buy-a-condo-for-the-first-time

How To Buy a Condo For the First Time

Are you thinking about buying a condo?

Condo living can be fantastic, but it may not be for everyone. In this post, I’ll throughly explain how to buy a condo for the first time. 

Points to consider before you buy a condo for the first time

You want to live in an urban setting

  • Most condos are located in cities or close-in suburbs.

You don’t need your car

  • Limited parking and the need to walk to your unit with groceries may be factors.

You’re not handy

  • Condo management takes care of exterior maintenance, so you won’t have to worry about it.

You loathe yard work

  • Condos typically don’t require yard maintenance; any green space is maintained by the association.

You love being around people

  • Condo living offers frequent interactions with neighbors and community events.

You like getting in your extra steps

  • Taking out the trash and retrieving mail may involve a bit of walking.

You don’t want to be house-poor

  • Condos are generally less expensive than single-family homes, though there are additional fees.

You don’t mind rules

  • Condo associations have rules, addressing issues like fees, parking, pets, and remodeling.

You travel a lot

  • Condos are a good option for frequent travelers who don’t want to worry about home maintenance.

You don’t have pets

  • Some condos allow pets, but there may be restrictions on breeds and sizes.

The Bottom Line:

Condo living can be a great option, especially for those who want a more affordable housing choice, appreciate community living, and prefer not to deal with extensive maintenance tasks.

Types of Condo Buildings

When you begin searching for your ideal condo, you’ll discover various types of condo buildings available. Here are the main ones you’ll find in our area:

High-rise:

  • Tall buildings with at least seven stories (or more, depending on local definitions).
  • Always equipped with an elevator.

Mid-rise:

  • Multi-story buildings, typically between four and seven stories, with an elevator.

Condo townhouses:

  • Multi-level structures in rows, sharing common walls.

Detached-condos:

  • Standalone units that do not share any walls.

Choosing the right type may seem overwhelming, but the info below can help you weigh the pros and cons of each:

  • If you have a baby, a walk-up may not be ideal.
  • If you walk your dog frequently, you might want to avoid high-rises.
  • For privacy lovers, a townhouse or detached condo could be preferable.

Once you’ve narrowed down your preferred type, consider the location within the building or community:

  • Do you want to be near the elevator?
  • Is walking up to your unit from the lobby important?
  • Do you prefer proximity to amenities like the pool or fitness center?
  • How far are you willing to walk to retrieve your mail?

The Bottom Line

Before diving into your search and buy a condo for the first time, educate yourself on the various types and their suitability for your lifestyle. With an experienced Realtor by your side, you’ll confidently find the perfect condo and community.

Different Types of Condos

Understanding the differences between condos, townhouses, and co-ops is crucial when house hunting, as it can impact certian things such as home renovations and updates, rules, monthly fees, and ownership structure.

Condos

  • Owners own the interior walls of their unit.
  • Common spaces are collectively owned by all unit owners.
  • Monthly fees cover property maintenance.
  • Unit size influences fees and voting power.
  • Customization is possible, but check condo documents for restrictions.

Townhouses

  • Owners own the home and land (fee simple ownership).
  • Responsible for all exterior maintenance, including the roof.
  • Some may be part of an HOA with aesthetic rules.
  • Lower HOA fees compared to condos, paid monthly, quarterly, or yearly.

Co-Ops

  • Ownership is like buying shares in a corporation.
  • The co-op corporation owns the building and land.
  • Buyers purchase shares and are assigned the right to occupy a specific unit.
  • Fees are higher, covering property taxes, maintenance, and the underlying mortgage.
  • Strict rules on renting and pets; higher down payments often required.
  • Co-op boards vet potential owners, involving information submission and interviews.
  • Prices may be lower than condos, but they can be harder to sell.
  • Some lenders may not offer loans for co-ops; approval is needed.

In summary, condos offer shared ownership of common spaces, townhouses provide more independence with exterior responsibilities, and co-ops involve buying shares in a corporation with strict rules.

If you have questions about buying any of these property types, feel free to reach out to me. I’m more than happy and answer your questions and assist you in navigating the condo search and buying process.

Moving From a Condo to a House

Considering the move from condo living to a single-family home? Here’s what you need to know, broken down into the upsides and downsides:

The Upsides

Privacy

  • No more shared walls or elevator small talk.

More Space

  • Enjoy separation between bedrooms and living areas.

More Storage

  • Attics, basements, sheds, and more for additional storage.

More Time

  • Skip waiting for elevators and walking down halls.

No More Condo Fees

  • While homeownership has costs, say goodbye to monthly condo fees.

No More Rules

  • Freedom from condo restrictions – get a bigger dog, play music late.

Decorate as You Please

  • Personalize your space without restrictions.

A Yard

  • Plant a garden or landscape as you wish, and no mandatory walks for your pet.

Your Mail Comes to You

  • No more trips to the mailroom; your mail comes directly to your home.

The Downsides

Hefty Initial Expenses

  • Furnishing new rooms, buying tools like lawnmowers, shovels, etc.

Higher Maintenance Costs

  • Exterior maintenance, like roof and windows, becomes your responsibility.

Higher Utility Costs

  • More square footage means higher heating and cooling bills, and new bills for water, cable, trash, gym membership, etc.

More Maintenance

  • Lawn care, snow shoveling, gutter cleaning, and more responsibilities.

Remembering the Trash

  • No more convenient chutes; you need to take trash cans to the curb.

The Bottom Line

Moving from a condo to a house comes with pros and cons. Assess when you’re ready for more space, privacy, and additional responsibilities. The decision depends on your preferences and readiness for the changes homeownership brings.

Want to talk it through? Let me know! I’m always happy to chat about your real estate goals and what makes the most sense for you.

Get in touch here.

Tips to Help You Buy a Great Condo

Thinking about buying a condo in Toronto or the Greater Toronto Area? Here are some easy-to-understand tips to help you navigate the process and buy a condo for the first time:

Taking out the Trash

  • Know the trash disposal process in advance—whether there’s a chute, basement location, or an outside area. Small detail, big impact.

The Washer and Dryer

  • Check if the unit has a washer/dryer. If not, find out about common laundry options. Having one in the unit can impact resale value.

Location of the Unit

  • Consider proximity to the trash chute, laundry, and elevator. Walking distance within the building can vary, so think about your preferences.

Outdoor Space

  • Check for patios, balconies, or common outdoor areas. Be aware of any usage restrictions or if you need outdoor space for your lifestyle.

Close Quarters

  • Condo living means close neighbors. Assess if you’re comfortable with shared walls and hallways. Spend time near the building to gauge the community vibe.

The Fine Print

  • Review condo documents within three days of being under contract. Look for rules, regulations, finances, and what’s included. Consider deal-breakers upfront.

The Rules and Regs

  • Check condo documents for pet policies, renting restrictions, and other rules. Decide if they align with your preferences.

The Condo Fee

  • Brace for condo fees; they vary. Consider building history, fee increases, and included utilities. Higher fees might indicate good reserve funds.

The Amenities

  • Decide on must-have amenities. Avoid paying for services you won’t use. Older or smaller buildings may have limited amenities.

The Condo Management

  • Review the annual budget, reserve fund, and check if the building is professionally managed. Review recent association meeting minutes for insights.

Your Responsibilities

  • Clarify your responsibility for the unit—know where it begins. This is crucial for addressing leaks or damages promptly.

The Bottom Line

Condo living can be fantastic, but understanding fees, amenities, rules, and responsibilities is crucial. Follow the tips above to make an informed decision and enjoy your condo life.

Buying a Condo as an Investment

When considering buying an investment condo, there are crucial factors to keep in mind. Beyond just rental income, you need to consider financing requirements, rental restrictions, and management issues. To make an informed decision, take a closer look at the special considerations and expenses involved in this process.

Special Considerations

Condo Building, Association, and Neighborhood

  • Evaluate the strength of condo management and finances.
  • Review condo association rules, especially the presence of a “rental cap.”
  • Research the neighborhood’s demand for rentals, local employment opportunities, and competition in the rental market.

Financing

  • Most lenders require a 20-35 percent down payment for investment property loans.
  • Lender approval of the condo association is essential.
  • Lenders typically avoid financing condos facing litigation.

Long-Term Investment

  • Considering the above, plan on holding the condo for at least five years.

Calculating Return

Expenses

  • Regular expenses: taxes, insurance, association fees, and possibly a mortgage payment.
  • Intermittent expenses: repairs, special assessments, vacancies, property management fees, and advertising costs.

Income

  • Monthly rent is the primary source of return.
  • Consider annual appreciation, noting that condos appreciate more slowly than single-family homes.

Yield Calculation

  • Divide the potential annual rent by the purchase price to calculate yield.
  • Example: $2,500 rent x 11 months / $225,000 purchase price = 12 percent yield.

One Percent Rule

  • If the expected monthly rent is at least one percent of the purchase price, it’s considered a wise investment.
  • Example: A $300,000 condo should rent for $3,000 per month.

The Bottom Line

Buying an investment condo can be financially sound with proper research and realistic expectations. Scrutinize the condo association, rules, and the local rental market before making any investment decisions.

Making an Offer on a Condo

Making an offer on a condo involves unique considerations compared to a house. For a smoother process, here are four essential things to know:

Status Certificate and Condominium Documents

  • Once your offer to buy a condo is accepted, you have ten days to receive the status certificate and condominium documents.
  • These documents, provided by the condo association, contain vital information about the condo’s formation, operation, rules, and finances.
  • The review period allows you to identify dealbreakers and back out if necessary.

Review Period

  • During the review, focus on current bylaws, rules, payment schedules, any unpaid assessments, litigation records, and the association’s annual report.
  • The condional period (two to five calendar days) lets you cancel the contract if you find anything in the status certificate that would make you not want to buy the condo.

Insurance Issues

  • Lenders and lawyers will recommend that you take title insurance. Some lawyers will just include it in their fees.
  • Ensure no outstanding condo fees and confirm adequate building insurance.
  • Provide proof of content insurance for your interior possessions since the condo building insurance does not cover your personal belongings.

Condo Fees

  • Condo fees cover insurance, maintenance, and often include various services like landscaping, water, and trash removal.
  • Understand what amenities and utilities are covered to adjust your budget accordingly.

Special Assessments – Buyer Beware

  • Special assessments are fees for unexpected repairs or improvements not in the operating budget.
  • Owners collectively bear the cost, so be cautious about potential steep assessments for shared space issues, especially in small condo buildings.

The Bottom Line

Condo offers differ from single-family homes due to complex rules and shared spaces. Thoroughly read all documentation from the association and do your homework to make an informed decision.

The Status Certificate and Condominium Documents

What to Look For

Once you’ve signed a contract for a condo, you have three days to review the condominium documents, known as the status certificate. If there’s anything you find unacceptable during this period, you can void the contract, and your deposit is refunded.

While reviewing the entire packet may seem overwhelming, focus on three key areas for a thorough understanding.

The Rules

  • Carefully examine the condo association’s rules and restrictions.
  • Check for allowances or restrictions on pets, grills, rental policies, and alterations to your unit.
  • Ensure you can live with all the rules, and watch out for potential dealbreakers.

The Budget/Reserve Fund

  • Scrutinize this section to understand the association’s financial health.
  • Assess if there’s sufficient savings in the reserve fund for major repairs like roads, roofs, and elevators.
  • Inadequate funds may lead to special assessments, an additional cost beyond your monthly condo fees.

The Minutes

  • Read the association’s meeting minutes for valuable insights into the community.
  • Look for ongoing discussions on repairs, complaints, or other relevant matters.

The Bottom Line

Contact the condo association for clarification on any concerns or questions.

Keep in mind that condo staff may be available only during business hours.

Choose an experienced Realtor to guide you through the process, ensuring you stay on track and providing negotiation options if issues arise during the review period.

Condo Moving Made Easy: Tips for a Smooth Transition

Moving into a condo requires careful planning due to unique challenges like parking restrictions and additional fees. To streamline the process, follow these top tips for moving into a condo.

First Things First

  1. Contact the condo manager early to determine your move-in date and time.
  2. Note the allotted hours for moves, as exceeding them may require a larger moving crew.
  3. Inquire about booking elevators specifically designated for moves and check if there’s a loading dock.
  4. If parking is limited, ask about reserving a spot for the moving truck.

Expect Some Costs

  1. Be prepared for a refundable “damage deposit” to cover potential building damage during the move.
  2. Some condos charge a non-refundable “moving fee” for elevator padding and on-site staff during the move.
  3. Additional fees may apply for reprogramming your buzzer, updating building directories, and mailbox information.

Clean Up

  1. Remove moving debris promptly from common areas, following building guidelines.
  2. Flatten boxes, secure them with twine, and dispose of them in designated bins.

Utilities

  1. Confirm which utilities you must set up and which the building manages.
  2. Inquire about meter readings if necessary.
  3. Arrange for cable, internet, and telephone installation close to your move-in date.
  4. Reprogram your buzzer early to allow access for utility workers and services.

The Bottom Line

Moving into a condo involves extra considerations, so start by connecting with the condo manager to gather essential information. Relay this information to your mover to ensure a smooth transition into your new home.

Final Thoughts on How To Buy a Condo

Condo living is always either a lifestyle choice or a budget choice. As houses continue to be more and more expensive, “regular” homeownership is out of reach for many home buyers, especiall first time home buyes.

The tips and advice I’ve thoroughly layed out for you in this long and detailed post will help you see red flags when buying a condo, and is based on everything I’ve learned by helping many people buy great condos since I began my real estate career in 2004.

Yes, I’m old.