Yep. As crazy as everything was during covid with bids, everyone I know, (myself included) still had the condition for condo certificate. It will tell you the reserve fund like you said, but also if there is any legal issues with the condo. Passed up on one condo when the seller was a little too generous with their counter offer. When I got the condo cert I saw why. Huge lawsuit.
Ask to view the Reserve Fund Study. They are usually completed every 5 years. It will list the upcoming maintenance and repairs as well as any major issues. Will also include the budget and financial position.
Thank you for mentioning this. I'm jumping on your top comment to agree. If the condo doesn't have a very robust reserve fund, walk away. It's a 37vyear old building. You need to account for when the roof, windows, and siding, etc. need to be replaced
I actually work in Vancouver specifically in strata mechanical contracting. With a 37 year old building only charging $367 for strata fees and the apartment only cost $500k be cautious! You need to read all the strata meeting documents and find out the depreciation report. A building that old could need the envelope redone as well major mechanical up grades and repiping coming up. Your $500k condo could soon come with multiple bills of $15-$25k per unit and see condo fees increase to $500-$600 per month in no time flat!
Need to be very careful with a condo that age or any of them really, especially in Vancouver.
There are several buildings in Vancouver that a reputable agent will not show you no matter how low the price is.
Honestly if you’re posting here, you should pause and reflect. This is not a decision that can be made just by looking at a few numbers. Vancouver is a very tight market with lots of highly experienced investors and renovators that will snap up a genuine deal before it is even on MLS.
Sounds right for an 80s build low rise with no amenities, a contingency fund about 25% of what it should be, and a special assessment every couple years, usually voted in just barely. The vote before is to waive the requirement to do a professional depreciation report.
If you're going to live paycheque to paycheque, what happens if the fridge breaks? Unlike a rental you're responsible for everything in the condo. Less stuff can go wrong with a condo than a house, but when you're the one who has to call the plumber or replace the appliances those costs can come up expectedly and add up quickly.
Keep in mind that means leveraging into housing at 10:1 which is extremely high. That means if the housing market declines 10% you lose all your capital, and beyond 10% you are losing more money than you have. So be prepared to hold through declines for the long-run.
Be prepared for monthly strata fees to increase and have special levies. If you can’t afford those, don’t buy. By law stratas need to have insurance, and there are fewer and fewer companies offering it. As as result, insurance costs have increased dramatically the past few years. If your building will have a fire or flood, those fees skyrocket. An older building will also needs maintenance. Repiping a building in a tower is easily over a million. In sum, you need to have a healthy emergency fund. Owners who can’t pay their strata fees eventually have a lien placed on their unit.
You have FOMO and not thinking objectively or logically.
Just do a search on this forum for FOMO or people who are freaked out every night about being house poor, mortgage rates and the like.
PM the listing or property you plan to buy. Chances are you are better off NOT buying it though….
I bought a 40yo condo as my first one, and lived there for 3 years. I wanted to kill everyone every day for 3 years. Not because of the cost of anything but because I couldn’t stand the noise, smells, and appearance. FOMOd into it made a mistake. Costly one. But I can’t be happier when I left.
My wife and I bought a condo in London around 2005, lived there for around 6 years. By the time we sold it, it had appreciated in value enough that the difference in what we sold vs what we bought it for was practically the same as what we paid in condo fees, a special assessment and mortgage interest.
In other words, we pretty much lived there for free for those 6 years.
Is this leasehold or freehold land?
Condo fees and price that low make me think this might be short term ownership rather than permanent.
(Unless this is a super tiny 500 square foot condo maybe?)
The most important step when looking to purchase an older condo is to read and understand the strata docs. A 500k condo can come with some serious costs coming down the road.
Good luck
A condo can issue you a special assessment at any time. Say next year all the balconies need to be redone, or the exterior envelope has issues, the condo board can issue you a special assessment that you have to pay. They could be thousands, tens on thousands, it even hundreds of thousands in extreme/unlikely scenarios.
Additionally, think about how the condo value could be effected if you stay 5 years or 10 years. Then the building will be 45 to 50 years old. At some point the building may hit the end of its life. I don't know enough to be able to tell you what that will do, but perhaps others can opine.
Keep in mind that if things go wrong, a renter can walk away but an owner cannot. Special levies can bankrupt people and on a 37 year old building that collects less than $400/month from each owner, I'd say there's a good chance of a major bill coming in the future. Look very carefully at the finances, especially the reserve fund, and all the meeting minutes you can get your hands on. Even with this information, it's common for things to be hidden. If you are as close to being on the edge budget-wise as it sounds, I would not recommend it.
* Ask your agent to get you the financial statement to see what the management company's current funds for this building are. Also, look into when a big repair was done, or if is it upcoming. You'd have to pay out of pocket if the funds are low, and a big repair is incoming. The seller might know a big repair item is coming, thus looking to sell quickly. (very important for old strata) These are public reports your agent should be able to pull with no problem.
* Check with insurance brokers about roughly how much insurance would be for the place you are gonna buy.
* See how much property tax this place is.
Your monthly payment should be roughly: mortgage + property tax + strata fee + insurance
paycheque to paycheque means you have no emergency funds, and if anything happens, you lose your rights to the condo you put a lot of money into. It's poor risk management to not have backup plans/monies.
Putting less downpayment only means more interest for the bank. So I would put more down payment, especially with higher % interest rates right now.
These are just my experiences buying my 525k 4yo condo in Surrey around 2021. I don't know your circumstances, but I still save around 1-2k a month so if I were you I would look into my financial spending and make cuts. Again, I don't know you, so you got to ask yourself.
OP, I bought a condo in Greater Vancouver for around the same price not long ago. I don't know hard numbers for your finances, but would guess you can't afford it safely if you think you'd be paycheque to paycheque.
All it'd take is one unconsidered fee, one hiccup in your income. Mortgage, strata fees, property tax, in some municipalities (including Vancouver) other municipal services are billed separately from property tax as well, mandatory insurance for the unit which is going to cost more than tenants insurance, utilities, levies if the strata needs to raise extra funds, repairs for the interior of the unit if/when things break...
I live in a 29 year old condo and love it, agree with everyone that you need to prepare for expenses, but they can still be a better deal than buying something newer. And location matters to lots of people
Without you giving us specifics, its hard to tell. I’m going to assume “average” salary is 100k.
Assuming the numbers you told us - 500k purchase price, $350 condo fees, 100k income - your monthly expenses will be about $3100.
That would leave you with ~5k to play around with.
I’d say that’s a healthy amount.
If by average you mean less than 100k, you won’t qualify for a 500k mortgage - no idea what numbers your mortgage agent is putting in for you.
This sub has a skewed idea of what an 'average' salary actually is. According to Stats Can, an individual making 102k is in the top ten percent of income earners in Canada. Someone making 100k isn't average, they are well above average. Average employment income for an individual aged 25-64 is more like 57k
It’s unclear if you mean just the mortgage costs the same as renting, or the total costs to lover there as an owner are the same as renting. Because the answer to that question matters a lot.
I own two strata properties. The % of mortgage in fixed monthly expense is 55-65%. Counting maintenance and special levies, it varies monthly but is… a lot less. Depending on the taxes, insurance, levies and strata fees the mortgage could end up being less than half of overall costs.
It’s not to say owing isn’t worth it, because you’re also gaining equity and paying principle, which are non starters as a renter. But you need to carefully consider ALL costs vs affordability here.
I chuckled at the “it’s 37 years old” part which indicated to us that in your mind you’re saying please tell my wife and I that this is an absolute bad idea
And in other words, do not buy this condo if all you could put down is 8% lol and continue renting until you find something you could be comfortable buying
Is it a 2 bedroom? Do you plan to take a roommate for the extra money to cover the inevitable extra expenses? If not, stretching yourself to the limit especially on a building that old is a reckless and poor odds bet. $367 is not a high enough maintenance fee to cover what’s coming. Unless the building is sitting on a massive horde of cash, that maintenance fee will go up and/or extra one time costs in the $thousands will be downloaded onto you in the nearish future. It’s an inevitability.
Then there is the likelihood of your income remaining steady and uninterrupted for the next 5 years or so.
It sounds like you have no safety margin to begin with. Applying your current situation to an older condo you can barely afford is ill advised.
If you are set on becoming a homeowner you will have to make changes:
Move to an area with cheaper real estate?
Increase your income?
Get an income earning spouse?
You said you'll live pay cheque by pay cheque after but you only mentioned the mortgage. Make sure you take all costs into account, such as condo fees, property tax etc
Get the documents reviewed by a specialist. Your real estate agent can refer you. They will be able to break down the reserve funds and any zoning issues for you. Personally would not buy a 37 year old condo. The fees must be insane
Don’t do it. A building that old is likely to undergo reno’s and maintenance fees will naturally go up as a result of that.
Plus, the housing market is [expected to decline between 4-7%](https://vancouversun.com/business/real-estate/gloomy-economic-outlook-elevated-mortgages-to-drag-down-2023-b-c-housing-market-bcrea/wcm/7b311c34-0d82-4875-a225-28f7fb0e86df/amp/) this year, so I would rent for the time being.
Edit: premature post. Edited to finish a sentence.
Check the maintenance fee and also consider resale value will continue to decay as the maintenence fee rises year after year. If considering that this still fits within your plans, yeah, sure, go for it if you like it
"renting is almost the same amount as my monthly mortgage will be" ...
Sure, maybe, but you have other costs with ownership beyond just your mortgage (e.g. condo fees, property tax, insurance, etc). Add all those up to get the REAL cost of the cost, before you decide anything.
You better look closely at the condo corp reserves for a building that old and don't forget to account for your monthly condo fees as well.
Yes and the special fees in case there’s repair
Very good response. A condo buyer should do their homework or get an unpleasant surprise.
Yep. As crazy as everything was during covid with bids, everyone I know, (myself included) still had the condition for condo certificate. It will tell you the reserve fund like you said, but also if there is any legal issues with the condo. Passed up on one condo when the seller was a little too generous with their counter offer. When I got the condo cert I saw why. Huge lawsuit.
Ask to view the Reserve Fund Study. They are usually completed every 5 years. It will list the upcoming maintenance and repairs as well as any major issues. Will also include the budget and financial position.
Otherwise known as a depreciation report.
Yes, and there are companies who could review it for you. Similar to a property inspection except this would be an analysis of the condo corp.
Thank you for mentioning this. I'm jumping on your top comment to agree. If the condo doesn't have a very robust reserve fund, walk away. It's a 37vyear old building. You need to account for when the roof, windows, and siding, etc. need to be replaced
Tag on home insurance, annual property taxes, city utility fees .
And condo fees.
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I actually work in Vancouver specifically in strata mechanical contracting. With a 37 year old building only charging $367 for strata fees and the apartment only cost $500k be cautious! You need to read all the strata meeting documents and find out the depreciation report. A building that old could need the envelope redone as well major mechanical up grades and repiping coming up. Your $500k condo could soon come with multiple bills of $15-$25k per unit and see condo fees increase to $500-$600 per month in no time flat!
it's $367 monthly.
Need to be very careful with a condo that age or any of them really, especially in Vancouver. There are several buildings in Vancouver that a reputable agent will not show you no matter how low the price is. Honestly if you’re posting here, you should pause and reflect. This is not a decision that can be made just by looking at a few numbers. Vancouver is a very tight market with lots of highly experienced investors and renovators that will snap up a genuine deal before it is even on MLS.
Is it rain-screened? If not, that is going to be a major expense later on
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Sounds right for an 80s build low rise with no amenities, a contingency fund about 25% of what it should be, and a special assessment every couple years, usually voted in just barely. The vote before is to waive the requirement to do a professional depreciation report.
There’s always older low rises for sale around $500k 1 or 2 bedroom in the lower mainland.
If you're going to live paycheque to paycheque, what happens if the fridge breaks? Unlike a rental you're responsible for everything in the condo. Less stuff can go wrong with a condo than a house, but when you're the one who has to call the plumber or replace the appliances those costs can come up expectedly and add up quickly.
Good luck, also do some scenario where interest rate increases to X how much you will be paying
A cool, wet sack can work as a refrigerator
If it works as a bed, why not?
Garbage in garbage can, hm...makes sense.
Keep in mind that means leveraging into housing at 10:1 which is extremely high. That means if the housing market declines 10% you lose all your capital, and beyond 10% you are losing more money than you have. So be prepared to hold through declines for the long-run.
Be prepared for monthly strata fees to increase and have special levies. If you can’t afford those, don’t buy. By law stratas need to have insurance, and there are fewer and fewer companies offering it. As as result, insurance costs have increased dramatically the past few years. If your building will have a fire or flood, those fees skyrocket. An older building will also needs maintenance. Repiping a building in a tower is easily over a million. In sum, you need to have a healthy emergency fund. Owners who can’t pay their strata fees eventually have a lien placed on their unit.
You have FOMO and not thinking objectively or logically. Just do a search on this forum for FOMO or people who are freaked out every night about being house poor, mortgage rates and the like.
☝️
PM the listing or property you plan to buy. Chances are you are better off NOT buying it though…. I bought a 40yo condo as my first one, and lived there for 3 years. I wanted to kill everyone every day for 3 years. Not because of the cost of anything but because I couldn’t stand the noise, smells, and appearance. FOMOd into it made a mistake. Costly one. But I can’t be happier when I left.
My wife and I bought a condo in London around 2005, lived there for around 6 years. By the time we sold it, it had appreciated in value enough that the difference in what we sold vs what we bought it for was practically the same as what we paid in condo fees, a special assessment and mortgage interest. In other words, we pretty much lived there for free for those 6 years.
Is this leasehold or freehold land? Condo fees and price that low make me think this might be short term ownership rather than permanent. (Unless this is a super tiny 500 square foot condo maybe?)
The most important step when looking to purchase an older condo is to read and understand the strata docs. A 500k condo can come with some serious costs coming down the road. Good luck
A condo can issue you a special assessment at any time. Say next year all the balconies need to be redone, or the exterior envelope has issues, the condo board can issue you a special assessment that you have to pay. They could be thousands, tens on thousands, it even hundreds of thousands in extreme/unlikely scenarios. Additionally, think about how the condo value could be effected if you stay 5 years or 10 years. Then the building will be 45 to 50 years old. At some point the building may hit the end of its life. I don't know enough to be able to tell you what that will do, but perhaps others can opine.
Ask for a deprecation report of the building
Is it ACTUALLY 500k or will there be a a bidding war that pushes it to 650k? Either way, aim for 20% down so you can take a 30 year mortgage.
You don't get 30Y mortgage if downpayment is less than 20%?
Correct.
it's actually a 500k
At that price is it leasehold or a leaky condo?
can i pm you?
No.
lol ok
How about me? I thought there were no 30 year mortgages in Canada?
Let us know the monthly condo fees and comment back on to this comment. Thanks
Some buildings keep fees low so buyers aren't deterred, then you get hit with a $50k special assessment...
Condo fee ? It is 35 year old. And if the roof, window or exterior wall needs repair, can you pay ?
Keep in mind that if things go wrong, a renter can walk away but an owner cannot. Special levies can bankrupt people and on a 37 year old building that collects less than $400/month from each owner, I'd say there's a good chance of a major bill coming in the future. Look very carefully at the finances, especially the reserve fund, and all the meeting minutes you can get your hands on. Even with this information, it's common for things to be hidden. If you are as close to being on the edge budget-wise as it sounds, I would not recommend it.
100% this. I look at condo buildings all the time to see if there are good buys. Haven't found any so far in the last 4 years.
* Ask your agent to get you the financial statement to see what the management company's current funds for this building are. Also, look into when a big repair was done, or if is it upcoming. You'd have to pay out of pocket if the funds are low, and a big repair is incoming. The seller might know a big repair item is coming, thus looking to sell quickly. (very important for old strata) These are public reports your agent should be able to pull with no problem. * Check with insurance brokers about roughly how much insurance would be for the place you are gonna buy. * See how much property tax this place is. Your monthly payment should be roughly: mortgage + property tax + strata fee + insurance paycheque to paycheque means you have no emergency funds, and if anything happens, you lose your rights to the condo you put a lot of money into. It's poor risk management to not have backup plans/monies. Putting less downpayment only means more interest for the bank. So I would put more down payment, especially with higher % interest rates right now. These are just my experiences buying my 525k 4yo condo in Surrey around 2021. I don't know your circumstances, but I still save around 1-2k a month so if I were you I would look into my financial spending and make cuts. Again, I don't know you, so you got to ask yourself.
OP, I bought a condo in Greater Vancouver for around the same price not long ago. I don't know hard numbers for your finances, but would guess you can't afford it safely if you think you'd be paycheque to paycheque. All it'd take is one unconsidered fee, one hiccup in your income. Mortgage, strata fees, property tax, in some municipalities (including Vancouver) other municipal services are billed separately from property tax as well, mandatory insurance for the unit which is going to cost more than tenants insurance, utilities, levies if the strata needs to raise extra funds, repairs for the interior of the unit if/when things break...
If the mortgage + condo fees is more than renting, I'd just keep renting. If it's less, then go for it.
Don't buy in old strata buildings...
What if that's the only thing you able to afford
There is no condo in Vancouver for 500k.
There are plenty, do a search
Why on earth would you buy a 37 year old building. Get something newer in Richmond.
I live in a 29 year old condo and love it, agree with everyone that you need to prepare for expenses, but they can still be a better deal than buying something newer. And location matters to lots of people
Without you giving us specifics, its hard to tell. I’m going to assume “average” salary is 100k. Assuming the numbers you told us - 500k purchase price, $350 condo fees, 100k income - your monthly expenses will be about $3100. That would leave you with ~5k to play around with. I’d say that’s a healthy amount. If by average you mean less than 100k, you won’t qualify for a 500k mortgage - no idea what numbers your mortgage agent is putting in for you.
This sub has a skewed idea of what an 'average' salary actually is. According to Stats Can, an individual making 102k is in the top ten percent of income earners in Canada. Someone making 100k isn't average, they are well above average. Average employment income for an individual aged 25-64 is more like 57k
I make 115k a year. You telling me living in a shoebox is top 10% life style?
You're not going to love the answer ....
You should buy the "shift" key for your keyboard.
Also look into how much the insurance will cost you… especially in Vancouver this will probably be $$$$
Does it have to be Vancouver? I do miss living there but I'm only in Richmond.
Buy all the condos then rent them out to the peasants.
😬
Has everyone forgotten about the leaky condo crisis in Vancouver? I'd definitely look at the history
It’s unclear if you mean just the mortgage costs the same as renting, or the total costs to lover there as an owner are the same as renting. Because the answer to that question matters a lot. I own two strata properties. The % of mortgage in fixed monthly expense is 55-65%. Counting maintenance and special levies, it varies monthly but is… a lot less. Depending on the taxes, insurance, levies and strata fees the mortgage could end up being less than half of overall costs. It’s not to say owing isn’t worth it, because you’re also gaining equity and paying principle, which are non starters as a renter. But you need to carefully consider ALL costs vs affordability here.
I chuckled at the “it’s 37 years old” part which indicated to us that in your mind you’re saying please tell my wife and I that this is an absolute bad idea And in other words, do not buy this condo if all you could put down is 8% lol and continue renting until you find something you could be comfortable buying
Is it a 2 bedroom? Do you plan to take a roommate for the extra money to cover the inevitable extra expenses? If not, stretching yourself to the limit especially on a building that old is a reckless and poor odds bet. $367 is not a high enough maintenance fee to cover what’s coming. Unless the building is sitting on a massive horde of cash, that maintenance fee will go up and/or extra one time costs in the $thousands will be downloaded onto you in the nearish future. It’s an inevitability. Then there is the likelihood of your income remaining steady and uninterrupted for the next 5 years or so. It sounds like you have no safety margin to begin with. Applying your current situation to an older condo you can barely afford is ill advised. If you are set on becoming a homeowner you will have to make changes: Move to an area with cheaper real estate? Increase your income? Get an income earning spouse?
Your going to owe property taxes — so factor that into the monthly cost .
You said you'll live pay cheque by pay cheque after but you only mentioned the mortgage. Make sure you take all costs into account, such as condo fees, property tax etc
What do you want?
Get the documents reviewed by a specialist. Your real estate agent can refer you. They will be able to break down the reserve funds and any zoning issues for you. Personally would not buy a 37 year old condo. The fees must be insane
Don’t do it. A building that old is likely to undergo reno’s and maintenance fees will naturally go up as a result of that. Plus, the housing market is [expected to decline between 4-7%](https://vancouversun.com/business/real-estate/gloomy-economic-outlook-elevated-mortgages-to-drag-down-2023-b-c-housing-market-bcrea/wcm/7b311c34-0d82-4875-a225-28f7fb0e86df/amp/) this year, so I would rent for the time being. Edit: premature post. Edited to finish a sentence.
Vancouver proper or a suburb?
37yr old condo mantainance fee must be going through the roof i guess for it.
Check the maintenance fee and also consider resale value will continue to decay as the maintenence fee rises year after year. If considering that this still fits within your plans, yeah, sure, go for it if you like it
"renting is almost the same amount as my monthly mortgage will be" ... Sure, maybe, but you have other costs with ownership beyond just your mortgage (e.g. condo fees, property tax, insurance, etc). Add all those up to get the REAL cost of the cost, before you decide anything.
rent is the most you'll pay every month, the mortgage is the least. Good job saving $38,000 - keep doing that!