With prices of homes rising over the years in Guelph, many builders are opting to build condo developments. But what exactly is a condo? What are condo fees? Why should you consider a condo?
This blog walks you through all the common questions about condos.
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What is a condo?
A condo is type of ownership where owners have their own unit in a larger development. Condos can be in apartment style format or a townhouse format. This development requires owners pays a monthly fee towards common elements.
What are condo fees?
Along with mortgage and property taxes, condominium owners pay additional monthly condo fees. These monthly condo association fees go toward community amenities, common elements maintenance (CAM), major repairs and replacements and more.
Are condo fees worth it?
Owning a condo with monthly fees (also known as HOA fees) may be the perfect way to invest in property if you don’t want to take on maintenance yourself. You won’t have the hassle of yard maintenance or major repairs.
How are condo fees calculated?
Condominium fees vary depending on the size of your condominium unit and the overall expenses of the development. It’s worth noting that these condo fees can increase annually and rarely decrease. The more amenities and common areas the development has, the more likely the fees will be higher.
Who decides the monthly condominium fee?
Each condo development elects a Board of Directors to oversee the overall expenses of the development. In Canada, this is usually called the “Condo Board”. However, in the US this may be called a Home Owners Association (HOA).
This volunteer role is made up of existing owners who are voted in by other owners. This Board of Directors, along with the property management company make decisions on expenses and investments.
Pros of owning a condo:
Maintenance fees are built into condos fees
Condos are perfect for buyers who want to downsize from a larger home or who don’t want to spend a ton of time maintaining a house. Monthly condo fees do pay for this service.
However for some, the trade off in condo fee versus your time is well worth it! These fees could be for things like snow removal in parking lots, liability insurance, landscaping,
More Affordable Than Single-Family Homes
The average price of a condo in Guelph in 2020 was 32% cheaper than a freehold detached property. This is ideal for first-time homeowners and investors.
Because condos usually build higher instead of wider, it’s likely that the condo you may be considering is located closer to downtown amenities such as Guelph restaurants, coffee shops in Guelph, Guelph florists and more.
Cheaper Insurance
When you own a condo, your insurance likely only needs to cover the inside of your home, as your monthly condo fees will insure the building. A freehold home requires insurance for inside and outside which is more expensive.
Note that not all developments are the same, so be sure you understand things like liability insurance, flood insurance. This can be found in the status certificate for the condo building.
Opportunities for socializing
Most condo buildings have community spaces, such as kitchens, patios, rooftops, party rooms and sometimes even guest overnight suites! So although your unit can be smaller than a detached home, you have the benefits of larger spaces when needed.
In addition, condo communities usually host fun events for residents like movie nights, game nights, wine tastings, cookouts, and more. Remember though- this isn’t free. A portion of your monthly fee goes towards this benefit! As first-time home buyers get more focused on the condo market, these sense of community activities are very important to them.
Top-Notch Amenities
You don’t have to live in a luxury condominium to enjoy nice amenities. Most developments have community spaces like a pool, rooftop terraces, or a fitness center, which you can use without worrying about the upkeep. Some even have tennis courts or spas!
Major expenses are covered
Condos offer residents the opportunity to embrace homeownership without having to pay for the unexpected like a new roof, windows or eavestroughs. Each development is different, but a portion of your condo fees go towards the Reserve Fund (a long term plan to pay for major items) that covers major exterior expenses of condo units.
This may be attractive for someone living in older buildings, who may not have the additional fees to cover unexpected expenses.
Good Security
Most high rise buildings have secure entrances and surveillance cameras, and some even have security guards or doormen who keep an eye on the property for unit owners. This is the major appeal for those who choose a gated community.This is especially great for those who live alone.
Cons of Owning a Condo
Condos Fees
Some things to consider with fees:
- The development may require Special Assessments if major repairs are not accounted and budgeted for appropriately.
- Most associations have a reserve fund, a savings account that is used for future expenses or projects. If there isn’t enough in the reserve fund, payment for a major repair will be included in your fee.
- Your condo board members (volunteer position made up of current owners) holds significant power to make decisions. If mismanaged, it can have serious consequences on your monthly payments and resale value for potential buyers.
- If buying or selling a condo, ensure your real estate agent gets a copy of the Status Certificate before you commit. Status certificates outline the rules and regs of a development as well as the financial health. Read more on status certificates here
You may not use the amenities you are paying for
If your fee is high because of amenities you aren’t using, you may not want to move there. As an example, if your condominium development has high fees because of maintenance costs of a pool, it may be a better idea to move to a complex that doesn’t have one.
Other amenity considerations include a fitness centers, billiards rooms, guest suites, pet spa and more.
No Green Space or Common Space
While no yard work is a positive of condo ownership, not having green space or common spaces can be a disadvantage for some residents. Especially if you have kids who want to play outside or have a large dog that needs to go to the bathroom, you may have to walk a fair distance to find a playground or park.
Lack of Privacy
Unless you’re an end unit on the top floor, you’ll share walls above, below and beside others. You might hear your neighbours walking across their floor, or loud TVs or animals. If you are looking for peace and quiet, condo living may not be ideal.
The other thing to consider is that the property may be subject to an easement. This is particularly common with townhome units and not high rise buildings.
Pet Restrictions
Most condos do accept pets. However, there can be limits on size, breed, and number of pets, which can be a major disadvantage for pet lovers.
These restrictions could also make it difficult for resale down the road. You may also have to get rid of your pet if there are too many complaints from other residents. Make sure to read the Status Certificate! Pet rules could be the main differences in buying a condo unit or not!
Parking could be an issue
Since condos are typically located in more urban areas, parking is almost always an issue for you or your visitors. Know how many parking spaces you have or how many
Know whether spaces are owned (on title) or exclusive (you don’t own it, but have exclusive rights to it).
Also ask about parking for visitors: if you live in a building with 100 units and there are only 3 visitor spaces in the parking lot, it’s likely going to be a challenge. This will happen every time you have guests. Also: be sure you know whether your parking is outside or in a garage. Also be sure to ask about renting an additional spot. Many developments have extras on hand for this purpose that they rent monthly or annually.
This can be a dealbreaker for some people.
Specific Rules to Follow
There are sets of rules that owners have to abide by. Some common rules:
- Not being able to put solar panels on your roof.
- Limited holiday decorations or window coverings you use
- Parking rules like no overnight parking on the street.
- Limits on community spaces, including specific access hours for pool or gym.
- Quiet hours enforced throughout the week and even on the weekends.
- Bans on smoking or drinking in community areas
Value Appreciates Slower Than a Single Family Home
While they may be cheaper to purchase, this goes hand in hand with slower appreciation. A 10% gain on a $200,000 condo is significantly less than a 10% gain on a $500,000 detached home type of property.
However, there are some exceptions like buying pre-construction, or having a more unique unit in the development (like a penthouse).
Lack of Storage Space
Not having a basement, garage, attic, or additional closets might be a downside for residents who need to store items. Some condos include small storage units assigned, which are included in the fees. Alternatively, some owners may purchase a storage locker that can be sold with the unit.
In Summary
Condo ownership is not for everyone, but it provides a great option for some! If you’re considering buying this type of ownership, get in touch with Beth and Ryan, Guelph Real estate agents.
