The hidden cost of low condo fees.

Shopping for a condo? You might not want to go for the one with the cheapest strata fees:

“This is a coming crisis that nobody is talking about,” said Chris Jaglowitz, a lawyer who specializes in condo law for Gardiner Miller Arnold LLP and a member of the Condominium Managers of Ontario. “You have all of these older buildings, and someone needs to pay for long-neglected repairs. And many people won’t be able to cover their share.”

That’s because condo buildings are owned collectively by the residents, and all repair bills are shared equally. Condo boards are able to levy special assessments in addition to condo fees to pay for projects. But the boards are made up of residents, who are sometimes motivated to keep fees low. And they serve short terms, which means long-term planning is often difficult.

Check out the full article in the Globe and Mail.

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patriotz
Member

This is the reason why condos should have a lower price/rent (higher rental yield) than multi-unit rentals. The owner faces higher risk because of lack of control over factors affecting operating costs and the value of his investment.

I'll say it again, buying a condo really does not make sense at a price/rent of over 100.

bullwhip29
Guest
bullwhip29

The "coming crisis"? This Jaglowitz guy is completely out to lunch. Issues like this are nothing new at all. Some places are overseen by competent and proactive management, but many are not. What many fail to realize is that many owners of "detached" homes are either unwilling to deal with and/or totally unaware of many of the same repair and maintenance issues and instead focus all their attention on the usual meaningless cosmetic details.

snatchamoto
Member
snatchamoto

Off topic:

Does anyone know of a way to check recent sale prices on a home?

I'm moving into a place, and I'd like to know how much my landlord is taking a bath on the rental yield?

Also, what about property taxes?

Thanks!

anymouse
Guest
anymouse

@snatchamoto: If documents have been filed at the BC land registry office, you get selling price and other info for a few dollars.

Fast
Guest
Fast

@anymouse:

If it's just curiosity, how about looking at the assessment for a rough idea.
http://evaluebc.bcassessment.ca/

jesse
Member

A friend of mine is part of a strata where the owners want low condo fees and want to pay special assessments on a case-by-case basis. In other words they want to retain the capital cost allowance on their personal balance sheets instead of it sitting in a bank account earning 1% interest or whatever.

pricedoutfornow
Guest
pricedoutfornow
But high condo fees may scare off potential buyers are well. I've been watching MLS V879844 in New West since March of last year. It's been on the market for more than a year (where are the Chinese) and we went to the open house. It's an alright place (no balcony though, so you kind of feel like you're in a box) lots of space though. The condo fees, however, are over $500/month! Yikes! Also, the realtor admitted to us that a lot of maintenance was coming due on the place (ie-be prepared to fork over thousands as soon as you move in). I feel for the people who live there, it looks like they have a couple young kids and probably want to move to a house/townhouse. See? It's not ALWAYS possible to sell and move up. People are… Read more »
Anonymouse
Guest
Anonymouse

I thought the Strata Act requires by law that a certain %-age of fees are paid into the Contingency Reserve Fund?

TJ Hooker
Guest
TJ Hooker

Hahaha..

This blog is dead….

After a 10 year bull run, there are no bears left to capitulate…

I guess the increasing prices and logic defying trends of Vancouver RE have finally gotten to bears…

Maybe, just maybe, all those realtors were right and all the reasons why Vancouver RE is so popular are true…

Those reasons have held more truth than any bear logic or reasoning..

Anonymous
Guest
Anonymous

@ TJ Hooker

Ha ha you're the idiot… yes the bears are alive and more confident than ever. Everything you had you have used … there is nothing left to keep real estate going.

Enjoy the crash stupid.

anymouse
Guest
anymouse

"After a 10 year bull run, there are no bears left to capitulate…"

You're really a bear aren't you?

TJ Hooker
Guest
TJ Hooker

“After a 10 year bull run, there are no bears left to capitulate…”

You’re really a bear aren’t you?

_______________

Now why would you draw that conclusion git? Bulls are allowed to acknowledge bull and bear runs you know…

1.9milCrackHouse
Guest
1.9milCrackHouse

The bears have either gotten so depressed they don't write on this blog anymore, or they have started to drink the cool-aid like everyone else.

AG Sage
Member

@TJ Hooker: Please print this comment out and frame it and stick it on your wall. I want to imagine that you have to stare at it every day for the next 7 years.

TJ Hooker
Guest
TJ Hooker

Please print this comment out and frame it and stick it on your wall. I want to imagine that you have to stare at it every day for the next 7 years.

____________

No problem – I printed off a similar one in 2005…

I have enjoyed looking at it daily as it brings me a smile to know that the bears have been wrong for 6 years now….

Bears told me to do it back then too….thanks for the advice bears

patriotz
Member

@TJ Hooker:

I have enjoyed looking at it daily as it brings me a smile to know that the bears have been wrong for 6 years now

The only thing the bears have to be right about is rents, and they've been spot on. If their goal is to buy, being right about prices just once is enough.

Bulls have to be right about prices all the time.

TJ Hooker
Guest
TJ Hooker

Please print this comment out and frame it and stick it on your wall. I want to imagine that you have to stare at it every day for the next 7 years.

__________

What a pile of gobblty gook…

You have all commented on prices will inevitably drop – you focus on prices, not rents, all the time…

Saying that you guys were only concerned with proving that "renting is cheaper than buying" is complete BS…

Nice try – you guys have still been wrong for years now

buffates
Guest
buffates

The top's in when the bears start capitulating…. I've been a bear since I sold my condo in summer 2008. I've started to go to open houses. This must be very very close to the top.

TJ Hooker
Guest
TJ Hooker

The only thing the bears have to be right about is rents, and they’ve been spot on. If their goal is to buy, being right about prices just once is enough.

Bulls have to be right about prices all the time.

___________

What a pile of gobblty gook…

You have all commented on prices will inevitably drop – you focus on prices, not rents, all the time…

Saying that you guys were only concerned with proving that “renting is cheaper than buying” is complete BS…

Nice try – you guys have still been wrong for years now

granite countertop
Member
granite countertop

@pricedoutfornow: I don't think that's necessarily from the high condo fee.

In general the market is bifurcating. There are still plenty of speculators, but not enough to upbid every single undesirable unit like there was a couple of years ago. I've seen far more condos for sale in New West under $250k. Also, this gem: V877919. There is one condo in Vancouver asking $123k. That has to be a milestone.

The condo in New West, that's right across from the site of the new Viceroy, yes? Having a highrise being built across the street will be annoying.

sore loser
Guest
sore loser
RE Investors are like locust. They come, use up the resources available and leave when there's nothing for them to gain anymore. Theses prices go up simply because there's still money to be made and nobody asks where you got the suitcase full of it to buy your condo(s) to begin with. Once the prices stop rising and there's no easy way to make money here, they will not "try and wait it out" or play any other games. They will pack up and go elsewhere. And before they leave they will SELL, SELL SELL. And you know what that means, don't you??? Vancouver real estate never goes down. Until it does. The average Joe has no mo money. There's nobody left to buy Surrey "Luxury" condos or "retirement properties" in sunny Okanagan. How about rich Asians??? They can have… Read more »
Troll
Guest
Troll

Anyone see those bond yields today? Ouch. Looks like the 'recovery' is even weaker than I thought. No rate increase from C until the fall at the earliest, most likely not till 2012. If we see a renewed Euro crisis then no rate hikes is a given. Where's parabolic Data Junkie?

At least the Nucks are in the final, eh bears?

Narnia
Guest
Narnia

How about rich Asians???

They can have Point Grey and British Properties- they always did anyway

Uummm…the rich Asians never had those areas until very recently, and even now, they dont' "have" those areas. They always had, and always will have RICHMOND. I just hope we get the big one to get rid of those locust investors.

Anonymouse
Guest
Anonymouse

@granite countertop:

"There is one condo in Vancouver asking $123k. That has to be a milestone."

The listing for that building clearly says "Future assessment for building is unknown". Previous listing for a different unit said "Building has history of water leaks and pending engineers report, may need 50% down for purchase."

So it's hardly a valid data point if you want to start identifying milestones.

whydoItry
Guest
whydoItry

The condominium complex must keep a percentage of their total fees as a contingency fund for repairs. It may come that strata councils will be required to have a professional audit done of the complex to determine the life expectancy for the buildings components. Courses are being developed to train these professionals and develop consistent standards. Like the complex insurance that has to be revisited from time to time, so will there be a necessity for a maintenance audit to determine the adequacy of the contingency fund.

wpDiscuz