Condo fees. The mightiest of obsessions among the condo owner across the city, the world, and possibly the universe, if there are condos on other planets. And for good reason! You can spend a lot of money on maintenance fees for any given condo. So, you want to make sure your money is well-spent, and you are not being taken to the cleaners. Nothing wrong with that.
Still, there are some misconceptions out there on how condo fees function. Understandably, condo owners want to spend as little on condo fees as possible. I know first hand that a condo with exceptionally high fees will act as a repellant for condo shoppers buzzing around looking to find a new home or income property. Prices will stay low, and the condo seller will likely make less money on the sale of his or her unit. So, often it is assumed that the lower the condo fee, the better the building will be as an investment.
Most of the time, I find buyers are focused exclusively on that number. What are the condo fees? That’s almost always the first question I get. Some buyers have a limit with how much they will pay. The thing is, the number can be a little misleading. A higher number in an older condo can often include a lot more of the cost of ownership, like the heat and the hydro. If there is a healthy reserve fund and good management, this number may not be increasing all that much for a couple of years.
When it comes to brand new condos, on the surface they are selling for 49 cents/per square foot. Resale market averages about 59 cents/ square foot. It seems like the resale condos are more expensive but the truth is, the newer condos will likely have fees going up very soon. On average, common expenses can rise almost 30% in the fist three years. The law requires 10% for a reserve fund, but this often is not enough. So once the new condo is up and kicking, the reserve fund will likely need more funds. So, if you’re not suppose to judge a book by its cover, then don’t judge a condo by it’s condo fees.