Condo Fees vs. Home Ownership

[rbt]

Just wondering about the average annual increase in condo fees. I'm just asking because the fees in the building I currently rent in are going up 15% starting December 1st.

X-Condos went up about 10% this year too; although that's largely due to small (or even 0%) increases the last couple of years which burned through the surplus despite increasing expenses.


Water and electricity will be your corps 2 biggest expenses and they're increasing by about 11% and 7% respectively; those will be passed down.

 

[TheKingEast]

Just wondering about the average annual increase in condo fees. I'm just asking because the fees in the building I currently rent in are going up 15% starting December 1st.

That's high. Is it a newer building? What is the cause for such a steep increase.

As for this topic, I shudder at the maintenance fees of these glass boxes in the next 10 years or so. All that glass, so little energy efficiency, so much upkeep. It's going to be a nightmare.

 

[ChesterCopperpot]

Yes - it's the Paintbox building in Regent Park

 

[Ex-Montreal Girl]

Just wondering about the average annual increase in condo fees. I'm just asking because the fees in the building I currently rent in are going up 15% starting December 1st.

WHOA! Sounds like the developer had a loss leader sale going to get you into the tent. Either that or the Reserve Fund is in the tank. Who is on the board? (I am treasurer on my board.)

Lots of newer buildings face this problem. I know of one place that fees jumped 100$ within its first four years.

We are going up 9.4% this year but that's after 7 years of an average 3.8% per year while water was climbing 9% per year. Our hydro is not metered and sometimes, when we walk the dog at night, we can look up and see lights blazing. People seem to have no awareness. Having come from a house, we're much more sensitive to keeping lights off in empty rooms etc.

Our building is also one of the oldest condos in town which means (1) it's time to replace and repair stuff and (2) our suites are large so our cost/sf are still relatively low compared to newer buildings.

 

[Condo Madness]

Just wondering about the average annual increase in condo fees. I'm just asking because the fees in the building I currently rent in are going up 15% starting December 1st.

If your condo corporation is a few years old, condo fees increases should match the inflation rate.

If your condo has not raised the fees for a few years, or if it is a newly built condo, then you should expect to see higher than normal fee increases to make up for fees than may have been set too low.

 

[Admiral Beez]

That's high. Is it a newer building? What is the cause for such a steep increase.

As for this topic, I shudder at the maintenance fees of these glass boxes in the next 10 years or so. All that glass, so little energy efficiency, so much upkeep. It's going to be a nightmare.

It's not the energy efficiency you need to worry about, but that the epoxy adhesive holding the windows onto the building envelope will reach their half life and begin to fail. Same as the welded non-stainless bolts holding the precast concrete and fake brick onto the subframe... those bolts will rust and fail withinthe condo owners' lifetimes. That's where condo owners will get a shock, when after 15-20 years they each get a huge bill for replacing all the glass and repairing the precast panels.

There is no way I'd be buying one of these quickly thrown up glass box timebombs. My 1920s semi may have tiny windows and its double brick and lath may have no insulation, but I trust it has been robustly constructed.

 

[Condo Madness]

We got our new budget pckage yesterday. Our fees are going up 2.1%. We have a new Reserve Fund Study and the board has accepted the engineers' recommended funding for the study. (Some boards ignore the study or go cheap.)

I was at an AGM last week in Mississauga where the engineers recommended spending $5 million and the board decided to patch instead of replace some major items, like leaks in the garage, water penetration problems through the building envelope and pin hole leaks.

The board acted as if they were heroes by saving so much money.

I recommended that the owners who invited me to their building sell in the next two-three years as all the board was doing was pushing these expenses down the road.

 

[Admiral Beez]

I recommended that the owners who invited me to their building sell in the next two-three years as all the board was doing was pushing these expenses down the road.

Within two decades when the envelopes and windows begin to fail, Toronto will have problem far larger than Vancouver did http://en.wikipedia.org/wiki/Leaky_condo_crisis

http://www.thestar.com/news/gta/201...ed_to_trigger_major_wave_of_replacements.html

http://www.theglobeandmail.com/life...the-glass-draped-condo-tower/article14795835/

The current real-estate boom, Mr. Kesik writes, has created a generation of towers wrapped in glass systems that will probably fail after only “15 to 20 years,” and that are, from the outset, “thermally inefficient compared to curtain walls or punched windows.”

 

[Ex-Montreal Girl]

We got our new budget pckage yesterday. Our fees are going up 2.1%. We have a new Reserve Fund Study and the board has accepted the engineers' recommended funding for the study. (Some boards ignore the study or go cheap.)

I was at an AGM last week in Mississauga where the engineers recommended spending $5 million and the board decided to patch instead of replace some major items, like leaks in the garage, water penetration problems through the building envelope and pin hole leaks.

The board acted as if they were heroes by saving so much money.

I recommended that the owners who invited me to their building sell in the next two-three years as all the board was doing was pushing these expenses down the road.

We had a RFS in 2012 and ordered up another one because the past board was out to lunch and, like you say, acted like heroes for keeping fees low. (Two members moved out and one died after the 2012 RFS was delivered. The move-outs were a clue.) The new one, which we pored over this week, was very sobering indeed.

There is no getting around a special assessment, not only to repair/replace whatever would have come to the end of its natural life in this 40 year old building but also to make up for cheap a$$ decisions by the past boards. I won't get into details but, suffice to say, on one big job alone, had they bit the bullet and spent another $1500/suite, not only would we have saved big time on subsequent repairs of water damage but also on electricity/heating costs.

I can hear jackhammers below me as I type this post. A big job that need not have been so big had the past board done the right thing when it needed to be done.

What's interesting though is how, now, most of the people coming in are downsizers from older neighbourhoods around us. These people accept that you have to keep doing maintenance, that foundations leak, roofs need replacing, furnaces die. So, while none of us are happy about our maintenance fees increasing, we accept this as a part of living in an older, solid, stolid building with large apartments. Our fees cover heat, hydro, water tax, premium cable with two free digital boxes, and more. I figure we are still way ahead in terms of monthly expenses from having a semi in Riverdale.

 

[Admiral Beez]

If you're buying a condo, look for one with punched windows, http://www.haskamp.de/en/products/windows/punch-windows-and-window-bands.html. Punched windows are those that are inserted inside the wall, not part of the wall itself, like the below, http://chatterbox.typepad.com/portl...-the-pearl-visiting-the-937-condominiums.html

When the above windows need replacement, the board just needs to cut out the old ones and insert news ones, just like you would with a regular single family home. You can imagine it in the below job.

 

[James]

The takeaway is that, regardless if the building is a condo or a single family dwelling, structure and mechanical equipment eventually get old and need to be replaced. Generally speaking, single family home owners would know to set aside funds for when these things go. Hopefully the condo maintenance fees will be sufficient to cover these expenses as well. Unfortunately, we all know that this is not always the case and many condo unit owners get stuck with unexpected phased-in additional maintenance costs that they never planned for.

 

[Admiral Beez]

The takeaway is that, regardless if the building is a condo or a single family dwelling, structure and mechanical equipment eventually get old and need to be replaced. Generally speaking, single family home owners would know to set aside funds for when these things go. Hopefully the condo maintenance fees will be sufficient to cover these expenses as well. Unfortunately, we all know that this is not always the case and many condo unit owners get stuck with unexpected phased-in additional maintenance costs that they never planned for.

A big difference though is that the owners of a single family dwelling can choose to delay or even neglect his/her property until either willingness or finances permit the repair. The owner can also shop around for better pricing from any provider of his/her choosing. In a condo, unless you're on the Board you simply get a notice that "X" repair is being done, and you're on the hook for XX thousands of $$, regardless of your financial situation.

 

[TheKingEast]

A big difference though is that the owners of a single family dwelling can choose to delay or even neglect his/her property until either willingness or finances permit the repair. The owner can also shop around for better pricing from any provider of his/her choosing. In a condo, unless you're on the Board you simply get a notice that "X" repair is being done, and you're on the hook for XX thousands of $$, regardless of your financial situation.

This. I can think of one project going through a $500K lobby renovation and owners are not happy about it. That's the drawback of living in a condo. If your board wants to change something, you will have to deal with it. You will have no say in the design, look, quality, etc. While, in a SFD, you can choose how much to pay, when to do it, who will do it for you, etc.

 

[Ex-Montreal Girl]

This. I can think of one project going through a $500K lobby renovation and owners are not happy about it. That's the drawback of living in a condo. If your board wants to change something, you will have to deal with it. You will have no say in the design, look, quality, etc. While, in a SFD, you can choose how much to pay, when to do it, who will do it for you, etc.

I call BS.

That's an out of control board, one which was VOTED in by residents. If they object to board decisions, according to the act, a certain percentage of them can sign up and demand a meeting to vote them out. The thing about condos is, too many residents buy in thinking "Lalalalala condo lifestyle I don't need to think. I'm worry and fancy free." So they don't go to AGMs, they don't get involved, they don't examine the minutes if they smell a rat ... You do nothing, you get nothing.

A $500K lobby reno doesn't just happen. There's a reserve fund study which residents should look at it when it's published. The annual budget will say "We're planning to spend $500K for new rugs." or whatever.

If you're in a SFD, you may make your own decisions, but you live with the consequences. If the mailman breaks his neck because your front steps collapse, you pay the piper. A board of directors' mission is to never get to that point.

A board must do due diligence. Three bids, just like we used to do at the house. Sometimes the lowest bids are suspicious, and end up being more expensive. Sometimes, as we just did, we can take the highest and highest-quality bidder and negotiate them down to where the middle bidder was.

Do you just make this stuff up?

ETA: CondoMadness (whom I adore) posted this in another thread. It's worth posting here.
http://www.condomadness.info/challenge_board.html

 

[Eug]

It may be overstated, but it's not complete BS. For example in my townhouse condo + condo apt. complex, the decision was made to redo the condo lobby, purely for aesthetic reasons. There was no significant maintenance issue. Most of us in the townhouses and some in the condo building felt it was a complete waste of money, but the majority in the condo building wanted the lobby reno, and the condo building dwellers outnumbered the townhouse dwellers.

Granted, ours wasn't a $500000 job. It was five digits, since it was purely aesthetic and was a small lobby, but nonetheless the idea is similar.