With affordability challenging in cities like Toronto, many first-time homebuyers are choosing between a condo and freehold townhouse. If you’re looking to live in the downtown core, condos are usually the best and most affordable option. But buying a condo isn’t the same as buying a house. Here are 5 things to consider before buying a condo.
1. Location
An old cliché in real estate is that the three most important rules are “location, location, location.” Although your condo is the place you call home right now, it likely won’t be home forever. When you go to sell it, is the location going to be a positive or a negative? Get to know the neighbourhood you’re thinking of buying in and find out the future developments planned for the area to see to if it’s on the upswing or downswing. The last thing you want is a condo in a location that will be tough to sell.
Likewise, it’s a good idea to ask for condo insurance quotes ahead of time. Condo insurance rates depend on several factors, including your location and the square footage of the condo.
2. Condo Rules
If you’ve always lived in a house, you can be in for a rude awakening when moving to a condo if you don’t know what to expect. Condos don’t come with as much freedom as houses. There are often rules on everything from smoking to pets. Make sure you know the rules before moving in; otherwise you’ll be in for a nasty surprise if only one dog is allowed and you have two.
3. Amenities
One of the best parts about living in a condo is the amenities. Amenities are the extra perks that condo owners love so much. Common amenities include a swimming pool, party room, gym and guest suites. While more amenities are usually better than less, those amenities aren’t free. You’ll be paying for them through your condo fees. Make sure you’ll make good use out of them before buying a condo with lots of amenities.
4. Parking
Similar to location, parking can help with your condo’s resale value. Even if you don’t own a vehicle, paying for a parking spot is almost always money well spent. If you don’t have a parking spot, it will make it tougher to sell your condo later on. Anyone with a vehicle won’t consider buying your condo, so you’ll have a much smaller pool of potential buyers.
5. Reserve Fund
Your condo fees may be low right now, but could they be higher in the future? That’s why it’s so important to have your real estate lawyer review the reserve fund of the condo to help ensure it’s being managed well. The reserve fund is supposed to be used to pay for major expenses, such as repairing the roof, replacing the elevator and maintaining the amenities. An underfunded reserve fund means that you could have to pay out of pocket via a special assessment. By reviewing the reserve fund ahead of time, you can be better prepared in the future or you might want to avoid buying the condo altogether.
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.