How To: Pick the Right Condo
There is one question I'm always asked ~ it goes something like this "We want to buy a condo, but how do we know that we have picked the right condo project? "
In other words, once getting beyond the obvious qualifiers of price and general location (downtown? suburban?) how should one consider the seemingly endless list of other characteristics. There's the physical: highrise? many or fewer units? converted historic building or new construction? The intangible: Who manages the association? Does the developer know what they are doing? And the unknown: Will my view stay forever? Will people want the 2008 version of "modern urban" in 2020?
Here are some important things to consider.
Select the building(s) you are interested in very carefully:
Smaller Buildings (20 units or less)
- Be cautious of buildings that have too many and two few units.
- Buildings that have too few units can be difficult to manage and control the common area expense (association dues).
- It is difficult to find a property a property management company that will devote much time to a building that has fewer than 20 units.
- Property management companies also charge a minimum management fee of $15,000-$18,000 and this can become a big expense per unit if there are only 10 units and this fee is negotiable if the building has a large number of units.
- Be cautious of self-managed associations as this can cause conflict among resident and is uncomfortable (similar to a shared driveway).
- When a large capital assessment arrives (roof, parking lot, exterior maintenance or replacement or boiler expense) this can result in a large assessment per unit.
Larger Buildings (100 Units or more)
- Most loft and condo buyers are first or second time buyers and will live in the property 3-5 years so resale is a very important issue.
- At any point in time it is likely that 5-7% of the units in any building will be for sale in any particular building
- If the building has 400+ units you will be competing with 30 units when you decide to sell.
- When we show a Buyer a large building that has many units for sale we find that they have a hard time recalling any one particular units they saw that day.
- It is sometimes difficult to have a voice in a large building if you are concerned about homeowner’s dues or other issues as the association tends to be run by the management company (and their fee is often based on the expenses to run the building).
- These buildings tend to have a great amenities package (swimming pool, health clubs, business centers, etc.)
Over the years we have found the following to be a good safe bet:
- Mid size buildings that are well located.
- Buildings that are unique (warehouse conversions or well designed new construction where the developer has not repeated their work over and over).
- End units or units higher in the building.
- Ground floor units are good provided there is something special (larger deck/on a green space/not on a city street).
- Homeowner’s dues that are 20-30 cents per square foot when you pay your own heat and utilities; 30-40 when it is included (stay away from older large buildings with high dues).
Pick the right tool for the job (get an agent that knows the market):
- While friends and relatives are great they will often not possess the in depth knowledge of various buildings to help you make the best decision (an experienced agent will be able to tell you which buildings have been a success and why and which units were popular within a particular building).
- Have your agent run the market time for pending and sold units in the buildings you are considering.
- Have your agent analyze then number of listings that have been cancelled or expired as a percentage of listed by building.
- Have your Agent ask the property manager how many foreclosures there have been in the building you are interested for the past 24 months (seller could not sell and ultimately the property was foreclosed).
- Have your Agent determine how much the dues have changed over the past three to five years.
- Ask the property manager if they are expecting any special assessments for capital improvements and if there are funds in reserve to cover this type of expense should it occur.
- Weigh the possibility of increasing interest rates against a building that will not be finished for 12-24 months to determine if you would still want/qualify for the payment if it were higher.
Contact me today for a FREE emailed list of condos and homes currently on the market within the Yonge and Eglinton area.