Dear David,

We are thinking about jumping into the real estate market. Current prices have us leaning towards a condo. We have heard people say condos are a bad investment, fees can be high, and we should avoid them altogether. Are condos a bad investment, or could the right condo be a good way to get into the market? – CONDO CAUTIOUS

DEAR CAUTIOUS: One thing that’s never in short supply is other people’s opinions, which are often based on urban myths, hearsay, or dramatic news headlines. Most people who own condos don’t end up being a cautionary tale if they do their homework before buying.

Condos represent a different kind of ownership that many people don’t fully understand. Condominiums are not a bad investment. A bad condo is a bad investment, and an overpriced unit with high fees and weak financials deserves caution. But the right condo at the right price can be a great way to break into the market.

Currently, the condo market is soft. Condos are taking longer to sell, prices are down from where they were previously, and buyers have more choice than they’ve had in years. For those who have felt priced out of the market, this can be a real opportunity. Before buying, look closely at the full monthly costs, including mortgage, condo fees, property taxes, utilities, parking, and insurance. Review the status certificate, understand the reserve fund, watch for upcoming repairs or special assessments, and make sure the building is managed properly. 

Condo fees are not inherently bad. They often cover exterior maintenance, building insurance, snow removal, landscaping, common areas, amenities, and reserve fund contributions. Instead of just looking at the amount you pay, look at what you are getting for the money, and whether the building is financially healthy.

A condo corporation’s reserve fund is like a joint savings account. Money is set aside each month so it’s available when the building needs repairs or updates. From the moment the first new owner moves into a unit, they are contributing to this fund for future expenses – much like starting to save for a new roof the day you move into a brand new house. In Ontario, every condominium corporation needs to have their reserve fund study completed every three years, which ensures enough money is being set aside for future repairs. For buyers trying to enter the market, a condo can expand your options and allow you to start building equity now, instead of waiting on the sidelines.

PRO TIP: Buyers should think of condos in terms of the building, not just the unit. Interior finishes matter, but the financial health of the condominium corporation is equally as important. If you’re buying when the market is soft, prices are down, and you have some negotiating power, these factors can work in your favour. When it comes to condos, cautious optimism is warranted if it’s rooted in facts rather than fear, headlines, or someone else’s opinion. #Advice #AskDavid #TheNegotiator 

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.