Condo Buyers Guide
Should I Buy a Condo or Townhouse?
As single family home prices have risen, many consumers have been looking to Multi Family homes as an alternative. First time Buyers like the lower prices, which makes entry into the Real Estate market easier. Seniors like the low maintenance aspect and the ability to be in a community catering to their lifestyle. Others like the security advantages that the building provides, especially for those who travel frequently.
When you purchase 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. The type of common property varies depending on the type of condominium - high rise or townhouse for example - and would include hallways, elevators, heating system, parking structures, landscaped areas, recreation areas etc.
A Strata is a specific form of ownership and does not describe a type of building.
Advantages and Disadvantages of Owning a Strata
If a winter holiday is part of your lifestyle, you can leave with your mind at ease, without the worry of a driveway to clear. In the summer the grass will be cut, you won't have any exterior painting projects or fence repairs to look after.
Strata projects are now part of most communities which means being able to stay in the same location where you were a homeowner. Some strata projects are more successful than others in terms of capital appreciation and length of time to sell. Here are some of the advantages and disadvantages of condo ownership:
Monthly cost of owning is often less than renting
Wide range of property types, prices, locations, sizes and amenities available
availability of amenities such as swimming pool, tennis courts, hot tubs, saunas, whirlpools, exercise facilities, health spas, sun decks, community rooms (the cost of which may otherwise not be affordable)
You are investing in your own home and build equity
Appreciation of capital value
Pride of ownership
Freedom to make interior changes and enhancements to your unit
Enhanced security availability and peace of mind when leaving unit unattended
maintenance and upkeep is kept down or eliminated
Security of tenure and permanent occupancy
Cost is often less than single family home due to efficient use of land and economies of scale
Wide range of prices depending on features, luxury and location
Sense of community due to permanence of residents and resulting social activity
developments available geared to a specific lifestyle (restrictions on age, pets, children etc.)
DisadvantagesSome loss of freedom may be experienced due to rules and by-laws e.g. type of pets allowed, right to rent unit etc. due to a larger concentration of people you may experience problems with the "5 p's”, Pets, Parties, Parking, Personality and People.
You may be paying for some amenities you never use.
Boards of directors vary in terms of skill and effectiveness
As a unit owner you will be responsible for your share of expenses known as strata fees or common expenses. These are set out in the condo declaration. It describes what expenses are to be shared and in what proportion. This fee is in relation to unit entitlement which is based on the comparative size of the units.
The exterior and common area maintenance of your condo is covered by your strata fee. The fees are usually paid monthly in accordance with the budgeted expenses. Of course if your condo has more amenities such as a swimming pool, on-site security personnel etc. your fees will reflect the extra services.
Reserve Fund and Newly Legislated Depreciation Reports
Reserve or contingency funds are set up by the condominium corporation to cover major or unexpected expenses. The developer of a new condominium usually sets up a fund which is then turned over to the condo corporation when the building is sold and becomes occupied by owners. This fund has some legislative requirements and is in place to take care of large expenses and maintenance items that the grounds and building will need down the road.
Questions You Should Ask When Buying a Strata
PricingIs the unit competitively priced with others currently on the market?
Have you taken into account the amenities offered?
What is the resale potential? Have the units appreciated?
Have you had a chance to read the minutes, financial reports, engineering reports of the building, the rules and regulations established for the building. The rental disclosure.....as you can see, buying a Strata is much more complicated than buying a single family home. You need to be sure all due diligence has been done before you sign on the dotted line.
Strata SecuritySecurity is a key factor in choosing a Multi Family home. The type of security will vary depending on the type of home you choose and special care must be taken to ensure it meets your lifestyle requirements. What security features exist or are planned - suite alarms, TV surveillance, controlled access?
Doors - Are they solid wood or metal and equipped with dead-bolts and peepholes? Do patio doors have effective locks?
Parking - how is access controlled? Electronically?
Intercom - is there a good working system?
Lighting - is property well lit in all areas - hallways, parking, fire escapes entrances and exits?
Balconies - are they accessible from the ground or adjacent units?
Mailbox - are numbers different from apartment and parking spaces?
Alarms - is there wiring for home security alarms in every unit or suite?
If possible check on the condo’s record for break-ins and vandalism by asking local authorities or current residents.
Common Elements and FacilitiesWhat amenities are offered, what are the hours of use, is there a separate cost?
Are there any exclusive use common elements (reserved for one or more unit holders)?
Parking and Storage FacilitiesWhat is included in the purchase? Some parking and storage may be separate and legally defined units you own, others are common property allocated to the owner and subject to reallocation by the Board, others are exclusive use elements designated for the use of a unit, pursuant to provisions in the Declaration.
What parking/storage is required and can you rent or buy additional spots/space?
Is there visitors parking available?
Quality of ConstructionWhat types of materials were used in construction? Are the facilities in good condition? How old is the building?
Find out if the corporation has done a reserve fund study (estimate of the remaining life of the various components, cost of replacement, and contributions needed to ensure funds are available for anticipated repairs and replacements), this is called a Depreciation Report in BC and has become a legislative requirement but is still in transition.
What is the reputation of the developer?
Design and LayoutSize of suite and rooms - adequate for furniture?
What exterior changes can you make? Can you add solarium to balcony?
Owner Occupied vs. TenantsHow many units are owner occupied vs. tenant occupied? Is there a maximum? Are there rental policies and what are they?
Management/AppearanceIs project managed by a professional company, resident manager or self-managed?
Does it fit your personality/lifestyle?
Are there any restrictions you require or don't want - pets, children, age, number of people per suite, carrying on business in a suite?
Most condos have a long list of association rules and regulations by which you'll have to agree to abide if you purchase in the building. These rules may limit the number, type, and weight of pets; how many visitors you can have at any one time; how often - and for how long - you can rent out your unit (if at all); when and how you can reserve common facilities like the party room; when you can have work done in your unit; and, what day you can move.
ExpensesWhat will be your monthly operating cost?
Have there been any special assessments in the last two years and are any planned?
Which utilities are common and which are individually metered?
What are the property taxes?
What insurance do you need and what is covered by the corporation?
Ask to see the past two years worth of condo board meeting minutes, as well as the last two years' of budgets and the current year's projected budget. What are the owners concerns in the building?
Are there any large-scale improvement projects planned? How much will they cost and how are they to be funded?
Has there been a review of the reserve fund to ensure it is adequate? Is the building fiscally responsible? Are any fees/owners in arrears?
New StrataCheck the reputation of the developer with people living in other projects they have done or project you are looking at.
Has the developer filled out the Rental Disclosure?
What types of amenities and is the developer supplying all the equipment?
What warranties are being offered - is the project covered by a New Home Warranty Program? What are the terms of this warranty? Contact the organization offering the warranty and find out exactly what is covered and what restrictions are involved. What specific timelines builders must work to and what dispute resolution services are offered? What clout does the warranty organization have with builders in settling a dispute?
How many elevators are there and how fast are they?
Does the corporation have a proposed operating budget? - If so, obtain a copy.
As professional Agents for the last 20 years, we have sold 100's of Strata Units and can navigate this complicated road for you. Contact Us with your wish list and we'll find you the perfect fit!