Mad Mike
Well-known member
You mean $1000/mo?
COVID and the housing market
- Thread starter mimico_polak
- Start date
Indeed, corrected already.
Mad Mike
Well-known member
My house in Burlington is in a condo corp. we have 22 places in the corp, $1m in the bank and have no anticipated near term capital expenses. It’s stupid accounting, the reserve is growing $150k/year.
If maintenance fees were $500, which covers costs (bloated costs) my property value would increase by at least $100k.
Condo fees to reserves are an interesting issue.
For a very long time, early owners used up a ton of life while contributing little. That left a giant hole for later owners to fill when major replacements came due.
Florida's old system of no reserve fund study required failed when a building collapsed amd many people died. In an interesting twist, the vacant lot was worth more than the combined value of all of the condos that previously existed there.
Ontario has required reserve fund studies for a long time but they are subject to games. The biggest hole is they are required to look at expenses for the next 30 years (iirc). If the consultant believes an expense is more than 30 years out, no money needs to be set aside for that item. Back to giant hole for future owners to fill. Many astronomical expenses fit in this category like major concrete repairs, replacing facade/glazing, etc. Regardless of the life of a building component, each owner each year should pay their portion of depreciation. If parking garage roof requires replacement every 50 years at a cost of $20M, each year the pool of owners needs to put in $400K for that component. Sum everything, add current expenses and you get the fee. Money put in by early owners in invested for returns over time. That compensates for inflation as the repair will actually be $50M when the time comes. That keeps condo fees reasonably stable over the life of the building.
Many condos and especially those with a high percentage of rentals have battles to keep condo fees low. That improves cash flow and keeps resale value high. Who cares if things fall apart or future owners have deficient reserves? That is someone else's problem. It's all a shell game where eventually some people are left holding the grenade with no cover.
I really like the condo we have next to Fort York. It's a nice building and will always be a magnet for being rented out because it's one of the older buildings in the area, but not too old. Mortgage is very little and we have a great long term tenant who in turn pays cheap rent. Maint fee is now $525 and was around $300/month 18 years ago. It has a healthy reserve fund and the building has had many upgrades in the 18 years we've owned it with only one small special assessment about 10 years ago.
Couldn't imagine buying a new condo nowadays from plans.
Couldn't imagine buying a new condo nowadays from plans.
