Condos appeal to young professionals making their first home purchase and empty nesters who want to downsize. But condos do come with some specific financial considerations that don’t generally apply to houses. Here’s a look at five areas to consider before signing on the dotted line.
- Strata/condo fees: Condos come with a monthly condo or strata fee to cover building maintenance, insurance and any amenities like a gym or doorman. B.C. has appropriated the term strata from Australia, but in most other places across the Canada, the term is condo association (which basically means the same thing). In many buildings, your monthly fees are based on the size of your unit and they are likely increase over time as the building ages and maintenance costs increase. Even after you’ve paid off your mortgage, you’ll still need to continue paying monthly fees, so this is a reoccurring cost think about before buying a condo.
- Reserve fund: Check out the building’s financial statements before you buy a condo, because a well-managed building with a healthy reserve or contingency fund may be a better investment than one that has a tiny fund and major repairs on the horizon that could lead to an expensive special assessment. B.C.’s Strata Property Act, Regulations and Amendments recently began requiring many strata buildings to prepare depreciation reports to provide buyers with more information about upcoming repairs, but many buildings have not done so yet.
- Age of the building: An older building may mean more maintenance issues, which could incur extra costs for you as an owner. If you do a condo inspection, the inspector should not only examine the condition of the unit but also the building as a whole, including the roof and parkade (if applicable). In B.C., many condo buildings built during the 1980s or 1990s suffer from leaky condo problems that can be costly to fix. Of course, new buildings can have have potential issues, too, as Moneysense reports. Construction delays or strata fees that are set too low initially are just two examples. CMHC has a checklist for buying a new condominium.
- Parking: Many condo units come with a deeded parking spot, but others, especially in downtown urban centres, have a limited number of parking spots available on a wait list basis. If you need a vehicle for work or errands and your condo unit does not have its own parking spot, research other parking options nearby before you make an offer. A spot in an underground parkade may cost more but it may also offer better security than an outdoor lot.
- Neighbours: With condos and even town homes, you and your neighbours live in much closer proximity than you would in a free-standing home. This means that the smell of your neighbour’s chicken curry or the sound of him watching a hockey game at top volume may waft into your unit or the common areas (however, concrete tends to create a better sound barrier than some other materials). Think carefully about whether you can happily live in that type of environment and visit the building at different times of day to get a feel for noise and activity.