Five questions to ask yourself before buying a condo
Buying a condo, especially in today’s housing market, can be a stressful, high-stakes affair. Making a bad decision can cost you dearly, both in terms of time and money.
The only way to remove as much uncertainty and future heartache from the equation is to ask the tough questions upfront. With that in mind, here are five questions you absolutely must ask before going through with the purchase.
1) If it’s a presale, what is the builder’s record?
Presale condos are very popular, and there are new buildings going up all the time, in great locations, with fantastic amenities. Many people choose to buy pre-construction condos and don’t mind waiting for the building and their unit to be completed.
The questions this scenario should prompt, however, are “will the building be completed” and “how long will it take?” Builders and real-estate developers give estimates, but things happen, and you might find yourself waiting longer than expected to move into your new place. In the worst-case scenario, the building may never be completed.
Both of these things can happen for a variety of reasons. The builders may have trouble securing loans for construction. The company building it may go bankrupt. There could be serious structural or environmental issues that end up requiring substantial backtracking and rework or which halt construction for a long period of time.
2) What complaints so people on the council have?
This is an important question to ask because there may be some red flags or potentially even deal breaks that could dissuade you from going ahead with the purchase. A good way to understand what these might be is to ask for access to the building’s meeting minutes from the past several months, or, additionally, you could also talk to the current owners.
Common complaints include a lack of communication from the condo manager, increasingly restrictive rules and regulations governing the use of the common areas and even your own condo, misuse of funds and even outright fraud. If you think you might be moving into a building that is going to be a source of headaches, or you worry you will end up frustrated and disillusioned six months or one year down the line, you may want to reconsider.
3) Does it have enough storage?
Most, though not all, new condo buildings come with storage space. Sometimes it is even possible to pay for a second storage unit, but it depends on the building’s rules. If storage is a key issue for you – whether because you have a lot to store or think you may in the future – it is important to nail down how much you will get when you move into the building.
If it doesn’t seem like you will be getting enough space, you will likely need to look for outside options, and there are some important trends in the self-storage industry to consider.
Perhaps the most salient in the case of new condo owners is the fact that there is projected to be an increase in demand for storage space as the very large Baby Boomer generation continues to downsize. Increased demand means increased prices, and a building’s storage policies could mean you have to budget for a self-storage expense you didn’t plan for.
4) When do I plan on moving?
The most important thing to note about condos is that they tend to appreciate in value at a slower pace than single-family detached homes. If you are buying your condo as an investment on which you hope to realize capital gains in a few years time, whether you plan on living in it during that time or not, the current state and future of the real estate market are essential considerations.
While it is always important to do your market research before investing in anything, you might decide, upon closer inspection, that the location of your new condo is not right, given the specific market conditions. You might also decide that the market, as a whole, is too risky right now and that you should postpone your purchase until things look better for investors.
5) Have I accounted for the association fees?
One thing that many condo owners aren’t prepared for before and when they move in, and particularly first-time owners, is the fees. A condo association’s fees are based on things like the number of units in the building, property maintenance costs, what kind of funds must be set aside for things like repairs and litigation, and whether it is a self-managed or professionally managed association. You are allowed to see and analyze the fees before making the decision to buy.
If it looks like the association will be asking you to contribute more money each month than you are comfortable with, this might be a sign that you should look for a different building. Association fees can end up amounting to a significant chunk of change at the end of the year, and you don’t want to end up resenting the building and its association (i.e., your neighbours) because of these costs.
Make sure you ask these questions before buying
Buying a condo, especially if it is your first, can be a thrilling, life-affirming experience, or it can be a nightmare. Much of that experience is up to you and how much due diligence you are willing to put in.
Keep the above questions and considerations in mind and ensure that your condo-buying experience is a positive one, whether you are buying directly from the current owner or a pre-construction unit.
Photo by Agustin Lara