-unit property, and share in the ownership of the land and other common property with all the other unit owners. There are many types of common properties, the types of common property varies based on each style of condominium - town homes or highrises for example - and would include hallways, elevators, heating system, parking structures, landscaped areas, recreation areas etc.
A condominium is a specific form of ownership. Not a type of building.
The greatest advantages to owning a condominium is that in most cases, it is owner-occupied and owner run. Owners usually make sure their investment is maintained and see improvements as an investment which increases the value of their individual unit.
Advantages and Disadvantages of Owning a Condo
If you celebrate the winter holidays, you can bet your mind will be at ease, without the worry of a driveway to clear. In the spring the lawn will be kept pristine, no need to deal with painting exterior walls or even repairing any fences.
Condo projects are in almost every neighbourhood and area. This means you could possibly move into one close to where you live right now. Some condo projects are more successful than others in terms of capital gain and how long it takes to sell. Lets take a look at some pros and cons of condo ownership.
Safety from rent increases
Amount of monthly costs generally less then renting
huge spectrum of property styles, costs, locations, sizes and amenities available
the ability to use amenities such as swimming pool, tennis courts, hot tubs, saunas, whirlpools, exercise facilities, health spas, sun decks, community rooms (the cost of which may be very high)
you are investing in your own home and building equity
growth of capital value
pride of ownership
presence security which gives you peace of mind when leaving unit unattended
maintenance is minimized or no-existent
cheaper then single family properties due to efficient use of land
wide spectrum of prices depending on locations, features, and luxuries
sense of community due to social interactions, and the fact that most owners are living there permanately
different projects to choose from targeting many lifestyles such as ,age restrictions, pets, children
owners are able to be involved in the development operations, including budgeting, decision making, choosing of rules and by-laws.
loss of freedom may be experienced because of rules and by-laws such as types of pets allowed, rental restrictions
since there is a larger concentration of people you may experience problems with the pets, parties, parking, personality and people.
money is tied up in equity
there may be amenities you do not use, which you still must pay for
every board of directors vary in experience and attitudes
As a unit owner you will be responsible for your share of expenses known as common fees or common expenses. It describes what expenses are to be shared and in what proportion. This will be equal or unequal in situations where they are based on the comparative size of the units.
The exterior and common area maintenance of your condo is covered by your common fee/maintenance . These fees are usually paid monthly in accordance with the budgeted expenses. Generally the more amenities you have the higher the fee will be.
Reserve or contingency funds are set up by the condominium corporation to cover major or unexpected expenses. The fund becomes an asset of the corporation and each year the unit owners decide on what the level should be. Individual owner do not have any rights to the Reserve Fund.
Questions You Should Ask When Buying a Condo
Competitively priced compared to other units?
Have you thought about the amenities offered?
Other unit owners in your financial bracket? If higher they may vote for services will not be able to afford, if lower they may vote down changes you would like to see.
Security is a essential factor when choosing a condominium. The type of security will vary depending on the type of condo you choose. Look for features such as - alarms, video surveillance, controlled access. These are some things to consider.
Doors - is it made of metal or wood and does it have dead-bolts and peepholes? Do patio doors have good locks?
Parking - is the entry controlled? Electronically?
Intercom - working system?
Lighting - areas well lit? - hallways, parking, fire escapes entrances and exits?
Balconies - accessible from the ground or adjacent units?
Alarms - wired for home security alarms in every unit or suite?
Common Elements and Facilities
What amenities are available, hours of operation, any hidden costs?
Common expenses cover? Any increases?
Exclusive common facilities? Which are reserved for specific individuals/lots
Parking and Storage Facilities
What is included in the purchase? Some parking and storage are seperate and some are legally yours. There are common properties given to a owner and subject to reallocation by the Board, some are of exclusive use designated for the use of a unit, in accordance to the provisions in the Declaration.
What parking/storage is provided and will you be able rent, and or buy more spots/space?
Are there any visitors parking available?
What types of materials were used in construction? Are the facilities in good condition? How old is the building?
Has the corporation done a reserve fund analysis to estimate the remaining life of the different components, which include cost of replacement, and contributions required to ensure funds will be available for predicted repairs and replacements
Who was the developer?
Design and Layout
What is the size and suite of room? Will you be able to fit your furniture?
Owner Occupied vs. Tenants
Number of units which are owner occupied compared to tenant occupied? What is the limit? Do rental restrictions existst ,and what are they?
What compay manages this project? Are they professionals? Are they resident managers or self-managed?
How well has the building been maintained?
Does it match your individual personality?
Monthly operating cost?
Special assessments in last two years and are any planned?
Distinguish which utilities are common and which are seperately calculated?
Amount of property taxes?
What insurance is covered by the corporation, and which do you need?
Obtain at least two years worth of condo board meeting minutes, as well as the last two years' of budgets and the current year's projected budget. Do you see any concerns owners keep mentioning?
Large-scale improvement/renovation projects planned? What will be the costs?
Has the reserve fund been reviewed to ensure it is adequate? Is the building fiscally responsible? How many fees/owners are in arrears?
Check the reputation of the developer with people living in other projects they have done or project you are looking at.
Costs of setting up a reserve fund, and will it be a one time fee?
What does the planned landscaping look like?
Ask about the warranties being offered- Will the New Home Warranty be covering the project, and what are the terms. You should always get in contact with the company offering the warranty and find out exactly what is covered and the restrictions involved will be. What timeline is set out that the builders must work to, and what dispute resolution services are offered? What influence does the warranty organization in settling disputes with builders?
What are the number of elevators that the development will possess and how fast are they?
Will units be wired for telephone and cable TV at the developers cost?
Will the corporation have a proposed operating budget? - If they do, you should acquire a copy.