Buying a condo is often the largest purchase of your life, especially given the current real estate situation and pricing in many Canadian cities. Here are just a few statistics:
- An average condo in Toronto is ~$520,000 (2017)
- A median condo cost in Vancouver is ~$650,000 (2017)
It is easy to become emotionally attached when seeing a condo unit you really like. Nevertheless, there are numerous things you need to consider when making such a big purchase.
We compiled a list of 22 things you need to know when buying a condo.
1. Location, Location, Location!
This is the MOST important factor when you are making a condo purchase. The view you see out your windows is very important, so do your research and find out about any future development plans in the area. Sometimes units go up for sale at a great price because the owners become aware of a future condo project that will block the view and all the natural light. Although you won’t own your condo forever, it is important to think about resale plans down the road. At times, a neighborhood may be trendy and popular, but don’t heavily rely on that. Demographics are more important; you want to be close to public transit, a hospital, grocery stores, parks and good schools.
2. Proximity and Quality of Schools
In most cases, the value and market price for a condo are driven up by how good the schools are in the area. In fact, good schools create more potential buyers and more multiple offers. This is a very important factor to consider when making a condo purchase because, if you don’t have children now, you may want them in the future. Being close to good schools also helps the resell value of the unit.
On the other side, however, you may purchase a condo in a great neighborhood and end up finding out that the school has either reached full capacity and your child will be bused to another district’s school, or you may find that your condo address doesn’t qualify your child to go to your preferred school due to many factors, one of which can be low annual property tax.
3. Size/Floor Plan
The exact size/square footage (sq. ft.) of your condo unit is important. Do your homework and calculate the purchase price in relation to the size and find the price per/sq. ft. Compare this with past sales in the neighborhood before making your purchase. Sometimes a better floor plan is worth more if it makes you as a condo owner happier and more comfortable living in the space. Recent studies indicated that a floor plan with good flow was top of the list for prospective buyers.
Here are a few important things to look for in a floor plan: make sure all the bedrooms have windows; it is very challenging to make a bedroom work without natural light. Make sure there is no wasted space in the floor plan; having an extra wide or long hallway really impacts your living space and price per/sq. ft.
This purchase could very well be the biggest financial purchase you will make in your life, so it is important to know the final price and fees you will be paying. You need to connect with a mortgage advisor or a financial advisor to find out what you can afford and ensure you can cover the mortgage and the monthly costs. Everyone’s financial portfolio and type of condo purchase will be different, and you have many mortgage options available you.
You must be aware of all the additional costs, including: closing costs, lawyer fees, property taxes, levies, monthly utility fees, monthly condo maintenance fees and insurance.
When purchasing an older condo, you should be aware of the monthly/annual repair costs, and you should keep all the financial documents given to you by the condo corporation. If purchasing pre-construction, you should be aware of additional costs at the décor center for upgrades that are usually not included in the purchase price but that are shown to you in the sample unit and illustrated in marketing packages.
You may also be faced with an occupancy fee (phantom rent). This fee covers the time you take occupancy to the time you actually move in, which are not typically on the same day.
5. Condo Fees
Monthly utility fees are standard (water, hydro, gas), but some condos, particularly ones that are 15+ years, will include water and/or gas in the monthly maintenance fees.
The maintenance fee covers: security/concierge, superintendent, general repairs, cleaning, common spaces, amenities, parking and a portion of the condo corporation’s insurance. A portion of the monthly maintenance fees will also contribute to building a healthy reserve fund for capital costs and large-scale maintenance, like roof replacement or repaving the parking lot.
6. Condo Amenities
Condo amenities may be one of your key requirements, but be very careful about what you wish for because this can drastically drive up your monthly maintenance fees. If you’re not a swimmer and you get into a condo with a swimming pool, be prepared to see spike increases in monthly maintenance fees as your condo ages. These days, developers are keen on introducing more and more unique amenities to recent pre-construction projects, such as: dog washing and grooming areas, gardening plots, basketball courts, mini putting, outdoor TV watching, lounge area and – most recently – an observatory for stargazing. Know what your needs are. It is always important to have security and/or 24hr concierge services, a storage room or locker, ample visitor parking and maybe a barbecue area for those great summer days.
7. Condo Unit Exposure
Get your compass out! Your exposure maybe much lower in your list of hot topics, but some things to consider about this just may spark your interest. This is one topic that is commonly overlooked.
What direction does the balcony or your primary window face? Natural sunlight not only helps save on your hydro bills, but it can also help on your heating bills in those very cold winter months. Direct eastern exposure (sunrise) often warms a suite to a point that you may think you are sitting in a sauna, but this might be your cup of tea! The same scenario can have detrimental effects in the summer months when you will heavily rely on the air conditioning to cool down your unit.
Northern exposure will be less bright and will offer little-to-no direct sunlight for 6-7 months out of the year.
By far, the most preferred exposure has to be southwestern. It’s the best of both worlds with less direct ambient heat, but a good amount of natural sunlight.
The higher you buy, the more it will cost, and it will sell for a higher price when you’re ready to sell. Not only will you have a better view on a higher floor, but it will also cost you greatly if you are considering a pre-construction purchase because most developers will tack on a charge averaging of $1,000+ per floor. If you’re buying for investment purposes, chances are you could charge more rent for a higher floor, and in some cases, if the view is really amazing, you will be involved in a bidding war for your rental. Higher floors also have less street noise pollution.
Common expense fees will also vary based on what floor you live on. The developer is free to set and choose what percentage of a common expense they want to charge each unit, and typically, those on the higher levels pay more.
9. Condo Finishings / Craftsmanship
What upgrades and finishings are mandatory? One thing to consider in a pre-construction purchase is that developers will limit the amount of ceiling light fixtures, so be sure to inquire about this upgrade. Other upgrades to consider are: premium counter tops, porcelain tiles, smooth ceilings and upgraded kitchen cabinets. In some cases, depending on the developer, you can upgrade your standard laminate/hardwood flooring for a very reasonable fee. Lastly, a great selling feature that has recently sparked a lot of attention is closet organizers.
10. Appliances and Other Equipment
One aspect of condos that has a lot of variability is the selection of condo appliances and other equipment. High-end condo appliances add a special touch to any condo and communicate additional value. Look for such brands as Miele, Jenn-Air or Bosch. Some cheap GE and Frigidaire appliances will be on the other side of the spectrum. Furthermore, you want to have a look at faucets, lighting, etc. This equipment can also have a lot of variability in its quality.
11. Condo Age
This one might be tricky since new is not always better. There are several aspects to consider. Older condos, aside from being sometimes a bit dated in the appearance and finishings, may have very high condo maintenance fees (sometimes over $1,000 per month). This can sometimes be offset by a lower purchase price. Make sure that you understand what your monthly fees will be once the deal is done. Another aspect to consider is that condos with high maintenance fees will be harder to sell at the market price.
On the positive side, if well maintained, older condos (e.g. 10-15 years) can be great in terms of square footage and floor plan. However, older condos sometimes (not always) come with low 8’ ceilings.
12. Condominium Reserve Fund and Status Certificate
The condo corporation is responsible for the maintenance of the building and for allocating funds from your condo fees to the reserve fund. This reserve fund is what pays for large repairs and replacements, such as roof damage from a hail storm. Prior to buying your condo, it is imperative to know if the condo corporation has a good reserve fund. If not, you could face sudden large fee hikes or special assessments (a one-time collection of a very large fee). To avoid the uncertainly, request a status certificate before you buy your unit.
13. Maintenance History
All buildings, including condominiums, must be maintained and repaired on a regular basis. Some condominium corporations are better with this than others. The danger of buying a condo which already has a few years of history but has not faced yet any significant repair/maintenance measures means that you are buying, to some extent, a time bomb. Once an issue pops up, all condo owners will be asked to chip in for a large repair.
If your condo reserve fund is not that big and your condo insurance does not cover condo re-assessments, you can be on the hook for a large amount. To give you an idea, we saw cases where condo maintenance fees (~$450 / month) were doubled (~900$ / month) for a period of two years. That results in extra costs of ~$11,000.
14. Commercial Condo Insurance Policy
This is definitely not a deal breaker, but it is something that you want to understand well at the beginning to know what coverage you need for your condo.
A condo corporation normally has a commercial condo insurance policy that covers, among other things, the building envelope (which is the physical building’s roof, windows and structural walls). It is important to understand how much coverage this policy has and, if it is not enough, to get additional coverage on your policy in case the condo corporation decides to pass some of the repair costs to you. It is also important to make sure that your insurance policy covers additional condo assessments and fees – this means that you are insured against any extra costs that a condo corporation might decide to pass to you.
15. City’s Development Plans for the Neighborhood
Given the still-limited coverage of Toronto through public transit, the price of your condo will be strongly impacted by its proximity to public transportation. It is a good idea to purchase property close to future subway/LRT stations. This means that your condominium will most likely increase in value. Check here for future LRT projects in Toronto and plans for extension of the Yonge subway station.
16. Elevator Infrastructure
Having too few elevators or slow elevators might result in painfully long waiting times, especially during prime times, such as early mornings and evenings. If you are planning to get a condo, one of the items to check is how well elevators deal with the volume of people living in the building. Taking an elevator to the higher floors will give you an idea of the elevators’ speed. Checking out elevators during different times of the day will give you an idea of what is waiting for you once you live there.
17. Demographics of People Who Live in the Condominium
Many condominiums, especially in downtown Toronto, are predominantly occupied by a young crowd; and that comes with pros and cons. You can expect many loud parties on the weekends and numerous guests roaming through the floors. If you are a family with kids, you might think twice about getting a unit in such a building.
18. Guest Parking
There are condominiums that do not offer free guest parking because paid parking is located close by. All your family and friends who will visit you in your new dwelling will be faced with the unpleasant fact that they need to pay for their parking. Even if your condo has guest parking, inquire about its size – a large condo with half a dozen parking spots will probably not be that different from a condo that does not have guest parking at all.
19. Separate Thermostats
When more than one person lives in a condo, there can be differences in desired room temperatures. If one person likes it warmer and another one enjoys cool temperatures, conflicts will arise. Some condominiums, typically two-bedrooms and larger, might have separate thermostats for different rooms. That is a feature that adds a lot of value in the eyes of some condo buyers.
20. Energy Efficiency
That is a typical feature that condo buyers do not look at from the very beginning, but they appreciate it later when seeing the utility bills. Energy-efficient condo features can include: superior isolation preventing warmth escaping in cold winter and preserving cool temperatures in the summer, energy efficient lighting (e.g. LED light bulbs) and equipment (e.g. energy efficient heaters), time sensors on lights and even the use of solar panels.
21. “Undesirable” Condo Unit Spots
Every condominium has spots that are typically worse than others based on noise, smells and foot traffic. Try to avoid such spots – they contribute to a negative condo living experience and will negatively impact your sale price in the future. Examples of such spots are condo units located next to elevators, garbage chutes and big entrances with high traffic of condo residents (like the amenities entrance). Also, proximity to dumpsters on lower floors will result in a lot of street and garbage truck noises.
22. Proximity to Any Places of Interest
When you buy a condo, there will be particular places around your complex that might be important. Some look for grocery stores and shopping malls, others look for a nearby park. Many people prefer waterfront, others want to be closer to the airport because they travel a lot. The more places around your condo that appeal to potential buyers, the better the chances that your condo will be high in demand when you are ready to sell.
Buying a condo, either as your own dwelling or as an investment property, is an exciting journey. Remember that one of the best ways to find out about your future condo is to get firsthand information from tenants and condo owners, and this is where Condo Essentials’ condo reviews will help. Do your research, and once you are ready, our experienced real estate professionals will be happy to assist you with your condo purchase.