Wednesday, July 28, 2021
5 Must-ask questions when buying a condo...
As a Medical Learner, buying a condo is a big step. Whether you're using it as an opportunity to get into the housing market, get closer to the hospitals, as a home or even as an investment, it can pose a whole other set of challenges that you didn't anticipate.
There are many questions that you should ask yourself - and your agent- before making an offer; and the first step is to ensure that your needs and wants will be met by the condo you ultimately choose. These are important questions to consider if you are looking for a place to spend the next several years while in medical school, residency, fellowship or eventually as an investment renting to future medical trainees as tenants.
Let's get into the nitty-gritty secrets that no one else will tell you before you sign on the dotted line.
1. What is the policy for short-term rentals and AIRBNB?
This seems like a benign issue but is actually VERY important.
Having loose policies around short-term rentals can be a major headache, cause added expense and create huge problems. Having short-term tenants in and out of the building doing whatever they want, and treating the condo like a hotel without the security measures in place that a hotel can implement, can quickly reduce the value of your investment. Often this leads to people no longer wanting to own their condo, and selling out.
- You don't want the condo association constantly forking out cash for major repairs because the amenities and common areas weren't taken care of by tenants who aren't invested in the condo's well-being
- The gym equipment can be stolen or broken, common areas and elevators trashed, pool area crowded with rowdy party people, broken glass and garbage leading to higher maintenance costs which in turn raises the entire condo monthly fees
- Did you know some condo elevator contracts charge a high fee for resets resulting from jamming the elevator door open (when moving, for example) This gets billed back to all the owners by way of increased maintenance fees
- Some condos have had to resort to hiring 24 hour security guards which greatly increases your monthly maintenance fees
Think about how this would affect the potential resale value of your investment. Loose policies and a very lax approach to short-term renters could be a major red flag.
And what about all the sleepless nights from the loud renters in the unit next to you or the hallways when you have rounds at 6am? Or post call sleepy time? Need we say more?
2. What do the condo maintenance fees cover?
There are a lot of moving parts in condo finances and there is A LOT of money that needs to be allocated to certain places. Condo developments are expensive, but healthy finances and proper resource allocation make things a whole lot easier and sustainable. This is exactly what those monthly fees end up going to.
What do those things include?
Condo maintenance fees cover water. Heating is usually included, while hydro and central air may or may not be. In some cases, buyers are surprised to find that cable and internet costs are built into their condo management fees as well! For budgeting purposes, it's crucial for you to know what these monthly expenses will be so make sure you ask about which utilities the building includes when looking at different condos.
You don't have to worry about the common spaces in your building, because they've been taken care of with a portion of your fees. Unlike a conventional real estate purchase, the money you pay monthly will be pooled to look after the shared spaces that your condo community enjoys!
Hallways and lobbies, elevators as well as amenities like pools, tennis courts, outdoor garden space, concierge, garage cleaning, security or maybe even a fitness center/recreation center are all part of the common elements that your fees will support. Multiple service contracts are involved.
A chunk of your monthly fees will be contributed to the condo's reserve funds. This is the money that is set aside in case of emergencies. Generally speaking, this could be put aside to repair the roof, fix the heating system or any other major repair that is required that comes unexpectedly in the near future. This is a major indicator of financial health as well.
3. Has there been a recent special assessment?
- How much will it cost me?!?!
Condos need money to carry out necessary maintenance and upgrades. Where does that money come from? From the condo owners of course. Just like a home, condos need repairs and upgrades, and just like a home, those things are EXPENSIVE. *ask for the last 5 years of maintenance fee history
In this instance, doing your research could save you thousands of dollars. You don't want to find out there is a big assessment coming in and you have to pay 50K towards it. Getting stuck paying higher fees because you didn't do your research can be an expensive mistake, especially when there are tons of other condo options out there.
4. Are bikes allowed in the elevators and up to your unit?
Bikes are one of the best forms of transportation and route to exercise in urban cities, not to mention beating the traffic. You also reduce your carbon footprint and they require minimal storage space compared to a car.
But not all condo communities feel the same about the benefits of bicycles as you do. Some condo buyers would rather opt for a parking lot instead of a bike rack.
To some members of the condo community, bikes just get in the way or take up space in the elevator and mark up the floors and walls. Those people might believe that permitting bikes too far into the building is a way to waste monthly fees on constant small repairs from dings and damage to common areas.
If you're an avid cyclist, for work or pleasure, read the rules and look at what the condo can offer a cyclist. If you must use a common bike rack, what is the security?
5. Who are the board members, do they live in the building?
It goes without saying that people with an interest in the building will ultimately want to see it at its best. They will be pushing to create a strong community and take the condo from good to great.
Condo ownership is an excellent opportunity to live close to work and play without breaking the bank. However, before buying a condo, a good amount of research needs to be done because there are all types and qualities of condominiums. Some might be pending litigation and have a terrible standard of living. Some might offer you access to friends, work and a lavish lifestyle at a fraction of the price of buying a home in an adjacent neighbourhood.
After going over all the things to look for when buying a condo, finding one that fits your needs is the most important. You want to be integrated into a community that you are invested in.
We wish you the best of luck in buying a condo!
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