Buying a Condo

We’re going to cover condos and co-ops, which are variations on the same theme. What's the difference between the two?
In a condo, each owner has absolute ownership of his own unit, which may be an apartment or townhouse. Owners pay a monthly fee (usually called homeowner’s fees) to maintain shared areas like the lobby, the pool or the laundry room. The chief financial risk to a condo owner is that the common charges can rise, or, in the event of a major problem such as a roof repair or boiler replacement, the condo board can assess additional fees to cover expensive repairs.

A co-op is a rarer animal found in some major metropolitan areas, especially New York City. Essentially, a corporation runs the complex where each owner is a shareholder. In other words, a co-op owner is a partner in a building, rather than an outright owner of his or her specific unit within that building. The monthly maintenance fees are generally higher than those of a condo, but prices tend to be lower. Their chief downside is that the co-op board usually has to approve new owners and may discourage you from renting your unit if you move out without selling.

Check out Home Purchase on Five Things for info on searching, agents, mortgages, price negotiation etc. Here, we will deal with issues specific to condos.

Thing No 1

Birds of a feather flock together.

For the sake of resale, look for a neighborhood that caters to the type of buyer that is in the market for a condo. The condo buyer (smaller families or younger buyers) often looks for more urban amenities. Restaurants, gyms and the all-important espresso bar are usually mission-critical to the lifestyle as well as a concentration of employers that attract young, urban professionals like hospitals and law firms. The condo buyer tends to be a little bit of a glam junkie and is usually interested in a certain amount of urban flair and luxury so, things like high-end, flashy appliances or bamboo floors will be particularly attractive when you resell. These folks usually go in for a certain amount of character so the “vanilla box” isn’t going to garner as much excitement at resale time.

Thing No 2

Get the right agent.

One who does a lot of condo sales. They will be intimately familiar with contracts and terms, be able to recommend a good attorney if one is needed to review the contract and be familiar with the history of the properties and associations that you are considering.

Thing No 3

Look for complexes that have high ownership rates.

Find out what percentage of the residents actually own their units as opposed to just renting them (many condo complexes include both). A complex with lots of renters has fewer owners who care about the upkeep, and it may be harder to get a loan on such a property.

Thing No 4

Scrutinize the fees.

Find out how much the common charge has changed over the last five years and whether there have been major assessments during that time. Check on the group's financial health and whether shareholders have recently been hit with special assessments. Find out what the assessments cover and don't cover (for example, maintenance of common areas and trash collection), and see how these assessments compare with similar condo associations in your area. The budget should have a reserve fund for major expenditures. If not, you may be hit up with special assessments for major repairs, which could really throw a monkey wrench into your plans for a new Fall wardrobe. Maintenance fees will be broken out differently depending on the market and on the specific nature of the property but you should look at how they are broken out but allocations should look something like this:

1.   Utilities                   40%
2.   Shared Facilities / Recreation Centre       14%
3.   Administration / Property Mgmt.       12%
4.   Repair / Maintenance           10%
5.   Reserve Fund               10%
6.   Access Control / Security           10%
7.   Site Personnel               4%

Thing No 5

Get familiar with the lingo.

Tridel.com/condo/glossary If you’re still hankering for more info on buying into association-governed community, you can download a free brochure here: caisecure.net.