The condominium market is increasingly the go-to choice for urban dwellers, with the price of detached houses now out of reach for many. Condo living have distinct advantages in this hot market. It also has its own unique issues, starting with how to find a reputable builder/developer management company — and the 4 other “Happiness Factors” you should know before signing the contract.
The most important documents for you to obtain and read, thoroughly are either the “Disclosure Statement” of the developer, if it is a pre-build, or the bylaws of the community if it’s a resale. The top three items on this list can probably be determined from those documents.
Depending on whether you’re looking at resale, or pre-build, the ranked issues may differ. For example, you may not yet know who your condo management team would be on a pre-build, unless it’s a large builder/developer with affiliated management companies, such as Tridel. Where you are unable to find out who will manage your community, a “reputable builder” moves to the top of your “top 5 things to consider.”
However, all things being equal, the management company for your community is the main determinant of your long-term happiness — or unhappiness. Real Estate agents are quick to place condo management near the top of the list for decision criteria.
Happiness Factor #1 Condo management tops the list
While a reputable developer-builder is a close second, many experts say that the management team contracted or hired by the condominium corporation is key to living happily ever after in a condo. With larger builders it’s fairly safe to assume a top property management team, such as Del Property Management, will take on the role. In fact, if you have two short-list properties, one where you’re fairly certain who will manage (assuming they are a good company), and one where you can’t determine it, many people will go with the condo with the good management company.
First time condo buyers often don’t even think to ask this question. Why is this so important? After you buy, for many years, you’re going to rely on a good management team and a solid condominium board to make your life a happy one. Nothing makes a condo-dweller unhappy faster than a mismanaged community.
Today, important new issues make good management even more important, such as: short term rentals (i.e. airBNB), and the legalization of marijuana in Canada. These issues are fairly new to market decisions; your management team and condo board have the ability to make your life wonderful, or miserable. A thoughtful board would likely pass bylaws prohibiting short-term rentals — imagine a community, where your neighbor on the 12th floor is different every day.
How to Choose?
Most experts lean towards well-established management companies with ten years or more experience and a large portfolio of homes. Ideally look for :
• more than 10 years of expertise, preferably much more
• the actual resumes of managers in that company (Similar to mutual funds, where you want to see the actual resume of the fund manager)
• awards track record: everything from customer service, to industry innovation to environmental programs and recognitions
• depending on your personal preference, look for companies progressive on environmental issues, recycling and green energy. Some companies pride themselves on their “green programs” (For example, one of Tridel’s slogans is “Built Green”
• check the better business bureau, online complaints and reviews — but bear in mind online reviews and information is often fabricated or biased, so be sure of your source
• look for companies who focus on community services and community living in a style you appreciate. Some companies are famous for strong management of common amenities, for example.
Happiness Factor #2 A reliable builder/developer (especially for pre-build)
Often the biggest concerns from buyers new to pre-build condos is uncertainty. Uncertainty brings stress, not Happiness. In the newspaper they read a horror story of a boutique developer giving back deposits to people after years of waiting so they can redesign the building and resell it for the hotter market at higher prices.
The fear is mostly ungrounded. Very few developers act this way. Never-the-less, it’s hard to overcome the big fears and uncertainties :
• you’ll wait forever, you’ll grow old and grey before you move in
• you could lose your deposit if the developer is in trouble
• after all that waiting, you’ll be surprised at how different the unit is from your expectations.
The happy solution?
Especially for newer buyers, it makes sense to work only with well- established developers with a minimum of 10 years (preferably much longer) experience — and many already-built, successful communities. The track record tells you that whatever promises they make, they’ll try to keep. They didn’t stay in business that long, with a mostly intact brand reputation, without a high degree of customer satisfaction.
As with management companies, it’s useful to look at all credentials: awards, industry accolades, industry firsts, long history, and well-managed existing communities. Arguably, the latter item is the most important. Really research those existing communities. Are they a happy owners? Are they well managed? Are there issues?
At the end of the day, unless you’re hard set on location and boutique features above all else, the builder/developer’s reputation is more important.
Happiness Factor #3 Percentage or Rentals
You were expecting location, right? Well, for a pre-build you might still place location here (or number one, depends on you). But for many people, today — and certainly as a “Happiness Factor” — the potential for a lot of rental units in a community is a deal-killer. Regardless of great location, if there could potentially be troublesome, noisy tenants, condo home dwellers will usually eliminate a high-rental ratio community — happiness goes right out your twentieth-floor window.
On the other hand, an investor-buyer might flip that around. A community that not only allows, but encourages, rentals would be a positive choice factor for an investor-landlord buyer.
How do you know? If it’s a built community, the bylaws are straight-forward. They do, or they do not. Pre-builds also must set out restrictions and bylaws in a “Disclosure statement.” Read the fine print. Many of the top ten decision factors are contained in that document.
Happiness Factor #4 Location
Number four. And it’s all up to you. Close to transit always costs more. Hot neighbourhoods cost more. Resale pricing follows similar logic. Location is usually more important than price for most buyers. One of the key reasons to buy a condo, versus a house, is to get a better location.
Happiness Factor #5 Budget Adherence
There’s a difference between price and budget. Your budget is fixed by your resources — and is a most-important “Happiness Factor.” Struggling to pay the bills is not a recipe for “happily ever after.” Price is more subjective, and based largely on location, builder reputation, upgrades to finishes, size, amenities and other community features. All other things being equal, many people will pay more for a well-managed building (that doesn’t allow short term rentals and has a great management team) over a larger unit from a less credible community.
Although many experts separate condo fees into a separate category, it is also part of budgeting and pricing and should be considered as just important. Unhappy is defined by that notice that condo fees are going up. Important questions such as what these fees include — importantly, do they include utilities — should be factored in to any decision. For pre-builds the fees are usually an estimate from the builder/developer. Remember, that in the 2nd and 3rd year of a new condo, fees normally increase as costs for maintenance start to kick in. Older buildings tend to have the highest maintenance condo fees.
There are many other factors that play into your personal situations, not least of which is the opinion of a building inspector (for resales). Some people really have to know about the potential for future “special assessments” — older buildings may have these as they age, to pay for refurbishing big ticket items like elevators and roofs. Size of community is often important (different people like big or small communities.) Most of these are more subjective. The above top five impact all condo buyers and owners.