Does size matter?
When buying a condo you need to determine what size space you’d like to live in. The older condo buildings tend to have much larger units available than the newer buildings. The average size condo in a newer (less than 5 years old) building is less than 600 sq ft. If you want space you need to look at an older building.
BOTTOM LINE: If you want more square footage, go for an older building
Maybe size does matter
Many buyers like the idea of living in a smaller boutique condo building. However in a smaller boutique condo building, there are fewer units to spread the costs around. Generally the size of the roof is relatively similar from building to building. So if you live in a taller building with more units, you simply have more people to share the cost of replacing it. The same goes for many of the other costs of running a condo building so the more units in a building, the lower the maintenance fees can be. Some people do like having a 24/7 concierge, or a swimming pool, however both will drastically increase the costs of running the building.
BOTTOM LINE: If you want lower maintenance fees, pick a large building with many units without a concierge or pool.
Would you like a room with a view?
The views in our city are literally changing daily and just when you think the view out of your window is secure, BAM!, a new condo building is going up. So if the view is uber important to you, the only thing you can do is to purchase a condo where the view is currently of a park or cemetery. The Mt. Pleasant Cemetery and June Rowlands Park at Davisvillle & Mt Pleasant come to mind. They will never (at least one would hope) build condos over a park or cemetery. When you’re looking for a condo, look out the window and what do you see:
A parking lot? That will probably be a condo in the near future.
A string of 5-10 houses? That could become a condo in 5-10 years.
A small apartment building of less than 8 storeys? It could become a condo in 10 or 15 years.
In New York City, when condo developers started running out of land, they started buying up apartment buildings and giving the tenants thousands of dollars as payouts to move. In the years to come, this will start to happen in Toronto.
BOTTOM LINE: Remember only parks & cemeteries are safe (we hope!) if you want a room with a view.
Why should you care about a status certificate?
The status certificate will showcase a building’s financial health. It’s comprised of all the financial statements for the condo corporation. When you are purchasing a condo, the status certificate is sometimes made available to you up front or when you have an accepted offer on the condo. It will be conditional on your lawyer having the opportunity to review the status certificate. The status certificate will also allow you to see how much money the condo corporation has in its Reserve Fund. Every 3 years, every condo corporation must hire an engineering firm to come up with pricing scenarios as to how much it will cost to repair the mechanicals of the building, the roofing and other areas of the building over the next few years. In this Reserve Fund study, the engineers will determine how much money the condo corporation needs to set aside over the years for these repairs. Why does this matter to you? If there isn’t enough money in the reserve fund, the condo board will most likely have to ask all of the owners to pay a special assessment to bring the reserve fund up to where it should be.
Does the building have a special assessment coming?
A special assessment occurs when the condo corporation realizes there isn’t enough money in the budget or reserve fund to cover a major expense like fixing plumbing, the parking garage, elevator, roof or anything else. It’s when the board and property manager have that “Oh crap” moment that they can’t afford something major that needs to get done. They divide the costs between all of the owners so that each owner will pay an amount in proportion to the size of their unit. No one likes to be charged thousands of dollars they haven’t budgeted for. This special assessment will need to be paid by the seller of a condo before they leave the building or by a new buyer coming in. And don’t think you can get away without paying this if you own a unit in the building. Your condo corporation has more pull in making you pay for outstanding bills than your bank does on making you pay your mortgage.
BOTTOM LINE: Be cautious if there is a special assessment on the condo.
What can you do to save money on your condo purchase?
Purchase an older condo that needs work and isn’t updated and do the renovations yourself. That is of course easier said than done. Doing renovations in a condo means that you’ll have to allow for additional time to have those plans approved by the condo board and property manager. When you make changes to the flooring in a condo, it can affect the suites below so it’s important to abide by the rules set in place to make sure the noise transfer will be minimal for your neighbour.
Why you need to see the parking spot before you buy a condo?
It makes sense that if you really like the condo to go and see the parking spot too. You need to make sure that it provides easy access for your car to get in and out. You can also assess if the spot is well-lit and how close it is to the door.
Do the appliances really work?
When you feel as though you’ve found the right condo, test out the appliances. Open the fridge, turn on the elements of the stove and the oven to make sure that everything works. Test the dishwasher. It’s better to find out if there is an issue now that can be resolved by the seller vs moving in and realizing there is a problem.
BOTTOM LINE: Test the appliances
Do you really need home inspection for a condo?
If there are mechanicals such as a furnace, hot water tank or any other apparatus, it is a good idea to have a professional home inspector assess the condo. It’s better to know upfront if any of these systems will need to be replaced soon. The home inspector will also be able to see if the building has any kitec plumbing. If the condo was built between 1995 and 2007, kitec plumbing was most likely used. There was a class action lawsuit in the U.S. that was won on the basis that the kitec plumbing will disintegrate due to heat and water pressure which would cause a flood. This problem has affected many of the condos in the midtown area and condo owners have had to pay special assessments to redo the piping.
What’s the demographic of the people in the building?
Most people do want to live in a building with people just like them so it’s important to assess the demographic of any building you are considering. Are most of the people retired? Do they have families? Are there many professionals or does it feel like a college dorm? You want to make sure that whatever the demographic of the building is, it fits in with your lifestyle.
What is the percentage of renters in the building?
Most Toronto condos have at least 30% of the units being used as rentals. However some of the newer buildings have a much higher percentage. Why should this matter to you? Some renters don’t treat the building as well as owners do so a building with a significant amount of renters will undergo more wear and tear which will eventually cost owners more. The property manager should have a good idea of the percentage.
Can you really interview building residents?
When you are visiting a condo, ask the residents in the elevator with you what they think of the building. They will certainly know what issues may exist and it’s a great way to get an unbiased opinion of what it’s truly like to live in the building. I do this with clients all the time.
BOTTOM LINE: You can gain a lot of insights on the building by conducting an elevator interview
Why are we seeing more bidding wars on Toronto condos?
The condo supply in 2016 has become rather limited. When a great condo comes up on the market, if I don’t get my client to see it in the first 72 hours on the market, it might be sold. So many condos this year have started holding offer nights, which means listing the condo one day and accepting offers 5-7 days later. This way everyone gets an opportunity to view the condo. It obviously benefits the seller as this way they will get more money for their condo. On occasion, a buyer decides they don’t want to wait until offer night so they decide to put in a pre-emptive (or bully) offer to purchase the condo. This bully offer will need to be a clean offer without any (financing, or inspection) conditions and should be at least 5% or more above the list price to entice the sellers to accept this offer instead of waiting until offer night. Studies have shown that sellers will usually get more money for their places by accepting a bully offer (this holds true for houses too).
BOTTOM LINE: If you want to buy a condo in the Toronto market, you must be aggressive.