In Toronto, buying a condo will often be the largest purchase of your life. In September of 2019, the average price of a 1 bedroom condo in Toronto is around $557,000.
If you are considering spending that amount of money, there are a few things you should consider before making such a big purchase that will ensure that your condo not only retains its value but also appreciates in value when it comes time to sell.
Here is a list of some of the most important things you need to know when buying a condo.
1. As the saying goes, it always comes down to “Location, Location, Location!“
Location is the MOST important factor when you purchase a condo. This doesn’t just mean the views you see out of your living room windows (although they are important!). Location also factors in the following:
How’s the Neighbourhood?
Trendy neighbourhoods, or transitioning neighbourhoods come and go. What you will want to focus on is if the condo is easily accessible to public transit, parks, grocery stores, a hospital, and good schools. If the condo is located to a number of areas that appeal to potential buyers, you can be assured that when you are ready to sell, your unit will remain a desirable place to live.
What is being developed nearby?
Ask your realtor what potential developments are planned nearby. The last thing you want is to purchase the perfect unit with unobstructed views only to realize that another developer will be building a 30 storey condo next door blocking all-natural light into your unit.
Look for future subway/LRT stations that will be built close to the condo. The price of a condo is directly impacted by how close it is to public transportation and is most likely to increase in value.
What floor is the unit on?
Higher floor, better views. Problem is, that view is going to cost you. On average, for pre-construction condos, most developers charge an average of $1,000+ per floor, so if you really want the 30th floor, be prepared to pay $30,000 more for your unit. Conversely, when you decide to sell, you can also sell the unit for a higher price. Another advantage of being on a higher floor is that you won’t be bothered less by annoying street noise. A disadvantage is that units on the upper floors may also pay higher common expenses.
Condo unit exposure
The direction your window or balcony faces is something that a lot of people overlook. The most preferred exposure is Southwest.
If your windows face east, then you get the benefit of seeing a sunrise, but it also can make your unit overbearingly hot due to the sun exposure. You might welcome the heat in the winter and actually save money on your heating bill, but just know that you will be spending a lot more money on air conditioning in the summer.
If our window or balcony faces North, you will not get much natural light into your unit and things will be less bright.
That’s why a southwest exposure is the best because you get both heat from afternoon sun, but also a good dose of natural sunlight.
The condo units no one wants
Every condo has units that you should avoid buying no matter how attractive the price is. Beware of units that are located next to elevators because not only will you hear every person getting on and off the elevator, but the foot traffic will be higher than anywhere else on the floor. Try not to purchase a unit that is beside the garbage chute. Not only can smells start emanating into your unit, but you will hear every time someone opens and closes that garbage chute. Don’t buy the unit that is next to the amenity center because you can expect that area to have heavy foot traffic as well. Does your condo have a garage? Try not to purchase the unit directly above the garage or else you will hear the garage door opening and closing. Are the garbage dumpsters outside of your window? Then you better get used to hearing the garbage truck every week.
2. Price
This purchase could very well be the biggest financial purchase you will make in your life, so it is important to know the final price and fees you will be paying. You need to connect with a mortgage advisor or a financial advisor to find out what you can afford and ensure you can cover the mortgage and the monthly costs. Everyone’s financial portfolio and type of condo purchase will be different, and you have many mortgage options available you.
You must be aware of all the additional costs, including closing costs, lawyer fees, property taxes, levies, monthly utility fees, monthly condo maintenance fees and insurance.
When purchasing an older condo, you should be aware of the monthly/annual repair costs, and you should keep all the financial documents given to you by the condo corporation. If purchasing pre-construction, you should be aware of additional costs at the décor center for upgrades that are usually not included in the purchase price but that are shown to you in the sample unit and illustrated in marketing packages.
You may also be faced with an occupancy fee (phantom rent). This fee covers the time you take occupancy to the time you actually move in, which are not typically on the same day.
3. Size/Floor Plan
Before you purchase a condo, try to get the exact square footage of the unit. Once you have that measurement you can then take the list price and divide it by the total square footage in order to get the price per Sq. Ft. Use that number to compare that unit with recently sold comparable units in the same building or in the same neighbourhood.
Look for condo units with a great floor plan. The most popular floor plan is called a “Wide-Shallow” vs. a less desirable type of floor plan shaped like a “Bowling Alley”. A wide-shallow floor plan allows for more light with windows in all living areas, and less wasted space. The best floor plan will have windows in all bedrooms. The natural light will positively impact the value when you decide to resell.
4. Condo Fees
Condo Fees, otherwise known as maintenance fees are the monthly fees you pay for utilities like water, gas or hydro. Sometimes, in older condos, you might even find water and gas included in your fees, but this is rare. Condo fees are a necessary evil and are considerably higher for older buildings. The fees cover items like concierge/security, amenities, insurance, common area cleaning, repairs, etc. A portion also gets put in a reserve fund for future items like eventual roof replacement or large-scale maintenance items like replacing hallway carpets and light fixtures.
Condo Amenities
Condo amenities directly affect how much your monthly maintenance fees are. Having a pool might be one thing you can’t live without, but you’re going to pay to maintain it and you can expect that fee to increase as the condo gets older. Developers are now creating unique amenities like common workspaces, yoga studios, even a refrigerated area for meal delivery services. Look for condos that meet your needs. If you don’t need a basketball court, then perhaps it might be best to not live in a condo that has one.
Condo amenities that will never go out of style are 24-hour concierge services or security. A locker for storage, visitor parking and common areas like a rooftop deck with barbecues.
5. pre-construction Condo upgrades
When considering a pre-construction condo, understand what the standard options are and what are considered “upgrades”.
Pay attention to how many ceiling light fixtures there are or if there is an ability to add more, or else you might get a room with no ceiling light.
Upgrades that can contribute to a property appreciating in value are premium countertops, tiled bathrooms, upgraded kitchen cabinets, and hardwood flooring.
High-end condos have appliances that are an upgrade from the old-fashioned standard white appliances that came with every property in the 80’s.
Consider choosing solid modern faucets that will still have style in 10+ years.
6. Get a copy of the status certificate
Every condominium has a condo corporation that is responsible for the maintenance of the building as well as directing a portion of your maintenance fees to a reserve fund that pays for any potential large repairs. As mentioned previously, these large repairs can mean anything from a roof replacement to emergency repairs to the underground garage that flooded. Before you put any money down to purchase a condo, you should know if the condo corporation has a solid reserve fund. Asking for a copy of the status certificate from the seller’s agent will provide you with the information you need. If a condo corp does not have a healthy reserve fund then that could mean a sudden monthly maintenance fee spike or a one-time fee to pay for the large repair/replacement.
Look at the Maintenance History of the condo
If a condo has not undergone any major repairs or maintenance in a few years, then ask why. You could be stepping on a landmine if you purchase a condo and all of sudden are asked to contribute money for a large repair. That is why it is so important to know if the condo corp has a large reserve fund and better yet, make sure your condo insurance covers condo re-assessments.
7. How many elevators service the condo?
This is another thing that most people overlook. Do not underestimate the benefits of having enough elevators in a condo building. If you have too few, then what if one needs to go in “service” for move-in, and now you just have one elevator servicing every person in a 32-floor condo! Expect to wait a while. Understand how long it might take you to get to your floor. See how fast the elevators are. Use the elevators at different times of the day to see what the traffic is like.
8. Who lives in the condo? understand the demographics
Are there a lot of rentals in the building? Then expect to live in a building with new faces every day. Are the majority of the resident’s young professionals, or just young? If it’s the latter, you might expect to hear get-togethers every weekend. Raising a young family? Look for a condo with a more family-oriented vibe.
9. Guest Parking
Guest parking can be important if all your friends live in the suburbs, but you have decided to live downtown. They will want to visit you a lot, but only if you have someplace to park. Some condos do not offer free guest parking, so your friends and family will have to pay for parking nearby. If this can be avoided, then it can only be positive. Before buying a condo, ask how many spaces there are because the size of the guest parking matters. The bigger, the better, especially if there are a lot of units in the building.
There are a number of factors to consider when purchasing a condo, but if you take into consideration these 8 important items, then you are well on your way to purchasing a great condo.
