Advantages and Disadvantages of Living in a Condominium

Living in a condominium seems to be a good choice for people who like to be in the heart of the city. For many it is better than living in an apartment. Condominium living has so many great things to offer than an apartment. But let me tell you now, before you finally make a purchase, that living in a condominium is different from living in a single family home unit. This is mostly because of its particularities.

• Condominiums are located in the cities and when living in a condominium, you own the space between the walls of your unit and share ownership of the common areas with other owners, but you do not own the land where the building is built. You just share an interest in it with your neighbors.

• Most people who live in condominiums own their spaces. Therefore, you can have long term neighbors and build relationships with them, but you also have to share walls and common areas with them. If you are not a very social person, this could become a problem for you.

• Condominiums offer better security than apartments. Condominium buildings often have security features, be they buzzers or a guard service. Plus, you find it easy to leave the place for a trip or vacation knowing that you’ve got neighbors whom you are familiar with. The thing that you might find a problem is the sharing of amnesties with your neighbors and whenever there’s a association meeting, as a part of the community you have to show up, attain, and coordinate.

• Living in a condominium could be less expensive than living in an apartment, but with the maintenance and repair of the common areas, your monthly pay could go upward. You will be charge with the swimming pool fee, but you didn’t use it.

• More people, especially first time buyers prefer condominiums because it is less expensive than those residential single family homes. But in real estate market, when there’s a downfall, condominiums are the last to recover. Therefore, it will be hard to sell a condominium after a tough climate.

• In condominiums, you have access to gym, swimming pool, and other common areas that you would not be able to afford on your own. But the problem is, there’s what we call Covenants, Conditions and Restrictions (CC&Rs), a set of rules that forbids space owners to bring pets or make a renovation and many others.

I hope you found this article helpful in making decision whether you like to buy a condominium or go for a single family house.

Condominium Management Fees: The 5 W’s and a How

Management fees are generally in the top five of the highest expenses within a Condominium Corporation’s annual budget. As volunteers on the Board, you each have your own personal expertise, but require the assistance of a professional manager to guide your decisions, advise of your regulatory obligations and handle the daily tasks of administering the business of your property.

Who sets management fees? Like every industry, condominium management is a competitive field. Management companies will set the fees (often this is done on a “per door” basis), but its very important to understand what is included in the price quoted and more importantly, what is not included.

What do fees include? Be VERY cautious in researching this aspect – unfortunately you may not, or even worse, sometimes may, get exactly what you pay for.

– The first consideration should be not only the company’s experience, but that of their staff member assigned to your property as Manager – often, you will find companies with lower fees because they hire administrative professionals and “train” them to be managers – you will want more than you’re paying for in this situation if you care about your investment.

– A second scenario regarding lower fees involves “buying” your business – the first year contract will be at the low-end of the market, but significant increases will be implemented each year thereafter (while it may seem like a cost-cutting measure to do this the first year and then change to another company, you will cause no end of grief and substantial expense by constantly changing managers).

– The third situation involves a low monthly fee quoted up front, but remarkable extra charges incurred after the contract is signed – often, these are not even itemized – you will simply see hundreds of dollars in additional administrative costs on your financial statement each month. If and when you get an explanation of these costs, it is often a vague reply, citing photocopying, land titles costs, courier expenses, etc. While these are legitimate charges – make sure they are itemized, with copies of invoices or details attached. This practice will cost you many thousands of dollars more over the long-term than a slightly higher fee from another company with realistic monthly fees and transparent invoicing.

Where will we see the benefits of our management fees? You will see the benefits of hiring a reputable, ethical professional in your property values. Thorough, accurate financial and legislated record-keeping; attention to regular maintenance and replacement issues; enforcement of bylaws and an appropriate reserve fund will be worth far more to today’s savvy purchasers who often hire professionals to review the Corporation’s affairs in detail, prior to purchasing a unit in your property.

When should we be concerned about fees? Obviously, lower fees should set off some alarms; conversely, higher fees should be completely justified. The rule of thumb in any tendering process is often to throw out the lowest and the highest – where all factors are equal, this is the simplest method. Just be sure that you look very closely in comparing services, terms and critical practices as well as qualifications such as experience, consistency and prompt, regular communication.

Why should we research a variety of fees? Often higher-end or, the “good” companies, will offer flexible service contracts – if you have a 12 unit property – you may only need assistance on a consulting basis or perhaps partial management services. At the other end of the scale, a 400 unit high-rise with older bylaws, special assessments and multiple insurance claims, may opt for an all-inclusive, comprehensive full-service contract. Carefully review the services proposed for the price quoted and consider your needs – don’t pay for what you don’t need and make sure what you need is included and not priced as an extra – surprises in this regard are never pleasant.

How do we make sense of the fees? ASK the questions and be sure you get a satisfactory answer before you move forward. It’s always prudent to get answers in writing and if you’re uncertain about what to ask; speak to friends, family, colleagues or consult with the local professional organization or an industry advocate to get some ideas. Make sure you’re comfortable with a) the services offered, b) the apparent knowledge, experience and skill of the person appointed to your property and of course, c) with the fees proposed in relation to value for your money.

Remember that condominium management is not a creative process – there are some very set, critical tasks that must be accomplished by every manager. What you must consider, is the depth of knowledge, variety of experience, availability, commitment and professionalism that will allow you to be comfortable in trusting the guidance and assistance you’ll be paying for.

Typical Condominium Formats

You may well be acquainted with the type of housing known as a condominium, or “condo,” but do you know what the term actually means? It is a particular part of a real estate piece that is owned by an individual, and is usually a converted apartment. These normally include common areas like hallways or outdoor patios and amenities. In this article we will look at the different types of condos.

One particular type is called a freehold condominium. That means the land the condo complex is built on is actually owned by the developer. Because of this potential buyers of the units can have the deeds transferred over to them directly. The buildings for these typed of condos can be row condos or low-rise condos or even high-rise condos. Different subcategories of freehold condos are: phased condos, standard condos, common element condos and vacant land condos.

A standard condo is made up of buildings subdivided into individual units and also includes common features such as amenities and outdoor areas. With this type of a condo the owners must chip in for the expenses for repairs and maintenance of these common features.

A phased condo is more or less a standard condo, but is instead developed in phases. This allows buyers to purchase individual units from the developer before the project is actually finished; even if the project takes years more to complete. The individual units MUST have everything they need to be self-sufficient complete in order for them to be sold.

The next subheading we will discuss is the common elements condominium. In this variety there are not any units; only common features that are connected to existing parcels of land. The owners of this kind of condo are responsible for maintaining the common features of the complex. An example of this can be: when a group of property owners want to create a park; or perhaps a small beach if it is near water, for their community exclusively. Then this same group of owners must chip in for the expenses of maintaining this amenity.

The final subcategory of condos is a vacant land condo. This is a parcel of naked, undeveloped land at the time of its registration. Parts of this land can be sold as units and therefore can be built upon by the new owner. With this type, the combination of the home AND the land is considered to be the condominium unit.

The other major category of condominiums is called “leasehold” condos. This was established in order to give more options on the use of the land to institutions such as hospitals or universities. With this, the land owner leases the relevant parcel of land to the declarant and establishes the condo. In this instance the length of the lease CANNOT be shorter than 40 years OR more than 99. Also; the buyers do NOT actually own this land, instead they only have a LEASE on it. For this and a few other reasons this type of condo is very rare.

Tips For Buying A Pre-Construction Condominium

Purchasing a condo when it's in the pre-construction period might seem a little too hasty. In that scenario, it would seem the unit is being purchased based on the architectural drawings from the developer's sales site. The reality, however, is that buying a unit before construction is finished isn't all that straightforward.

Developers tend to rework the designs of a unit's layout as the job progresses. This is a necessity given the many changes that happen during construction. Purchase contracts are drafted to be advantageous. For instance, a late complex completion will force delays onto the purchaser. They may even be put into the position of occupying their unit while the proper permits are still being worked out, as well as certain aspects of the construction itself.

Buyers might also be victimized by developers that attempt selling off units that are in an early stage and still in possession of over 51 percent of the condominium project. As time passes, developers may find themselves unable to sell off the remaining units.

A condominium that can't attract any new buyers will likely experience a major decline in the overall value of its units. After realizing there isn't any major demand, developers will decide to rent out any unit that has gone unsold. The overall unit value then drops even lower.

It is advised that buyers consult with an experienced lawyer to insert conditions of their own into any purchasing contract. By determining a fixed completion date, the buyer can make sure they'll get their deposits back if a developer happens to give an inaccurate estimate of time. These sort of arrangements can even help protect the existing value of previously sold units.

The timing of the completion needs to be in the buyer's hands. It is highly suggested that the proceeds from the sale of a unit, as well as its deed, remain in escrow under the guidance of the developer's lawyer. Only once the developer has sold as much as 51 percent of their units should this cease. Whoever purchases the unit will have to pay occupancy fees to the developer, equal to that of a combination of the monthly maintenance fees and the anticipated mortgage as long as their agreement is going as planned. Many developers will try to push these without sticking to the terms you've laid out, so be mindful of how your dealings with them proceed.

You must also keep the condo maintenance fees in mind. Only for the first year of operation after the unit owners take charge of the complex are they guaranteed. Developers tend to calculate an initial budget based on the lower end in order to make the condominiums appeal to more buyers overall.

As the years go on, a majority of the unit owners will assume control of a complex. It's almost as if it's a rule. Afterward, they are hit with a notably higher monthly maintenance fee that's meant to take care of the developer's overrun costs. From the first year on, buyers will take on and expect to see increased maintenance fees. Naturally, this comes after the completion of the condo.