What are they? Are you wasting your money?
So maybe you’ve recently entered the empty nesters club, or you’re just too busy or physically incapable of doing all the usual upkeep that comes with owning a home, and you figure it’s time to consider the condo market. No matter where you are in Ontario, the real estate condo market is present in most cities. But what are all these fees? Some feel that it’s just a financial burden while others wouldn’t want it any other way. Owning a condo can be a very rewarding lifestyle choice as long as you know what you are getting yourself into. Many times the concept or details of condo fees are misunderstood, but if you consider the many benefits of what you are receiving in return for this fee, it can become quite an attractive situation.
What are these fees?
Condo fees are fees paid to the condo corporation over and above your regular mortgage payments. These fees are set by the building owners and are based on your “percentage of interest” in the building. Your share of ownership is typically determined by the square footage of your unit and how it compares in size to other units in the building.
A portion of your condo fees also goes toward the Reserve Fund. This fund is set by the condo corporation, determined by studies required by law, and is used solely for the purpose of paying for major repairs of the building or common elements. Such items can include windows, doors, roofing, heating and cooling systems, recreational equipment, etc. This is one great advantage of condo fees that many buyers don’t take the time to fully consider. How much do you think you would have to save each month for these kinds of improvements if you were required to do them on your home? It could add up to a couple hundred dollars real fast, when you consider some of these big ticket items.
What do these fees cover?
Other than the portion that goes toward the Reserve fund, the condo fees are put towards various maintenance costs associated with the building. Although most condos cover similar items in their fee, it’s important to make sure you know what is covered in the condo you are looking at purchasing. Get all the information ahead of time, there’s nothing worse than expecting a specific service to be covered and finding out afterwards that it’s not.
Services included in your condo fee, depending on whether it’s apartment or townhouse style, can involve:
- General building maintenance
- Condo employee salaries (cleaning staff, superintendent, recreational facility staff)
- Minor repairs
- Utilities like electricity, gas, water and sewage
- Cleaning – windows and common area carpets
- Garbage collection
- Snow removal
- Recreational facility maintenance (pool, gym, etc.)
- Elevator maintenance and repairs
- Parking services (including garage maintenance, monitoring, parking lot)
- Heating, ventilation and air conditioning maintenance
- Management company and legal fees
It’s also important to note that a portion of your fee will usually go towards building insurance which means you will only need to acquire contents insurance, the difference can be quite less than full coverage.
In most cases, you will find that owning a condo, including the maintenance fees, works out roughly the same as owning a home of similar size, price, and location. All things considered it really isn’t a financial choice but instead one of lifestyle preference. Would you prefer your own large lot with garden? Or never have to cut the grass or shovel the driveway again?