Are you thinking about investing in a condo? If so, you’ve probably already started looking into such things as the type of property that appeals to you, the market in the area you are looking and the odds of finding good tenants. While you are doing your preliminary research, take a look the items below, equally important in your property search.
Study Reserve Funds
The rules for Reserve Funds vary from one province to the next. If most of your current investments are in Ontario and you decide to branch out to Alberta or perhaps British Columbia, you may be looking at a whole new set of requirements. One of the things that is the most variable is the time frame between required Reserve Fund Studies. While Ontario lists its requirements as simply “periodically” you will find that some provinces stipulate a specific number of years, usually three to five. If you are investing in a property that already has a Reserve Fund, make sure that fund covers at least ten percent of the property’s operating budget.
Know Your Builder
If you’ve followed the news you most likely know that not all builders are created equal. Do a bit of research and find out which developer built your building before you buy. Check out the company’s portfolio; look for incidents of complaints, non-compliance or other issues. Find out which contractors they farm work out to. Take a look at other buildings they have created and see how they are holding up. Look at any paperwork concerning bylaws, zoning, technical audits and disclosure statements.
Is Your Developer Financial Sound?
Check out your builder and see if there are any legal or financial issues, either past or present. The Better Business Bureau is one place to start, but there are also various independent agencies that collect statistics on such firms. Find out if there were and/or are any lawsuits filed between condo buyers and the developer, architect or the manufacture. Look into past judgments and see if any decisions are pending on active cases.
Condo Association Management
It is more common nowadays for a condo complex to hire an individual or registered firm to take care of the condo association duties. Many condo complexes are so large that the old fashion way of the condo owners themselves running the ship is fading fast. It is a lot of work to look after the budget, take care of owner complaints and to make sure the building is maintained. Find out who is in charge of your building’s operating management before you buy.
Master Insurance – What Does it Cover?
Your monthly condo fees go towards the upkeep of the common areas. Part of that fee also goes towards property insurance premiums to cover those same areas. Condo owners can only insure their unit and those that are renting can opt for a tenant insurance policy. Find out exactly what the common and insurance covered areas are. Some Master Insurance plans cover the entire property except for things like countertops and fixtures, while others cover all construction and installations.