Condo buyers should also check up on the management company that looks after the property, she said. Real estate lawyers often know which property managers have good and bad reputations. The potential for rising condo fees or special assessments plays a big part in deciding whether to buy a new or older condo.
Lash discourages any generalizations about older condos offering more fee risk because of maintenance or upkeep issues resulting from simple wear and tear. Lash said. The average increase last year was 2. If fees are kept low to attract buyers, it could mean the reserve fund will not have enough in it cover future maintenance needs. The story of about the Ottawa condo suggests the need for some fresh thinking about reserve funds.
For those of you curious, a condo corporation in Ontario is a not-for-profit enterprise. Ie, the goal is not to "make" money. A balanced budget is to be set every year and in a perfect world you spend exactly what you take in from owners. No more, no less. This isn't an exact science and expenses can vary year to year, but the goal is to analyze previous years' expenses and forecast. That being said, it is financially prudent to have an operating surplus slowly built up over time to take on those unexpected operating expenses that inevitably come up, within reason.
At a certain point, however, a condo corporation sitting on hundreds of thousands of accumulated surplus is probably not efficiently running their building's finances the way it's meant to. So that's why I joined the board of that condo two years ago. I wanted to know where the money was going, how it was being spent, and to help control the risk of condo fees getting so high that they ultimately effect the value of the building.
As an agent, I know what buyers say about buildings and certain ones get blacklisted by a lot of buyers for having high fees. Once on the board, here's what I learned - no property manager or auditor will ever recommend that a condo board actually lower their condo fees. Well, ask them and see if you get a straight answer. I asked. And I asked again. And I was never satisfied with the response I got.
So I pushed to reduce the condo fees two years ago and after appealing to logic and math, it was approved. We dropped fees 1. We still ran a surplus that year. Imagine that - we lowered condo fees and still were taking in more money than we needed to run the building.
And guess what? Halfway through our current fiscal year and we're still running a surplus. Now I've been shifted to Treasurer on my board and guess who's in charge of finances now ;.
Guys, one thing you need to remember is that condo boards are run by volunteers. There is no educational or professional experience required. Most boards rely on their property manager to come up with a budget each year and those managers, as great as they might be, are not financial experts. I agree Maria as well. I didn't even consider that condo fees could increase. I might have to rethink my purchasing strategy. In some new condo projects, the developer may "subsidize" the first few years' condo fees.
So you start out with a low fee but might find it double in a year or two. Ben Franklin said the only sure things in life are death and taxes Great info Nate Just one other thought: Buyers should be just as cautious to buy in a building with low condo fees as those with high ones because deferred maintenance in a condo, just like in a single family home, can sometimes sneak up on owners and cost much more in the long run.
One other note Sorta like "welcome to the club, and thanks for the dough". Too bad you can't charge your buyer that same amount when you resell! But still, why do I have to pay three times more? I never looked at the Condo Annual Budget. But now I see there numbers don't match up to my fees. I have been paying way too much! Who should I contact to find out what's going on?
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