- April 22, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Concerns about Affordable Condos in Lower Mainland, BC
Hi there,
Not sure if this is the right place for this question, but I’ll give it a go and see what happens:
Occasionally, I see condos for under $500,000 in the Lower Mainland, BC. However, the details are usually less than ideal. For example:
– 1 bed 1 bath
– Less than 600 sq ft
– Built 50+ years ago
– $600+ HOA fees
Some high-level info on me I feel comfortable sharing (I know it’s not enough to go off of):
– 31 years old
– My monthly rent + utilities are 28.8% of my AFTER-tax income (I’ve been living in the same place for 7 years)
– I save an average of 30% of my AFTER-tax income per month which I invest in a TFSA, FHSA, RRSP, and stocks.
– I don’t have any debt.
– I don’t have any assets aside from my investments/savings.
With all this in mind, it seems like my only option within the next 5 years as a single person is to invest in one of these cheaper condos if I want to stay in the Lower Mainland, BC. However, I feel like this could be a potentially bad financial investment, especially as newer and nicer high-rises are going up all the time.
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****** just grabbed a
Depends on how it’s managed. I live in a condo built in 1978 in Toronto. It’s well managed and an excellent investment with way more space and quality construction than a 10 year old condo.
My younger brother bought a bachelor in a condo built in the 60s. Not as well managed but low rise and minimal amenities so still a solid investment and living space.
I’m going to leave this link here. If you go searching, there are lots of similar stories from condo owners. As another commenter said, make sure you look at the financials. A realtor should be able to provide that information.
https://www.reddit.com/r/canada/comments/sbit38/condo_owners_in_aging_building_face_14m_in/
No because you are not ready to buy.
Each condo development will vary in terms of quality and financials. I would consider it for a low rise condo and if the maintenance has been on track and good accounting. I regret not buying the older townhomes because they have tripled in price in Richmond and I would have had a smaller mortgage.
Honestly, 50 year condo sounds pretty old. Probably has asbestos in the walls or ceilings.
But late 90s and early 2000s had shoddy construction.
And even places built today can have shoddy construction.
I don’t know of any era or period that has a “sweet spot” in terms of good construction.
So don’t focus so much on the age of the property. The answer has to come from other factors.
I just bought 50 year old building in white rock. Has a sick patio and ocean view. Honestly expecting 20-50k in strata repairs over the next 5-10 years for things like boiler/elevators and such. It’s super livable with a million dollar view so even if massive repairs happen I will be happy watching ocean sunsets (500k got her down from 530)
This may be an overestimate (hopefully not under) but am prepared to fork the $ over for repairs to an aging building. Strata looks well managed but white rock older fixed income people usually push back repairs and reserve fund is about 100k
People say you should have a massive reserve fund but in reality you don’t need one you can just charge special levees to pay for repairs. However you may need to fork over 10 20 even 30k at one time for a major repair such as leakage underground parking repairs or everything all at once.
For 500k on a new condo you get nothing and these new buildings can also have major problems sooner then later at least the old buildings were quality
It’s best to purchase a home when you’re going to live in it. Renting always comes out over purchasing. For example, while my home has increased in value, there’s a lot that has gone into it – plumbing, housing, landscaping, roofing, etc. That $50K+ would’ve done much more in ETFs. Not to mention, all of the interest going to the bank – the same as rent with the interest rates.
That said, I like being able to paint and not having a landlord. Worth it for the freedom alone. But if you’re looking to be rich, buying a place isn’t it.
We bought a condo built in 1981. This year during regularly scheduled repairs to the decks we discovered that the foundation needed work. $40,000 assessment to each condo owner.
Some things are predictable at regular intervals (new roof, new paint job, etc) and should be covered by the HOA reserve funds. Others, like our painful foundation repair, are hard to predict… but probably come up more often with age.
I make decent money, but I have never felt that a condo apartment in the neighbourhood I want to live in is affordable for me (I am in centretown Ottawa). It would require a mortgage, condo fees, and taxes that would eat up almost 50% of my take home.
Only way around that is a huge downpayment of 40-50%. Or buying a 425sqft studio apartment
So I am renting right now (I am 46 btw).
I just sold my 50 year old 1 bed 1 bath plus den condo in the lower mainland. bought in 2019 and I made about $65K on it before realtor commissions. It didn’t give me any crazy returns but I am satisfied with the outcome. It was a great starter home and let me build a lot of equity so that I could upgrade to a much nicer place with a big down payment.
Vancouver condo owner in a 1-bedroom in a well managed 50 year old building here. Honestly I’m trying to sell. $600 monthly is a lot especially if you don’t get any extras. Right now 100K mortgage is about $600/month. In Vancouver you can move slightly outside the city and save a lot. Even Burnaby or New West is more affordable and has newer buildings. That’s my plan but that’s based on my priorities at this time in my life.
You gotta go in with reputable home inspector and read all the strata to really find out what kind of surprises are waiting for you once you got the key.
My guy did a inspection report with cross-referencing the strata meeting(pretty much all the documents that realtor/seller have to provide ) and funds to paint what you will be spending immediately to what is coming/need to replace in next decade. Thanks to him , I walked out on the old cheapest apartment in commercial drive(value was mid 500k for one bedroom).
Richmond?
Also consider the cash flow. If you’re close to 0 cash flow it’s actually a pretty good investment for today’s world.
No matter what your research tells you, you are AT BEST putting yourself at the mercy of the special assessment lottery.
The roof is shot? Hope you have $40,000 handy because you don’t have a choice.
But that’s all right? Nope. The concrete in the parkade has been slowly deteriorating, that’ll be another $30k.
No matter how many things have already been fixed, there’s always something else that can go wrong in an older building, and unlike owning a detached home there’s no option to DIY your way through to keep costs down.
When you finally reach your financial breaking point you’ll be looking at selling for next to nothing and taking a total loss in the hundreds of thousands, because no one else wants to buy a place that has all those special assessments coming due.
Request a copy of the building’s Depreciation Report, especially for older buildings. It will outline the replacement timeline for all major components of the building, most importantly the roof (usually most expensive thing to replace). The report also gives owners an option of funding models for yearly contingency fund contributions, with one option being selected and voted on by owners. Options range from full replacement funding to partial funding. The option chosen usually gives great insight into the type of owners in the building (ie choosing the more expensive monthly options usually means long- term owners who care about the state of their building).
Not only will the Depreciation Report give any potential buyer the best overall idea of the condition of the building it will also forecast how much money will be required from owners to finance major repairs or maintenance in the future. If the contingency fund is small and the roof only has 10 years left until replacement, a special levy will likely eventually be assessed by the strata corporation when the time comes to do so, costing each owner big $ they must pay.
I live in a 42 year old condo in SW BC, it’s built like a brick….but I will say not amazing sound deadening. Well managed and updated and I’m biased but it seems way better than the quality of newer builds. But obviously not all old ones are well built or well managed – meaning among other things that the updates are key!
That large monthly fee indicates to me that these might NOT be condos. They of the age when CO-OPs were built. So the fee mentioned on RE webpages includes the ppty tax (and it often seems to me that they are using the full ppty tax rate and NOT the rate applies to personal residences.
condos aren’t investments, they are a place to live.
How much will they depreciate in five years? No one knows. How much maintenance will you have to pay to live there? no one knows. If it scratches your itch to own land, great, but it isn’t comparable.
People who pay rent are at the bottom of the pole. Are two people working full time-minimum wage priced out right now? If they are, wouldn’t you expect a lot of vacancies, and perhaps a drop in the price of rent? Employers love minimum wage. tons of people make it. If you and your partner make even 50% more than a recent grad you dont have to worry about rent.
In the lower mainland with an old condo like that most of the value is likely in the land anyway so as long as you can keep up with with strata fees and any special levies to keep the building going it’s not necessarily a worse investment than a brand new condo. If anything brand new condos can be worse investments since more of the value is the building itself which risks depreciating quickly in some cases.
Just make sure you’re paying a fair value for the building itself. If a huge special levy is coming up it may even have negative value. If the building is especially shitty in a good location there’s also redevelopment potential.
Main thing is request a status certificate. This will give you an overview of the unit itself – are they up to date with condo fees? Are they in arrears? Is there a lien on the property? Are there any unapproved modifications?
The status certificate also gives you an overview of the condo corporation budget, their reserve fund, any upcoming assessments, any lawsuits they’re involved in.
Outside of the status certificate it would be helpful to request meeting minutes from the condo management. You can see what are the issues that have arisen in past, how the board handled it, how the board financed things.
any amenities? $600 strata is crazy high
This is a really shitty price what is your salary?
Any condo is.
BUYING A HOME IS NOT AN INVESTMENT
people need to get it thru their fkin head
I’m on the other side of bc here and I just can’t wrap my head around living in the lower mainland Perhaps I should say I’m fortunate in that regard haha… . 500k should get a house of at least 1500 sq ft ish over on this side. I mean shit apartments here are like 200k about the same size.
I’m assuming that the $600 HOA is monthly?
don’t forget about taxes…