Dear All,
Is it a prudent move to buy a condo aptt., and what are the advantages/disadvantages?
Quite a few people said that condo apptt is a bad investment, and value doesnot appreciate much.
However, taking into consideration our present financial situation, and that paying rent is as good as throwing away money into the water, can the experienced people give us some suggestions as to whether we should go in for a not-so-expensive condo aptt?
While providing suggestions, please keep in mind the following:
-We are in Canada since last 2 yrs, and our finance's are not that strong yet.
-I have a 18 months old daughter, so for me to work ful-time at least for the next 2-3 yrs is remote. (we are not very open to the idea of keeping her in the daycare..........that's the last option!!).
-My husband works in a Bank, but the pay is not that great.
-Being from Mumbai, we dont mind living in an aptt.
-For us, right now, affordability is the main criteria. We dont want to get into something which we cant afford (house poor) and then spend sleepless nights thinking about where from the next mortg. payment is going to come from!!
If we do sell the condo aptt, it will be at least after 6-7 years, because hopefully by then our finance's would be in a better condition for us to afford a semi-detached/detached house.
Do we still stand to lose money on it if the value doesnot appreciate much?
Feedback would be highly appreciated.
Regds
Nupur
Hi Nupur,
First or all congratulations for deciding to buy your own home and all the best wishes to you.
There are threads in this forum which would give you information about Condo vs House buying and the pros and cons of both and you can browse the forum and make an informed decision.
However, after considering all the facts mentioned by you, I would say going for a 'reasonably priced' condo in your affordability would be a better option for you.
Good Luck.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
0
Apart from the details as listed painfully by Simmi, you also need to consider the cost of ownership. Every condo has a fixed amount of maintnence fee every month, which could be as high as $500.00 in most apartment condos excluding the utlities you pay directly. Additionally, take into account the interest portion of the mortgage during the first 5-7 years and the total "un appreciated" investment amount per month could be in the $800-$900 range - this is the "dead" investment which is never converted to any equity. You might at the end of 5-7 years have $8K-10K in equity, but after deducting the depreciation in market value and the selling agents commission, if you are still breaking even - then its a viable investment - otherwise it depends upon the total "loss" which you are willing to "digest". You need to weigh this loss amount against the net savings of difference in rent and "dead" investment stated above.
As Simmi mentioned earlier, townhouse condo appreciate higher than apartment condos - but with every passing day TH condos are increasing going out of reach of low/middle income group.
All the best and look forward to know your decision - if you can disclose to the board.
rgds,
Hiren
Location: GTA, ONTATIO, CANADA
Posted on: 17-07-07 21:22:19
Simmi,
Your given information is copied word to word from HOMEBUYERS.CA without giving any credit to that web-site. To avoid getting into trouble for copyright issues, I will suggest you to mention where you actually source your information from and give credit to them.
Quote:
Originally posted by Simmi
Hello Nupur,
I can truly relate the strain of investing money in your "place".
Condominiums may be detached, semi-detached, row-houses, stack townhouses, duplexes, AND NOT JUST apartments. Whatever the style, a unit is specified and is owned outright by the individual owner in fee simple. An owner would own a fractional share of the common elements (common area of the building like walkways, driveways, lawns and gardens, lobbies, elevators, parking areas, recreational facilities, storage areas, laundry rooms, stairways, plumbing, electrical systems and portions of walls, ceilings and floors, and other items). If there are 35 condominium owners, then each individual owner would own 1/35 as tenants-in-common of the common elements.
The reasons why condominium concept has been economically very attractive for purchasers: better land utilization, price competitiveness, built-in amenities, convenient locations, security too . There is also a wide price range, from $50,000 to well over a million dollars depending on the features, level of luxury, and location.
Large segments of the market find the multi-family residential development concept an attractive alternative for their lifestyles, due to the low maintenance required and the opportunity for equity appreciation.
Like other things in life :-) Condominiums too come with advantages and disadvantages and they are:-
Advantages:
Protection from arbitrary rent increases, Availability of amenities such as swimming pool, tennis courts, health clubs, community centre, saunas, hot tubs, exercise rooms, sun decks, etc, Benefits of home ownership in in the real estate market and potential growth in equity, Enables people of moderate and middle income levels to own their own home, Elimination of many of the problems of upkeep and maintenance often associated with home ownership, since maintenance is usually the responsibility of a professional agency or manager (this is a big factor for people choosing a condo and thus reduction of costs due to responsibilities for repair and maintenance), It is often considerably cheaper than buying a single-family home because of more efficient use of land and economy of scale.
Disadvantages:
The big one is real estate appreciation is generally not as high as for a single-family house, simply because it is the land that appreciates in value in a single-family house, and the flexibility of use of that land, Loss of freedom may be experienced through restrictions contained in the rules and bylaws. For example, restriction on the right to rent, restriction on pets, etc., People live closer together, thereby creating problems from time to time; frequent problem areas include the pets, parking, personality, parties, and people, Mney is tied up in the condominium ownership, which may affect immediate liquidity needs in certain circumstances.
If you are looking for higher appreciation (re-sale value), the purchase of the least expensive unit in a luxury condominium/townhouse complex generally offers a more financially attractive return than the purchase of the largest unit in a modestly priced development, assuming the price is the same. A townhouse condominium generally appreciates faster than an apartment condominium.
Hope this answer the fog for you. Please feel free to throw anyother question, concern or doubt you may have.
Sumedha
0
Quote:
Originally posted by Nup
Dear All,
Is it a prudent move to buy a condo aptt., and what are the advantages/disadvantages?
Quite a few people said that condo apptt is a bad investment, and value doesnot appreciate much.
However, taking into consideration our present financial situation, and that paying rent is as good as throwing away money into the water, can the experienced people give us some suggestions as to whether we should go in for a not-so-expensive condo aptt?
While providing suggestions, please keep in mind the following:
-We are in Canada since last 2 yrs, and our finance's are not that strong yet.
-I have a 18 months old daughter, so for me to work ful-time at least for the next 2-3 yrs is remote. (we are not very open to the idea of keeping her in the daycare..........that's the last option!!).
-My husband works in a Bank, but the pay is not that great.
-Being from Mumbai, we dont mind living in an aptt.
-For us, right now, affordability is the main criteria. We dont want to get into something which we cant afford (house poor) and then spend sleepless nights thinking about where from the next mortg. payment is going to come from!!
If we do sell the condo aptt, it will be at least after 6-7 years, because hopefully by then our finance's would be in a better condition for us to afford a semi-detached/detached house.
Do we still stand to lose money on it if the value doesnot appreciate much?
Feedback would be highly appreciated.
Regds
Nupur
Nupur,
You should read the post "False Affordabilty...." post at http://www.canadiandesi.com/read.php?TID=14562&page=12
With prices getting out of reach of first time buyers condo apartments/ entry level townhomes offer the best answer to one's housing needs. There is also shortage of affordable spacious apartments (1200-1400 sq ft) in Mississauga. The new builder condo apartments start @ $300 plus per sq ft, which also makes them out of reach of many first time buyers looking for bigger space at low price.
In my opinion, you should look at quality older buildings ( priced @ $200-$230 per sq ft approx.) that are managed well, have solid reserve fund, offer good demography mix and are near many amentities. There are some buildings that will definitely fit into above criteria. Last week, I sold (conditional) one condo in one of such building in Mississauga http://www.canadiandesi.com/poster.php?BID=28673&CID=14&wanted_available=A&country=&level1=&province=&level2=&city=Mississauga&level3=
Since there is lack of supply of such condos (quality well reputed buildings at low prices) and more demand, the future price percentage of these type of properties will definitley appreciate better than more expensive smaller sized condos that are being built in large numbers in Mississauga or Scarborough (popular destinations for new immigrant families).
One more thing, these condos are easily rentable and provide good rental income for someone who moves out to newer or better properties/ real estate investors.
Another popular myth about condo fees:
In apartments condo fees are generally based upon per sq ft. Say if one is buying a $700 sq ft condo (common entry level size of new condo apartment), the condo fee can be 0.45 cents p.s.f or $315 per month. Similarly, for an apartment of size 1300 sq ft @ 0.45 cents works out to $585 per month. It may appear that one condo apartment's fee is way more than the other, but if you look at it carefully one is paying similar price per sq ft of living space.
Thus one should not judge condominiums by condo fees alone but account for other factors too. Like size, reserve funds, management, work orders/special assessment, engineering report, financial health, what is include/ excluded in condo fees, who pays for heat, hydro, water, cable, parking/ common elements etc.
In nut shell condo apartments can be a good option for people looking at both price and affordability.
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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/
