Condo Buying Questions

[petevanthoff]

Hello,

I`ve been looking at a Condo in Edmonton on the West end. It`s in great condition but my concern is with the condo fund and lack of participation by other condo owners in the association. The Condo Board has been operating since 1991 and the fund is around $16000.00. It`s a 12 unit building and the list of things that the building needs includes insulation in the attic, new windows and balcony repair. Seems like quite alot of work for such a small fund to handle. This is the lower end of the spectrum as far as condos are concerned. The condo fees are $290.00/month which include heat and water.

I`m looking for some guidance and perhaps advice as to whether or not I should walk away from the deal. Is this a pretty standard description for condos of this age and description? Are the condo fees way to high for a 1970`s building and is the fund way too small for the work that needs to be done?

Pete

 

[EdRenkema]

QUOTE (petevanthoff @ Dec 1 2007, 12:58 PM)
Hello,



I've been looking at a Condo in Edmonton on the West end. It's in great condition but my concern is with the condo fund and lack of participation by other condo owners in the association. The Condo Board has been operating since 1991 and the fund is around $16000.00. It's a 12 unit building and the list of things that the building needs includes insulation in the attic, new windows and balcony repair. Seems like quite alot of work for such a small fund to handle. This is the lower end of the spectrum as far as condos are concerned. The condo fees are $290.00/month which include heat and water.



I'm looking for some guidance and perhaps advice as to whether or not I should walk away from the deal. Is this a pretty standard description for condos of this age and description? Are the condo fees way to high for a 1970's building and is the fund way too small for the work that needs to be done?



Pete




Pete,



I've owned a condo for almost 3 yrs now, first as a personal residence and now as a rental. The contingency fund is quite small and likely wouldn't be enough to complete the work required so a special levy would need to be assesesed to all the owners to bring it up to par. THe fees seem reasonable considering they cover heat and water. Based on my similar experience you could look at this two ways first it could be a deal breaker as you would have considerable up front costs to upgrade the building, providing all owners are on the same page. Or you could look at it as an opportunity to become involved in the condo board since few others are willing and begin to make positive impacts and proactive decisions in the management of the building, hence increasing the value of your investment. Again this is if you have co-operative involvement of other condo owners and/or board members. The latter was my experience and the value of my property (and all in the building) subsequently increased substantially.

I hope that helps, if you want more details on my experience you can message personally through this forum.



Ed R

 

[DonCampbell]

Hi Pete,

I wopuld also recommend that you take a look at the Condo Reserve Fund Study that all Alberta Condo Associations have to have completed on their building 9by law).

This will give you an indication of any deferred maintenance issue that may be looming and where the condo fees are projected to increase or decrease to.

By the way I own over 150 condos and have had wonderful luck with them. However they do take more pre-purchase investgation (hence the creation of the of the separate Condo Due Diligence Checklist in you Quickstart Program)

Trust this helps.

 

[invst4profit]

The reserves are very low and would be a major issue for me.
You need to give more detailed info. What are you paying,
how much are the taxes,insurance, etc. These are all necessary to give
informed advice. Also is it to live in or rent out.

 

[petevanthoff]

I`ve got an accepted offer at $179,600.00. Taxes are $50.00/month and insurance plus water and heat are all included in the condo fees which are $285.00/month. This will be my a principle residence.

 

[EdRenkema]

QUOTE (petevanthoff @ Dec 3 2007, 04:31 PM)
I've got an accepted offer at $179,600.00. Taxes are $50.00/month and insurance plus water and heat are all included in the condo fees which are $285.00/month. This will be my a principle residence.




Sounds like you're on your way. Take a good look at the condo board minutes for the last yr and the financials. If you can get some advice from a property manager experienced in these buildings and also an accountant - the numbers will tell a story. If things look good and you proceed you have an opportunity to participate in improving values in the building. Just remember, speaking from experience here, the people in the building become like your family and you are stuck with them, all major decisions involve the group. Certain individuals can only think of saving money rather than spending wisely to improve value. It will take patience and perseverance.



Good luck,

Ed R

 

[petevanthoff]

Thanks for all your input. It`s helped alot!!

Pete

 

[DennisEpp]

QUOTE (petevanthoff @ Dec 1 2007, 12:58 PM)
Hello,



I've been looking at a Condo in Edmonton on the West end. It's in great condition but my concern is with the condo fund and lack of participation by other condo owners in the association. The Condo Board has been operating since 1991 and the fund is around $16000.00. It's a 12 unit building and the list of things that the building needs includes insulation in the attic, new windows and balcony repair. Seems like quite alot of work for such a small fund to handle. This is the lower end of the spectrum as far as condos are concerned. The condo fees are $290.00/month which include heat and water.



I'm looking for some guidance and perhaps advice as to whether or not I should walk away from the deal. Is this a pretty standard description for condos of this age and description? Are the condo fees way to high for a 1970's building and is the fund way too small for the work that needs to be done?



Pete

 

[DennisEpp]

hi Pete, 1st as a Realtor in Edmonton, I can tell you there are condo`s with much better circumstance on the market. If u decide to go forward and put the condo into a pending mode I suggest going to this link. It is a pay for service here in Edmonton, I suggest you give it a view. (Capcanada)


www.capcanada.ca/view/24

Dennis

 

[DanSampson]

Hi Pete, I would suggest you follow your intuition on this one. I agree with you that 16,000, or 1,333 per door is low for a building that needs windows ($2,000 per door w/slider) or deck repair (1,000-3,000 per door).

To blow in additional insulation in the attic is a couple of hundred dollars per door. Not very much, unless you look at it as being 15% of the Reserve!

If this "lower end of the spectrum" condo has a new roof (2,000 per door) and new boiler and hot water tank (2,000 per door) and decent common area flooring and paint (1,250 per door) then the 16,000 reserve may be sufficient.

I am of the opinion that better quality buildings increase more in an expanding market and hold their value better in a contracting market than "low end of the spectrum" properties. Unless you are absolutely steeling this unit, you may want to dig a bit deeper or look a little broader for a different property.

Cheers,

Dan