A blog cannot deal with all aspects of a subject and is not intended to replace professional advice. It's purpose is to highlight information and identify areas of possible interest. Anyone wishing to discuss this blog or to make any comments or suggestions about this blog is invited to do so by either posting comments or emailing me directly.
May 29, 2012
Essential Things to Consider When Buying a Condo
Categories:Buying a Home In Calgary,Condominiums,Condos for sale,Property Virgins,Relocating to Calgary
Condominiums are a very popular housing choice for many Calgarians. Today, it accounts for well over 30% of all homes purchased and sold. Across Canada, ownership of condominiums is growing at a phenominal pace. However, there are a number of things to research and keep in mind before making an offer on a condo.
Condominium corporations collect fees on behalf of their owners that cover a variety of items from modest maintenance and upkeep fees to high fees for extravagant luxury amenities. Sometimes some utilities are even included in these monthly fees. Before you place the offer on your dream condo, make sure that you clearly understand what's included in the monthly fees and whether or not there are any out-of-the-ordinary expenses likely to be incurred in the near future. These aren't always due to deferred maintenance, but can be planned upgrades. A little investigation can keep you from being taken by surprise.
As a potential buyer, you should perform your due diligence and investigate the corporation's finances and especially the Reserve Fund Study and Plan. These documents, combined, serve as a 25-year forecast into the future for the corporation's capital expenditures. Look for areas that may have been neglected in the pas, like deferred maintenance, and especially years where there is only a small amount forecast as the balance in the reserve fund. Slightly increasing each unit's contributions today, could prevent an otherwise unnecessary "Special Assessment" in the future. Watch out for buildings with a history of foreclosures. This could be indicative of a building with low monthly fees and regular "special" assessments. The combination of a low reserve fund and low monthly maintenance fees is serious cause for alarm. Run, don't walk from that opportunity.
In addition to reviewing the particular unit you are considering purchasing, take some time looking around the common area - both inside and outside - of the condominium. You will own a portion of that too. Speak to other owners, or even tenants, to get a general feel for how things are maintained. Often a messy garage or garbage room can provide an indication as to how other owners treat their property in an otherwise pristine building. These can be indications and warnings of pending future repairs.
There's also a requirement of self-government and property management. If you're not prepared to help, even in a small way, then maybe condo ownership is not for you.
Typically, condominiums appreciate in value at a lower rate than single-family homes. This is due, in part, to the common ownership of the common property. This can also be a blessing should house values fall during a time of economic uncertainty -- The values of condominiums should fall at a rate lower than the values of single-famly homes.
Be aware of the cycle of rapid construction of condo building while economic times are good followed by a lull in building activity during economic depressions. Ideally, to maximize your gain in equity, you should buy during the lull in activity with lots of condo homes on the resale market and sell during a time prior to the new construction hits the market. In reality, the timing of buying and selling is caused by life events and rarely do we have an opportunity to take advantage of "maximizing equity."
Due to the higher demand in lower-cost, rental housing and decreased hands-on maintenance that's involved in this type of property, condos are often considered ideal income properties. If you're considering buying your first income property, this may be the type of home option you should consider first.
When you buy a condominium, you are buying into a lifestyle. The lifestyle issues that people are generally looking for are: limited maintenance, increased security, a community atmosphere and shared expenses. Some of the negatives that also come with the lifestyle are: a requirement to be part of the self-government of the corporation, some restrictions for deliveries, noise, common area usage and pets. All-in-all, people that select condominium ownership are looking for communities with similar personal values and often enjoy similar lifestyles.
If after checking out the items above, you like what you see in a particular condominium complex, it's likely due to the management and directors of the condominium corporation. It's due to the collective owners and their hard work. You'll likely enjoy owning and living there.
If you're ready and have made that decision to turn your dream of home ownership into a reality or want to start on the income property ladder, contact me so we can get together to create your home ownership plan today!
I agree with all the list above! It's really important especially for first time home buyers to consider those things. Good thing you have shared it to us, it would really help us a lot!
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