Condo Fees vs. Home Ownership

[doug]

Apparently, since you asked him to.

I asked about this statement:

I advise owners to keep on top of the type of owners who move into a building.

How does a condo owner "keep on top of the type of owners who move into a building" ?

understand? His answer was to sell when you think it's getting bad....which, as mentioned, is common sense.

 

[Ex-Montreal Girl]

Fortunately, most people moving in here are downsizing boomers (like ourselves) who want to stay in this great walkable nabe with all its amenities. Our building is older, true, and, no thanks to past boards who wanted to win Miss Popularity contests, fees were kept down and maintenance investments not made as they should have been. We are only now catching up but it has made for a noisy dusty few years, and we have two more to go, as we re-do the envelope, garage and balconies.

Because we are an older building in an establish hood, we aren't trendy enough for those young'uns who would be passing though until they can buy a house and have kids and the whole catastrophe. We do have a problem with some of the longer time folks who were here since Day One, never owned a home, and were used to boards that never raised rates. Fortunately, but sadly, most are "moving on."

As for marijuana, HEY!!! We downsizing boomers chose this building for the private and expansive balconies for a reason. LOL.

 

[Condo Madness]

Our building is older, true, and, no thanks to past boards who wanted to win Miss Popularity contests, fees were kept down and maintenance investments not made as they should have been.

As for marijuana, HEY!!! We downsizing boomers chose this building for the private and expansive balconies for a reason. LOL.

We received our budget package at my condo. We are paying 2% more this year. Not bad I thought. The reasons given is that our board watches our expenses and that in previoue years (over 4 decades) the boards have always repaired or replaced items as it was needed.

Last night I went to an AGM downtown where the board bragged that they will raise fees only 1%. How did they do it? I was all ears. Such a financial miracle needs to be shared.

Fee increase: 1%
Downloading electrical metering: 10%
$1.3M special assessment: $7,000 per unit

They had three special assessments in the last seven years. So what do they need the money for? $730K of this money will be spent renovating the lobby and hallways.

My condo fees, including all utilities and a premium TV cable package is 58 cents per square foot. Their new fees will be 90 cents a square foot. (Plus the downloaded electrical bills.)

When an owner started complaining about the board taking 4-6 weeks to repair the two water leaks he had in his unit, the board shut him down and said he can talk to the board later. (Water leaks? Oh, oh.)

Next Tuesday I am going to another AGM. This one is in Scarborough.

 

[Ex-Montreal Girl]

We received our budget package at my condo. We are paying 2% more this year. Not bad I thought. The reasons given is that our board watches our expenses and that in previoue years (over 4 decades) the boards have always repaired or replaced items as it was needed.

Last night I went to an AGM downtown where the board bragged that they will raise fees only 1%. How did they do it? I was all ears. Such a financial miracle needs to be shared.

Fee increase: 1%
Downloading electrical metering: 10%
$1.3M special assessment: $7,000 per unit

They had three special assessments in the last seven years. So what do they need the money for? $730K of this money will be spent renovating the lobby and hallways.

My condo fees, including all utilities and a premium TV cable package is 58 cents per square foot. Their new fees will be 90 cents a square foot. (Plus the downloaded electrical bills.)

When an owner started complaining about the board taking 4-6 weeks to repair the two water leaks he had in his unit, the board shut him down and said he can talk to the board later. (Water leaks? Oh, oh.)

Next Tuesday I am going to another AGM. This one is in Scarborough.

I love your posts. I learn so much.

When we raised the fees last year -- 9.4% after years of practically flat-lining at an average of 3% -- I gave an extended PowerPoint to a "town hall" explaining why.

Note that four of the five board members at the time had been on it less than six months. We sure had a rude awakening when we saw the extent of the problems, including water leakage in suite walls and in our garage. In fact, although we had a Reserve Fund Study done in 2012, we just had another one done because things were so screwed up.

Before putting together the PP, I spent a lot of time researching. Brookfield provided me with a large binder of all its managed properties broken down 80 ways according to fees per sf and other factors. The biggest challenge was to find comparable condos (age, size and number of suites, type of heating, amenities) that we could pit our fees per square foot and see how we were doing.

Bottom line, after the increase, we came in at 60.2 cents, which I think is great. After my presentation, people were very complimentary on our transparency and communication. I think that's very important. Nobody here wants to live in a dump and, although a few might complain about costs, when you get right down to it, none of them can say let's drain the pool, or get rid of security, or whatever.

In about 10 years time, our corridors will also need redoing. I just hope that I am on the board long enough to get rid of the boring beige.

 

[ryans]

Overall a condo generally has higher fees, but much of that goes towards yard/snow services, routine maintenance and upgrades, and peace of mind. So if you don't want to shovel snow, mow the lawn, or paint, etc, go with a condo. You are paying for convenience.

 

[Ex-Montreal Girl]

It occurs to me that the name of this thread is wrong.

It should be house ownership versus condo ownership.

Both are homes.

Or home maintenance/upkeep costs versus condo fees.

 

[DarnDirtyApe]

You can blame low rise builders for the house/home conflagration. They use "home" when they mean "house" all the time, presumably because they want buyers to feel all warm and fuzzy.

 

[yin_yang]

i live in a condo downtown. it's an older one built in 1980. 1300sqft 2br. mortgage is paid off. fees are $800/month, but it's worth it IMO. but then again, we own two other condos which pretty much pay the $800 each month. it's worth it if you work smart.

 

[Ex-Montreal Girl]

i live in a condo downtown. it's an older one built in 1980. 1300sqft 2br. mortgage is paid off. fees are $800/month, but it's worth it IMO. but then again, we own two other condos which pretty much pay the $800 each month. it's worth it if you work smart.

Better keep an eye on the Reserve Fund Study. In a couple of years, you may be facing major repairs and a large jump in fees or a special assessment. In the past few years, our older building had a lot of work done, envelope waterproofing, garage, etc. if the boards have been keeping fees low to be popular, there could be a nasty shock coming your way. When I became treasurer of our condo last year, just 15 months after moving in, I dug into the files and I am still shaking my head. I had to raise fees 10% at Xmas (although I was able to explain why and few people objected) and there is definitely a special assessment coming.

Just for the heck of it, last week I looked at the status certificate that we got when we bought and I do believe that the past board looked for an engineering firm to give them a BS RFS. I intend to pursue this. Interestingly, of that board, two members sold and left the building, a big hint. One died and one quit. Only one vet remains at the table but he was never an officer.

 

[Admiral Beez]

Jeez, I don't think I'll ever want a condo. With fees ever increasing and random yet mandatory demands for special charges in the thousands, how do you ever plan to be financially independent?

On my house we paid off the mortgage years ago, and maintain a $20K contingency fund for large repairs like roof or furnance replacement, but that's it. There's no $800 monthy fee from some board that keeps increasing and that also has the power to force you to financially participate in beautification projects. In my house I might spend $2,000 a year on repairs and maintenance, usually half that.

I suppose if you own a condo you're never free of a guaranteed monthly housing expense in the several hundreds of dollars, plus the several thousand $ special assessments. That's not the life for me.

 

[marsh]

One comment about reserve fund studies - they have to be carefully thought out as they are only as good as the info that's put into them - if not - they're useless and you will get hit with "unexpected costs". Chosing the firm who does the reserve fund is equally important.

Our condo board had scheduled redoing our balconies (we're a townhose condo development) and did a reserve fund study last year and told the consultants doing the study that we had to replace our balconies. Based on the reserve fund study, our board thought we had enough money, but when they went out for actual quotes for the work, the price came in 3x higher. One big reason for the discrepancy is that the consulting firm who did the reserve fund study didn't factor in the cost of scaffolding. As a result, the balcony repair work is being delayed until spring (rather then this summer) our condo fees are going up by 11% this year and there may be a special assessment.

That being said, I actually think we have pretty responsible board and generally have been happy with them so I don't completely blame them for this. I was on the board briefly - its alot of work it you take it seriously - people want all sorts of things done but generally don't want to pay for it - so its a balance of being fiscally prudent and deciding what work has to be done and when. The other problem that is often issue is board members who are poorly trained and do not understand their legal obligations and starting thinking that they because they are on the board they can do whatever they like - its their personal fiefdom. This hasn't been an issue at my condo but I have heard some horror stories from friends.

 

[W. K. Lis]

Interesting read. See this link in the Globe and Mail:

Condo glass panels may look great, but you'll pay more for heat and AC

The take-it-for-granted assumption that, when you buy into a condo complex, others will take (good) care of its governance and property management, is dead wrong. Every condo unit owner is strongly advised to actively participate in the day-to-day running of their condo complex by closely monitoring and contributing their time when necessary, to all the facets of its operation. As condos have a finite life span, at least as economic factors relative to their maintenance costs are concerned, the idea is to buy into newer complexes, where their near future expenses and therefore maintenance fees are prognosticated more accurately.

The same logic applies when selling a unit. Don’t wait until maintenance fees become too high. If you do, chances are you are not going to get your unit sold.

The physical life-span

When it comes to physical longevity, the same formula applies to condos as to other high rises, including apartment buildings. The properly-funded and prudently-managed buildings may have a life-span of over a hundred years, or even more. The poorly run, neglected and mismanaged buildings usually end up going down sooner.

Their physical life span depends on quality of governance, prudence of management policies, and the ability of owners to regularly look after their expenses.

 

[Ex-Montreal Girl]

One comment about reserve fund studies - they have to be carefully thought out as they are only as good as the info that's put into them - if not - they're useless and you will get hit with "unexpected costs". Chosing the firm who does the reserve fund is equally important.

Our condo board had scheduled redoing our balconies (we're a townhose condo development) and did a reserve fund study last year and told the consultants doing the study that we had to replace our balconies. Based on the reserve fund study, our board thought we had enough money, but when they went out for actual quotes for the work, the price came in 3x higher. One big reason for the discrepancy is that the consulting firm who did the reserve fund study didn't factor in the cost of scaffolding. As a result, the balcony repair work is being delayed until spring (rather then this summer) our condo fees are going up by 11% this year and there may be a special assessment.

That being said, I actually think we have pretty responsible board and generally have been happy with them so I don't completely blame them for this. I was on the board briefly - its alot of work it you take it seriously - people want all sorts of things done but generally don't want to pay for it - so its a balance of being fiscally prudent and deciding what work has to be done and when. The other problem that is often issue is board members who are poorly trained and do not understand their legal obligations and starting thinking that they because they are on the board they can do whatever they like - its their personal fiefdom. This hasn't been an issue at my condo but I have heard some horror stories from friends.

Agreed to all of the above.

We had a big job done this summer that absolutely needed doing and then towards the end got hit with a $30,000 charge to replace a system that got ripped up in the process. The consulting firm insisted it had no knowledge it was there but that is ridiculous. It is all connected. The contractor gets caught in the middle. We worked out a deal but, the point is, no matter how experienced the consultants claim to be, they aren't.

Other things that happen is, you don't factor in the cost of utilities for a job. Hydro costs jump because the contractors are running their scaffolding and equipment off your electricity.

4/5 members of our board are on a dizzyingly steep learning curve but we work super hard, devoting 6-8 hours a week, even more, to this. The only one who doesn't is the vet member fom past boards with that fiefdom mentality.

As for Admiral Beez's post about costs, I have come to the conclusion that condo living is a premium lifestyle in that you are putting equity into a property which is either forced saving or an investment, depending on the building, its location, upkeep etc., and paying for the luxury of not having to concern yourself with any upkeep. That includes not only no shoveling or raking, but also not trying to find a furnace repairman when your furnace conks out in January, not having to find three reputable contractors to give you quotes on repaving your driveway or redoing your roof etc. Of course you remain responsible if your own toilet plugs up or you need a new kitchen floor.

Renting is like giving away money IMO unless you live cheaply and are able to save or invest what could have gone into maintenance fees. But you have zero control or say over maintenance and really no recourse if the place is ill-maintained. There's also no incentive to invest any money into making your apartment yours in terms of aesthetics or practicality (say you need a step-in tub) if you don't own it.

House owning you can choose to let it run down until the wood is rotting etc. But condo boards have a duty to protect everybody's investment and that includes maintenance and more.

Our hope next year is to refurbish our party room. I will probably in charge because I am pretty good at decor. But I will be acting with an eye to practicality rather than what looks nice. Will that upholstery take punishment? Is that rug easy to clean? The budget as per the consultants is a ridiculously low $15K (and that includes redoing the washroom) so I will take on a real challenge. But I intend to involve a number of residents. Already, one family which is redoing their kitchen has given us their perfectly serviceable former appliances. The more community that goes into a project, the higher the acceptance and the less the complaining.

 

[marsh]

Interesting read. See this link in the Globe and Mail:

Condo glass panels may look great, but you'll pay more for heat and AC

I think the principal reasons that architechts and developers are turing to glass - is (1) as condo towers get taller it seems less imposing in the sky then something all brick or concrete and (2) as units get smaller, you need to use illusion to make the units feel larger - and having floor to glass walls makes the room feel larger than it is. But I agree, I think all glass windows are a poor choice for many reasons and am not surprised by the conclusion that they are more expensive to heat in winter and cool in summer.

 

[marsh]

Agreed to all of the above.

We had a big job done this summer that absolutely needed doing and then towards the end got hit with a $30,000 charge to replace a system that got ripped up in the process. The consulting firm insisted it had no knowledge it was there but that is ridiculous. It is all connected. The contractor gets caught in the middle. We worked out a deal but, the point is, no matter how experienced the consultants claim to be, they aren't.

Other things that happen is, you don't factor in the cost of utilities for a job. Hydro costs jump because the contractors are running their scaffolding and equipment off your electricity.

4/5 members of our board are on a dizzyingly steep learning curve but we work super hard, devoting 6-8 hours a week, even more, to this. The only one who doesn't is the vet member fom past boards with that fiefdom mentality.

As for Admiral Beez's post about costs, I have come to the conclusion that condo living is a premium lifestyle in that you are putting equity into a property which is either forced saving or an investment, depending on the building, its location, upkeep etc., and paying for the luxury of not having to concern yourself with any upkeep. That includes not only no shoveling or raking, but also not trying to find a furnace repairman when your furnace conks out in January, not having to find three reputable contractors to give you quotes on repaving your driveway or redoing your roof etc. Of course you remain responsible if your own toilet plugs up or you need a new kitchen floor.

Renting is like giving away money IMO unless you live cheaply and are able to save or invest what could have gone into maintenance fees. But you have zero control or say over maintenance and really no recourse if the place is ill-maintained. There's also no incentive to invest any money into making your apartment yours in terms of aesthetics or practicality (say you need a step-in tub) if you don't own it.

House owning you can choose to let it run down until the wood is rotting etc. But condo boards have a duty to protect everybody's investment and that includes maintenance and more.

Our hope next year is to refurbish our party room. I will probably in charge because I am pretty good at decor. But I will be acting with an eye to practicality rather than what looks nice. Will that upholstery take punishment? Is that rug easy to clean? The budget as per the consultants is a ridiculously low $15K (and that includes redoing the washroom) so I will take on a real challenge. But I intend to involve a number of residents. Already, one family which is redoing their kitchen has given us their perfectly serviceable former appliances. The more community that goes into a project, the higher the acceptance and the less the complaining.

Montreal Girl

Good luck with your design of the party room - sounds like you are on the right track though.

I think condo living is not for everyone - I agree with you that its a lifestyle choice more than anything.

With respect to apartments - there are a few luxury rentals that are worth it - primarily thinking of the Manulife Centre apartments - I have friends who live there and am very impressed from what I've seen and heard - their suites were updated - not as nice as a brand new luxury condo but still quite attractive. I think we get a little carried away with decor and upgrades - too may HGTV Shows warping peoples expectations. I know they pay alot for renting at the Manulife Centre but I am seriously considering selling my condo townhouse and renting again - and I don't want to go back to a cheap rental that I started out with 20 years ago when I just finished school (worked my way from a bachelor to junior 1 bed; to 1 bed -nothing fancy - just clean and cheap and in good locations - that's what changed now - seems like everyone fresh out of school is buying a small condo - i don't know how they afford it unless they have help from Mum and Dad) so I'm trying to find a rental that's nice but it doesn't have to all the latest design features of a new condo.

Sorry for the ramble and going off topic abit.