Whether you’re new to the real estate market, looking for your first home, downsizing, or buying an investment property, buying a condo can be a great option!

And why not? You’ll spend less, you don’t have to mow the lawn, and it might even have a pool! There’s nothing else to think about, right?

Sure, it’s true that condo living has its perks, but buying a condo isn’t as straightforward as buying a house. Condo ownership has unique considerations and, to complicate things, no two condo associations are ever exactly alike! 

There are several important things to consider when you’re buying a condo, so it’s important to do your homework before you sign on the dotted line. Keep reading to find out everything you should know to make the right decision!

3 Things to Do Before You Make an Offer

The best time to avoid potential pitfalls is before you make an offer, so here are 3 things you can to do help you know if buying a condo is the right decision.

1. Consult an Experienced Realtor

Consulting an experienced realtor is possibly the most important thing you can do when you’re thinking of buying a condo. This isn’t the time to go it alone! You’ll need to review several important documents and your realtor knows exactly what to look for to prevent major headaches in the future.

You want to be sure your realtor is an expert with a proven track record in the condo market. See if they’re the right person by asking a few questions:

• have they sold condos before?
• do they know how to review condo documents, including board meeting minutes and bylaws?
• do they understand reserve funds and special assessments?
• do they know which condos have the best resale value and which have reputations for issues with structure, financing, and special assessments?

2. Collect and Review Condo Documents

Condos come with a mountain of documents, which can feel overwhelming! But they contain useful information about the development and reading them will help you decide if purchasing a condo is right for you. Some of the most important ones are:

• Financial Statements
• Bylaws
• Reserve Fund Report
• Condo Board Minutes
• Annual Report

You or your realtor can request these documents, or any other, from the condo association. It’s legally obligated to provide certain documents within 10 days of a written request. The seller doesn’t have to provide you with any condo documents.

3. Talk to People

You can learn a lot about a building by talking with people who live there. You’ll hear first-hand accounts of living there and, if an unhappy owner is willing to share their stories, you’ll find out if there are red flags you should know about.

6 Things You Need to Know About Buying a Condo

1. Condo Fees

Condos are an attractive option for first-time home buyers or anyone with a limited budget or who has a small down payment. But they also come with condo fees - monthly or quarterly fees paid to the condo association to cover common costs like insurance, taxes, amenities, maintenance, repairs, and possibly some utilities. You can’t ignore condo fees - they aren’t optional and a lien will be put on your unit if you don’t pay them.

Condo fees can range from reasonable to cost-prohibitive, depending on factors like a condo’s location and amenities. In fact, condo fees could be so high that if you add them to other monthly costs, like mortgage and utility payments, the condo will cost more than a house. Start researching, compare your options, and do the math - it matters!

Things You Should Look For

Condo fees increase regularly, sometimes significantly. You can expect them to go up every few years to keep pace with inflation, but there also can be unexpected increases for unforeseen repairs or if the reserve fund needs to be replenished.

It’s important to review a condo’s financial history by going over financial statements from at least the past 3 years. Choosing the right realtor can help you get this right and know what you’re in for.

Look for regular fee increases that keep pace with costs. If they haven’t changed in years:

• a big fee increase may be on the horizon, so you’ll need to be sure you can afford it.
• the condo’s reserve fund may not be adequately funded, so owners may be facing an assessment

Why does this matter? Both these scenarios can be indicators a condo development is poorly managed by the board, the property management company, or both, so start asking questions!

2. Condo Maintenance

One of the best things about owning a condo is that someone else does the heavy lifting for you!

While condo living definitely offers a low-maintenance lifestyle, you’ll still have some work ahead of you because owners are responsible for repairing and maintaining anything inside their units, like replacing a leaky faucet or fixing the dishwasher.

The condo association is responsible for repairing and maintaining common areas, including the development’s heating, electrical, and plumbing systems. They’ll also look after any amenities and things like shoveling snow and landscaping.

Things You Should Look For

Make sure you read the bylaws carefully so you understand exactly what you’re signing up for!

No two condo associations are ever exactly alike! While they all need to follow some provincial guidelines, inside those guidelines they have the flexibility to come up with their own bylaws. Just because things were done a certain way at a previous development doesn't mean that's how they'll be done anywhere else.

3. Amenities

One of a condo’s big draws is its onsite amenities, like gyms, dog parks, pools, and clubhouses. It’s great for your lifestyle and you'll be able to meet your neighbors and become part of the community. This can make owning a condo especially appealing if you've just moved to a new neighborhood or city!

As an owner, you can use any of the amenities without paying any user fees. But, like most things in life, that doesn’t mean they’re free. They’re paid for through your monthly condo fees. And since luxury rarely comes at a bargain basement price, your fees will go up as the quantity and quality of amenities go up.

Things You Should Look For

Longer term, amenities eventually require repairs and upgrading, so it’s possible an assessment could be required in the future. You can find out about upcoming repairs, and whether they’re underfunded, in condo’s reserve plan report, financial statements, and board meeting minutes, so carefully review them with your realtor.  

4. Rental Restrictions

Condos can be great investment properties! But it’s important to read the fine print before you put your money down.

Many condo associations have strict rules around short-term rentals and absentee owners. They may even restrict how many rentals are allowed in the building - if the limit is already met, you won’t be able to rent out your property. Even if there is greater flexibility for long-term rentals, there could still be restrictions, such as limiting the number of occupants or the length of a lease.

Things You Should Look For

Rental restrictions are outlined in the condo association’s by-laws, so read them carefully with your realtor to understand your options. You may be able to get around the rules for a while, but when your neighbors notice strangers coming and going from your unit on a regular basis, you’ll be found out!

5. Soundproofing

Living in a condo means living with lots of neighbors. They’ll be above you and below you, and they'll share your walls. Unless you add specific soundproofing features, you’ll have to put up with at least a little noise.

But there are a few features which may help keep the noise down, so if peace and quiet are a priority for you, look for the following things:

• Walls with staggered-stud, double-wall construction with insulation
• Hardwood floors with acoustic pads and concrete slabs underneath
• Windows with thick, laminated panes a half-inch or more apart

Remember that buying a "luxury" condo isn't a guarantee that all will be quiet on the home front. "Luxury" usually refers to how great a condo’s amenities are, not how well it's soundproofed.  

Things You Should Look For

An experienced realtor will know the right questions to ask about how a development is constructed. More importantly, they’ll understand the answers! The construction industry has its own vocabulary, so be sure your realtor speaks the language.

Your realtor should also be familiar with condo developments in the city and may already know which ones have the best (or worst) reputation for solid construction!

6. Reserve Funds and Assessments

Condo associations are legally required to maintain a reserve fund - a rainy-day fund to use for large expenses, like paving the parking lot or upgrading the gym. A portion of your condo fees is allocated to the reserve fund.

If your condo association is well-run, the reserve fund will have enough cash to cover emergency repairs or fund special projects, like upgrading the gym. But that’s not always the case and sometimes the reserve fund doesn’t have enough money. When that happens, owners make up the difference by paying an assessment.

Assessments can either be a one-time charge that you’ll pay as a lump-sum or added in small amounts to your regular condo fees.

Things You Should Look For

You can find clues that a special assessment is in your future by reviewing the condo association’s financial statements. They show you how much money is currently in the reserve fund. If the fund is low, you may be at risk of a special assessment in the event of an emergency expense.

The Bottom Line

Buying a condo can be a great way to step into home ownership or add to an investment portfolio, but it may not be the right choice for everyone.

Think about what is most important to you, and then be sure you understand the pros and cons, compare multiple properties, and do your research. And remember, there are several things to consider, so having knowledge and expertise matters! Use a realtor who understands condos and can help protect your interests during the process.

If you’re ready to take the leap into home ownership or just have questions, reach out to us at AlexCowie.com. We have years of experience in Calgary’s condo market and we’re here to help!