Pros and Cons of Buying a Condo
What You Need to Know About Buying a Condo
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you buy or sell, contact our team today!
Buying a condo is very different than buying a townhouse or a house, and there’s a lot to know about what it means to be a condo owner.
In this blog, we go through the pros and cons of condo living, as well as walk you through what you should know when buying a condo.
You’ll learn all about strata’s, bylaws, strata maintenance fees, contingency reserve funds, special assessments and more through our list of benefits and disadvantages of buying a condo.
Keep reading for the pros and cons of buying a condo in BC, specifically the Greater Vancouver Area/Lower Mainland!
What is a Condo?
A condo (short for “condominium”) is a unit within a building that has an entrance via a shared common space, like a hallway. The condo unit itself is typically one level (no stairs), and has roughly 4-10 neighbours on the same floor as you, with other units above or below you (unless you’re a ground floor or penthouse).
Condo buildings can vary in height. You may see a low-rise condo building (typically 3-7 stories) or a high-rise condo building (typically 10-50 stories) depending on the type of zoning and density in the city you’re interested in.
Condos share common areas with all the other units in their community; these common areas can include a fitness centre or amenity room. There are also items that are considered limited common property, which means that space is designated for the exclusive use of an owner but still under the governance of the strata; such as a balcony or parking stall. Condo owners pay monthly strata fees (aka “maintenance fees”) to keep these common property items operating and in good condition.
Pros and Cons of Buying a Condo
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Benefits of Buying a Condo
Pro – You’ll have someone taking care of the building maintenance and landscaping
One of the biggest benefits of living in a condo is that other people do the maintenance for you.
If you’re buying a condo you won’t really have to worry about taking on any of the maintenance yourself or cutting the grass anymore! Things like landscaping are costs that are accounted for in the strata’s annual budget and therefore taken out of the contingency. As an owner, your maintenance fee that you pay monthly will help to contribute to supporting the operating budget that goes towards building and area maintenance. If a roof or maintenance needs to get done, it’s the strata’s job to source quotes and facilitate the process with sub-trades so that the building is in proper order!
Many buildings also have a caretaker that lives in the building or nearby that comes everyday to take care of matters or clean common spaces so that regular maintenance gets done.
Pro – They’re more affordable than a house or townhouse
Condos are often entry-level properties, and are most often purchased by first time home buyers. They are less expensive than a house (paying for land) or a townhouse (typically bigger/more bedrooms) due to them typically being 1-2 bedrooms and a smaller space. For those buyers working on a budget, condos are a great option!
Pro – Many major costs are shared
Strata properties (condos/townhouses) have spaces that are considered “common property,” which essentially means that portion of the building or complex is shared by all owners. An example of this would be the amenities, or the roof of the building. What that means is that when a repair or maintenance cost related to the common property parts of the building are incurred, it is shared between all owners. This allows for all of the owners in the building to share in the cost of maintenance, which typically lowers the bill for you.
If you had to replace a roof of a house, that would be on your own bill and a major cost; if the strata needs to replace the roof in a building, you’ll be sharing that cost with your neighbours!
Pro – Location & proximity to urban centres
Typically to have a condo building built it has to be in an area that is zoned for at least medium, if not high density in the city. What that means is that most condos will be located in an area with other condos nearby, thus creating a higher population area; which, in turn, drives business and commercial areas. Many places that are zoned for condos already have an existing mall, groceries, restaurants, easy access to transit, and more, or the city has a plan to develop further.
If one of your top priorities is to purchase a home that is central and has a great walk score, purchasing a condo is going to be your best bet!
Pro – Amenities & community feeling
Want a pool? A fitness centre? Summer community BBQs? Weekly game nights in the amenity room? Many condo communities offer residents amenities that are out of reach for those living in a house or townhouse, or have residents that vibe get together and create fun activities!
These amenities and also easy opportunity to run in to your neighbours often build a sense of community in a condo building that is harder to find in townhouses or houses. If you live alone or love to socialize, this can be a great perk of buying a condo.
Pro – Better security
Many strata’s will have building security cameras for the common area to prevent or document any suspicious activity or break-ins, as well as caretakers that canvas the area.
Because homeowners come in and out of the building there’s almost always someone watching or around in the event of a potential break-in, so suspicious activity is typically caught quicker. Many condo owners also socialize often, so you get to know your neighbours and be able to identify if someone that the community doesn’t know is trying to enter.
Disadvantages of Buying a Condo
Con – There are extra costs, like strata maintenance fees
When you buy a condo, you essentially become a business partner in that building. Because there are things that are covered by the strata (like landscaping and amenities), you do end up indirectly paying for it through strata maintenance fees. These fees are due on the 1st of every month, and a portion is contributed to the contingency reserve fund and the rest goes towards the operating budget for the year to maintain the building.
Due to inflation and the building depreciating, it is very common for the operating budget to increase from year to year; so you can count on those fees steadily rising in the years to come. This is an extra expense for any strata owner, so make sure that when you’re looking at condo properties you pay attention to how much the maintenance fees are and budget for increased fees to avoid the risk of being priced out of your condo.
Con – Strata councils & mismanaged funds
Not all strata’s know what they’re doing or proactively know how to manage funds and maintenance.
Every strata council has two types of accounts: an operating account and a contingency reserve account. The funds in the operating account are used for regular maintenance costs, such as landscaping, cleaning. The contingency reserve fund (CRF) account is essentially the strata’s savings account, and is used for capital and major projects, such as underground parking membrane, roof replacements, or building envelope jobs.
A well-managed strata will be pro-active in their maintenance and saving of the building, without being too aggressive. A great strata should make sure that both accounts are well-funded so there’s enough money to meet regular operating expenses, as well as plan for capital projects and ensure there is enough money in the contingency to safely fund larger maintenance and repair items in a timely manner.
Furthermore, sitting on a strata council is a volunteer job, and while some are filled with great, hard-working people wanting to make a difference in their community, others may be filled with power-trippers or people that have way too much time on their hands. (if you know what I mean…)
Cons – Special assessments
Special assessments also tie in to the management of the strata and their financial accounts. If a contingency reserve fund is too low and/or funds are mismanaged, then if a big repair or emergency expense comes up that cannot be funded by the contingency, the homeowners may need to make up the difference via a special assessment.
That means that in addition to your monthly maintenance fee, you’ll be required to pay an additional fee (“the assessment”), which can be hundreds or even thousands of dollars to make up the difference of an expense or repair to the common property of the building.
Con – You have limited control outside of your unit
With the areas that are deemed “common property” (essentially anything outside of your unit or behind the walls), you have little control with any changes. Most matters are dealt with and voted on by the strata council, so just because you want your dryer vent checked doesn’t mean that it’ll happen if the strata doesn’t deem it top priority. Additionally, for larger expenses (ie building envelope repair), all of the owners will vote and if ¾ of the owners approve then you’ll be on the hook for paying a portion if it’s not paid out of contingency.
Con – You’re sharing walls, and can’t pick your neighbours
In a condo, you will have limited privacy due to sharing wall space, a common hallway, and perhaps having people both above and below you. You may have neighbours going down the hall or into the elevator at all hours, or get to hear the parties, arguments, or newborn baby crying depending on what your neighbours are like or which walls you share.
If you’re looking for some peace and quiet at all hours in a controlled space, then a condo may not be the right choice for you.
Con – There are rules and bylaws
Living in a condo means you have to live by the management’s rules. Examples of common restrictions are:
- Restriction on type of renovations allowed; decorations you’re allowed to put up and for how long/when; needing approval to switch to laminate or hardwood flooring, and requiring a certain grade of underlay to prevent noise
- Rentals restricted to a number of units in the building
- A limited number of pets; rules on whether you’re allowed dogs, cats or both; size, weight, or breed restrictions on dogs
- Quiet hours (ie 7am-11pm) and restrictions
For instance, say you want to install hardwood flooring throughout your whole unit. Instead of just getting started, you have to ask the strata council for permission. If they deny your request or tell you that only carpet is allowed in the bedrooms, you’re out of luck.
Living by someone else’s rules might be fine for some people, but for others, it can be stifling. Make sure that when you’re looking in to a strata property that you’re aware of their bylaws and rules.
Con – You’re responsible for other people’s problems too
While sharing costs can be a pro, you can also flip it the other way and see it as a con. If someone damages common property or involves the strata in a legal battle then you’re on the hook too… even if you had nothing to do with it.
Tips for First Time Condo Buyers
Hire a realtor that has extensive experience with strata properties
Buying a condo is very different than purchasing a house, and requires additional subjects (ie strata documents) and extensive review of documentation relating to the strata, their financials, and the history of the building. You’ll want to make sure that you hire a realtor that has knowledge in condos specifically, so they can point out any red flags or matters you should be aware of.
Make sure there’s a good balance between maintenance fees and the contingency
Having a low maintenance fee often means that the contingency is lacking which will increase your chance of special assessment; but having an extremely high maintenance fee can make your unit harder to sell down the road. You’ll want to find a building that has a reasonable maintenance fee with an adequate portion contributed to the contingency, which will result in a healthy strata savings account in the event of any emergency or large repair.
Read the depreciation report
The depreciation report is a part of the strata documents, and will be able to tell you what the financials for the building are looking like, when major repairs need to be done, how much maintenance fees are expected to increase, and if you should anticipate paying any special assessments (and for how much). If a building doesn’t have a depreciation report, be wary and/or make sure that you have a large rainy day fund just in case.
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If you’re looking to hire a realtor with experience to help guide you through the process of buying a home, then reach out to us today at [email protected] or 604-319-2020 for realtor representation!
