How common is this with condos?
Jul 14th 2015, 11:44 pm
#31
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Location: Moncton, NB, CANADA
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Re: How common is this with condos?
Using an example of one other property for sale at $70,000
110 NORTH , MONCTON, New Brunswick E1C5X6 - 2145816 | Realtor.ca
110 NORTH , MONCTON, New Brunswick E1C5X6 - 2145816 | Realtor.ca
@ $260k
Jul 14th 2015, 11:47 pm
#32
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Location: Ontario, Canada
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Re: How common is this with condos?
That one looks more than a tad ramshackle, which is surprising as it's in a really, really, nice area where this is more the norm
http://cdn.realtor.ca/listing/TS6354.../2145211_1.jpg @ $260k
http://cdn.realtor.ca/listing/TS6354.../2145211_1.jpg @ $260k
Are you considering upping your investment risk to something approaching $300k?
On that property what sort of return would one get?
Jul 14th 2015, 11:58 pm
#33
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Re: How common is this with condos?
Are you considering upping your investment risk to something approaching $300k?
On that property what sort of return would one get?
Jul 15th 2015, 2:35 am
#34
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Re: How common is this with condos?
Is this sort of thing common for condos? Stories like this is what makes me wary of owning a condo. I know one person personally (MIL) who had this happen to the condo she owned, but it was 55,000 per unit, and it just about financially ruined her.
Suppose if its an older building just make sure all the big stuff is done first?
Seems this could ruin someone, it's a lot of money to pay that was never expected.
Downtown Edmonton condo owners on the hook for $2.3M repair - Edmonton | Globalnews.ca
Suppose if its an older building just make sure all the big stuff is done first?
Seems this could ruin someone, it's a lot of money to pay that was never expected.
Downtown Edmonton condo owners on the hook for $2.3M repair - Edmonton | Globalnews.ca
I thought the entire point of the monthly fees that one pays when living in a condo was to cover expenses such as these.
Jul 15th 2015, 2:49 am
#35
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,558
Re: How common is this with condos?
It is, but the fees are estimated against known future repair costs. So it is not uncommon to find the repair fund insufficient to meet the costs of a repair.
Jul 15th 2015, 2:52 am
#36
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Re: How common is this with condos?
Some countries/states do not require condo associations to have a fund to cover major expenses. We were interested in buying an apartment in the UK...until we found out that the monthly fees were something like £30 per month. That basically covered the lights in the hallways, gardening and window cleaning. In cases like that when repairs are needed all the current owners must chip in. In Ontario condos must...by law... have a minimum fund to cover major repairs...for our building it is several million dollars.
Jul 15th 2015, 3:06 am
#37
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Re: How common is this with condos?
Some countries/states do not require condo associations to have a fund to cover major expenses. We were interested in buying an apartment in the UK...until we found out that the monthly fees were something like £30 per month. That basically covered the lights in the hallways, gardening and window cleaning. In cases like that when repairs are needed all the current owners must chip in. In Ontario condos must...by law... have a minimum fund to cover major repairs...for our building it is several million dollars.
"One last area to consider is a category known as “special assessments.” These are one-time fees for repairs not covered by the contingency fee, and can be substantial, especially with older buildings and conversions; once the bill is paid off, the maintenance fee will drop accordingly.
Kathy Monahan of Forest Hill Real Estate in Toronto says one of the most important things you should do when considering a condo is to ascertain what the monthly maintenance fee covers, so you’re comparing apples with apples when deciding between two buildings."
Jul 15th 2015, 4:07 am
#38
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,558
Re: How common is this with condos?
post 26 & 27 thanks for that input
ROI or ROE is what I was trying to establish for the investment
Some good points by el_richo, & that any tenancy, fixes & maintenance, property tax etc need to be factored into this as an investment to get the best possible net return before income tax. On investment property all expenses including mortgage interest, property tax & maintenance costs are deducted from gross income to get to any net income.
For the ROI/ROE, as an investor I would always want the lowest possible risk that best fits my needs.
Using an example of one other property for sale at $70,000
110 NORTH , MONCTON, New Brunswick E1C5X6 - 2145816 | Realtor.ca
"This home is situated in a nice location and close proximity to the hospitals and university. Also included with this great deal is a 18.6 x 12.6 detached garage and 12 x 8 baby barn for all your extras. Large private deck overlooking nice backyard for all your summer activities. Vendor is ready for offers. This house is selling $23,000.00 below assessment"
On the basis that I live in Moncton, for the property above, the options that I see ....
A) Buy to own & live in it, go with the lowest possible down payment so that my monthly payments for principle, interest & taxes would be ~$500/mth. Current owner mortgages available below 3%
B) Buy to lease it out at $1000/mth. using 25% down, carrying costs all in $500/mth, use any net income to pay down the mortgage
C) Buy it outright then get a low interest HELOC (maximum possible amount that I could get) to either lease it out or live in it
D) Buy it outright then sell it as a lease to own to someone on the basis they maintain it all, the lease to own [L2O] purchaser puts down $2000 and pays $1000/mth lease on a 5 year lease to own with a fixed purchase price option to own it at the end of 5 years at $70,000 [something for the OP to consider as the lease to own person].
he L2O must have insurance to cover damage & perils. Myself as the owner would also have building insurance
Which if any option would you go with & why?
Or would it be better to take any money that I had whether it was the $70,000 or $17,500 (that would have been the 25% down payment on the above property) to invest that in a balanced portfolio investment?
.
ROI or ROE is what I was trying to establish for the investment
Some good points by el_richo, & that any tenancy, fixes & maintenance, property tax etc need to be factored into this as an investment to get the best possible net return before income tax. On investment property all expenses including mortgage interest, property tax & maintenance costs are deducted from gross income to get to any net income.
For the ROI/ROE, as an investor I would always want the lowest possible risk that best fits my needs.
Using an example of one other property for sale at $70,000
110 NORTH , MONCTON, New Brunswick E1C5X6 - 2145816 | Realtor.ca
"This home is situated in a nice location and close proximity to the hospitals and university. Also included with this great deal is a 18.6 x 12.6 detached garage and 12 x 8 baby barn for all your extras. Large private deck overlooking nice backyard for all your summer activities. Vendor is ready for offers. This house is selling $23,000.00 below assessment"
On the basis that I live in Moncton, for the property above, the options that I see ....
A) Buy to own & live in it, go with the lowest possible down payment so that my monthly payments for principle, interest & taxes would be ~$500/mth. Current owner mortgages available below 3%
B) Buy to lease it out at $1000/mth. using 25% down, carrying costs all in $500/mth, use any net income to pay down the mortgage
C) Buy it outright then get a low interest HELOC (maximum possible amount that I could get) to either lease it out or live in it
D) Buy it outright then sell it as a lease to own to someone on the basis they maintain it all, the lease to own [L2O] purchaser puts down $2000 and pays $1000/mth lease on a 5 year lease to own with a fixed purchase price option to own it at the end of 5 years at $70,000 [something for the OP to consider as the lease to own person].
he L2O must have insurance to cover damage & perils. Myself as the owner would also have building insurance
Which if any option would you go with & why?
Or would it be better to take any money that I had whether it was the $70,000 or $17,500 (that would have been the 25% down payment on the above property) to invest that in a balanced portfolio investment?
.
Of the options above I would strongly favour B), buying on a mortgage because the financing is locked in. If your equity line was canceled or frozen you'd be up $4!t creek very quickly because whatever caused your equity line to be canceled would likely also make it impossible for you to refi either. That said, I wouldn't pay down anything extra against the mortgage until I had a float of at least 12 months mortgage payments to cover contingencies including vacant periods.
That said, I am not in favour of people investing in a single home, and a duplex is only a little better. If you get a bad tenant, or have a gap between tenancies, that can very quickly turn into a financial catastrophe. A neighbour moved out of her home and went to Florida, leaving her home in the hands of a well respected local agent. But the tenants lost their job(s) and stopped paying the rent, and almost immediately the owner couldn't afford to pay the mortgage, so the house has been foreclosed. Whatever equity she had in the home is now gone, less than a year after she moved out.
Last edited by Pulaski; Jul 15th 2015 at 4:19 am.
Jul 15th 2015, 4:12 am
#39
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Re: How common is this with condos?
from an article in the Toronto 'styleathome' magazine ...it really is 'buyer beware' even if told the slush fund is adequate
"One last area to consider is a category known as “special assessments.” These are one-time fees for repairs not covered by the contingency fee, and can be substantial, especially with older buildings and conversions; once the bill is paid off, the maintenance fee will drop accordingly.
Kathy Monahan of Forest Hill Real Estate in Toronto says one of the most important things you should do when considering a condo is to ascertain what the monthly maintenance fee covers, so you’re comparing apples with apples when deciding between two buildings."
"One last area to consider is a category known as “special assessments.” These are one-time fees for repairs not covered by the contingency fee, and can be substantial, especially with older buildings and conversions; once the bill is paid off, the maintenance fee will drop accordingly.
Kathy Monahan of Forest Hill Real Estate in Toronto says one of the most important things you should do when considering a condo is to ascertain what the monthly maintenance fee covers, so you’re comparing apples with apples when deciding between two buildings."
Obviously there is a greater chance of older buildings requiring more repair/maintenance and of course one should always reads through the condo rules/articles carefully. Common sense really...but as with most things...one can always get caught out.
Jul 15th 2015, 4:17 am
#40
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,558
Re: How common is this with condos?
I am sure that most of the time condo arrangements work just fine, but if the arrangement "blows up" it can get very very expensive very quickly.
Jul 15th 2015, 4:27 am
#41
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Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,686
Re: How common is this with condos?
Pulaski @ post#38 .... thanks for the input & suggestions.
What about a Duplex that we would live in one half & rent out the other?
In a situation like that I could see it renting to a senior pensioner couple over single or working couple with kids, even if the seniors pay less rent they likely would be more stable & less trouble, especially if they're snowbirds that go south for the winter?
At least an amount of rent to cover the utilities, property taxes & general maintenance
If there is any extra over that could go towards other household items (groceries), payment towards a mortgage or vehicle
.
What about a Duplex that we would live in one half & rent out the other?
In a situation like that I could see it renting to a senior pensioner couple over single or working couple with kids, even if the seniors pay less rent they likely would be more stable & less trouble, especially if they're snowbirds that go south for the winter?
At least an amount of rent to cover the utilities, property taxes & general maintenance
If there is any extra over that could go towards other household items (groceries), payment towards a mortgage or vehicle
.
Last edited by not2old; Jul 15th 2015 at 4:36 am.
Jul 15th 2015, 7:09 am
#42
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Jul 15th 2015, 7:14 am
#44
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Location: Ontario, Canada
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Re: How common is this with condos?
did you look at other parts of NB or the East Coast before deciding on Moncton?
Have you considered or looked at St John?
286 MILFORD Road , SAINT JOHN, New Brunswick E2M4R4 - SJ150550 | Realtor.ca
Jul 15th 2015, 7:21 am
#45
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