Is a Waterloo Region Condo the Right Buy for You?
You may have a rough idea of what a condominium is: you own a "unit" within a bigger building or community of condo owners. You and the other unit owners in the building or community jointly own the exterior property and common areas.
Condo owners pay a monthly "condo fee" that pays for regular repairs and maintenance of the building exteriors and common amenities, as well as a cash reserve for future requirements.
Condos come in a variety of styles, ranging from multi-story town homes to high-rise apartments with common interior halls or garden-style flats with exterior entrances. Each condo is different, but in general, your condo fee covers exterior and common area upkeep, so you won't have to worry about repairing a roof, for example.
But there's a lot more to learn. One crucial point to remember is that, in many ways, Waterloo Region condo ownership is the same as Waterloo Region single homeownership. You'll enjoy both the joys and the responsibilities of homeownership as a condo owner.
You may discover that owning a property provides you with tax and investment benefits. For example, if you itemize deductions on your tax return, you may be able to deduct your mortgage interest, and condos, like detached homes, may rise in value over time. Please get advice from a tax professional on your specific situation.
There are a more few things to bear in mind.
Condominiums are a type of community ownership.
You will pay a condo fee, which is sometimes known as “homeowners' association” (HOA) dues or fees, in addition to your monthly mortgage payment, local property taxes (in most locations), and insurance charges.
When evaluating how much of a loan you may get, your lender will take the condo fee into account. If your down payment is less than 20% of the purchase price, you may be required to pay PMI, or private mortgage insurance, each month.
The "home-buying essentials" — your monthly income, credit history, and monthly debts — all help determine if you qualify for a mortgage.
The Benefits of Waterloo Region Condo Living
Someone Else Handles the Outside Work.
One of the biggest draws of condo ownership is freedom from maintenance you might not have the time, desire or ability to tackle — like shoveling snow, mowing the lawn or repairing outside structures. Your monthly condo fees cover these services. Many major costs are shared and that can significantly reduce your out-of-pocket expenses.
By law, a portion of those condo fees goes into a reserve fund. When the property is well managed, this fund covers major repairs like replacing windows and roofing without additional costs to owners. Even when the reserve fund falls short, you’re not in it alone — a “special assessment” will be done and costs will be shared equally among owners.
Better Suits Some Lifestyles.
If you prefer to live on one floor or in a one- or two-bedroom home, condos allow you to own your own space rather than rent. Common areas like pools and recreation rooms offer opportunities to socialize with neighbours.
In the Waterloo Region, you’ll find that most condo buildings are located right in ‘the heart of the action’; near all the best shopping and dining, another big plus for many.
Some condos offer benefits you won’t see in the average home or apartment building — like a theatre room, gym, swimming pool and party room.
Unlike when you are renting, you’re free to paint the walls, put up pictures and renovate. You are also responsible for making some interior repairs, but that is something every homeowner has to undertake.
Depending on where you want to live, some condos are more affordable than owning a freehold home — and a mortgage plus condo fees may be equivalent to rent. Add to that the fact that in the Waterloo Region right now, a condo is a solid choice for an investment property, and you may have a great deal on your hands.
Some people feel that condos offer greater security than a freehold home or renting.
For one thing, people are more likely to take better care of the property they own, and some buildings offer a secure entrance or a doorman. You might feel safer with neighbours on either side and worry less if you frequently travel.
Basic Questions to Ask About a Waterloo Region Condo
You love the look and layout of the Waterloo Region condo your real estate agent has just shown you. The neighbourhood seems great. But there are still (lots) of questions you should ask.
What are your legal rights and responsibilities as a condo owner? As a potential buyer, you will receive a copy of the condo bylaws and other paperwork, which you should read carefully to ensure that you are aware of the rules about renovating, leasing your unit, fines and penalties, parking restrictions, pet ownership, and other responsibilities.
After the seller accepts your purchase contract, you usually have a limited time to examine the condo agreements. Talk to your real estate agent, understand your rights, and, if necessary, seek legal advice.
What does the condominium fee cover? Are homeowners responsible for paying utilities, hazard insurance premiums, and real estate taxes, or are these included in the condo fee? Is there property management on-site?
Is there deeded and/or assigned parking? Is there enough room for visitors? What is the number of parking spaces available for the apartment you want to buy? Can you buy a parking spot?
Officers of the condo board or HOA are elected in a variety of ways. How often do elections take place? What are the requirements for running for office? What is the average length of service for officers? Are there any restrictions on the number of terms someone can serve?
What alterations to the unit are permitted? Is there a committee in charge of reviewing and approving changes?
Is it possible to speak with some building or community's owners? What's it like to live there? Is maintenance handled well, for example? Is there a lot of change? Do they have any complaints about noise levels or other issues?
What is the remaining useful life of the principal components of the community or building? Roofs, sewer and water lines outside individual units, parking lots or garages, elevators, and other important building infrastructure are among these components. Is there a chance that your condo's value will suffer as a result?
How much money is set aside for future repairs in the cash reserve fund? Are there any pending assessments or big repair projects that are now costing more than the repair fund has in reserve?
Has the HOA's accountant made any recommendations, or has the HOA commissioned a study on the cash reserve fund's adequacy? It's vital to have enough money set aside for both routine maintenance and cash reserves in case of emergency repairs or unforeseen expenses. If the cost of needed repairs exceeds available money, a special assessment might be imposed on all condo owners, requiring a one-time payment or increasing the monthly condo fee for a period of time. Inquire about the condo's history of special assessments.
Is full replacement cost covered by the master property insurance policy? Is there a building-ordinance clause in the policy that will cover the costs of bringing the building up to code if it needs to be rebuilt?
Is the master insurance coverage comprehensive enough to cover both the interiors of the units and the "common features" shared by all residents? If not, you'll almost certainly be obliged by the conditions of your mortgage financing to obtain and maintain an insurance policy that covers the interior of your condo, an additional expense you'll need to factor into your budget.
Is the complex suitable for renters? If you intend to use your condo as a long-term investment, you may not want any restrictions on your freedom to rent or sublease it in the future.
If you want to live in the condo for a long time, you may prefer a high owner-occupancy rate, so you know you only live among other property owners (like you!). Inquire about all the terms and circumstances that apply to renting your unit, as there may be seasonal or other limitations.
Qualifying for Financing for a Waterloo Region Condo
For condo mortgage loans, your lender will consider many of the same types of borrower qualifications as it does for detached home loans. Your lender needs to know that you can repay the loan without causing yourself excessive difficulty or risking defaulting on your mortgage.
However, there are a few more details to be aware of when it comes to condos. Your lender may review many parameters aimed to measure the financial and governance strength of the condo community or building you are choosing to ensure your condo qualifies for the most advantageous loan financing.
Remember, you're not simply buying a house; you're investing in a community. Take the time to observe, learn, and ask the appropriate questions.
Before making a purchase offer, you should thoroughly inspect the unit. You should also be aware of the following:
Are there any special assessments (such as for capital renovations to the condo property) that will affect your long-term cost of ownership or the value of the building?
Is there any substantial litigation pending against the condo association or developer that could affect your ability to acquire financing for the property? This is something you should talk to your lender about.
As we mentioned upfront, condo living isn’t for everyone, but for those who find it is, the Waterloo Region offers some great options and, having helped many people achieve their dream of Waterloo Region homeownership via buying a Waterloo Region condo, Team Pinto have all the local condo buying - and selling - information and expertise needed to close a great deal. Call or contact us today to learn more.