It's a useful way to evaluate the costs of buying and owning a condo and to compare units when you're close to buying. He gets paid a salary, and if he lives in the building, the association is probably paying the rent for his unit. Fines are used as a punitive measure to encourage all residents to play by the rules in the association’s bylaws. NMLS ID: 1125207 Terms, Privacy & Disclosures. Our sample condo is 800 square feet and its maintenance fees are $512 per month (800sqft x $0.64). First and foremost, compare the monthly maintenance fees for this condo to other nearby comparable properties (comps). The key is to find a building that has a fair fee that won’t break the bank, but will keep the quality of living and maintain the resale value of your unit. NMLS ID #1125207 - nmlsconsumeraccess.org. And unlike HDB, your MCST is not okay with people putting off payment. If the cost of the large-scale project goes over the reserve fund, the condo board turns to the condo owners and charges a special assessment. Be sure to ask the condo association how often they charge assessments, whether it’s regular or only charged on rare occasions, and ask for a list of the last ten assessments charged. Let's assume you've paid your lawyer and hopefully enjoyed your first-time-buyer rebates. Well, people argue that, for example, those fees might add up to $200, but your condo fees are $275.88/month. So if you purchase a 650 square foot condo, that’s $422.50 per month in your Toronto condo maintenance fees. Appliances and other interior fixtures also aren’t covered. Monthly maintenance fees nearly always cover exterior structure insurance as well. If the home you’re looking at qualifies as a townhouse condo, there will be an association that governs the development. “A sinking fund is a reserve fund collected from the strata owner for future expenditure which is typically less predictable and cost a lot more than the usual maintenance fee. Then I bought my first house, and within 4 months was amazed at the 3years I was ripped off by condo fees. As of Jan 1, 2020, the maintenance fee for Palm Greens Condo 1 is $360.00 per month. However, when you’re purchasing a condo, … That falls to you. The same logic of the community-wide insurance applies to maintenance: you’re responsible for maintaining the interior of the condo. Getting a status certificate of the building could prove to be … But you still need to make sure that prospective buyers or tenants will be willing to pay a premium for the conveniences provided by the condo association. Most often, one of the costs that your condo maintenance fees cover is building insurance for the common areas like the lobby, elevators, and gym. We used a 600k example in the previous chapter where we counted the costs of buying, so we'll stick with it here. As always, keep your financing costs in mind as soft costs whenever you invest in real estate! Maintenance fees will vary property to property. As with single-family houses, LendingHome covers up to 90% of the purchase price, and 100% of the renovation costs. Maintenance fees are a very important consideration when you're serious about buying a condo. While they can still use hard money loans for the initial purchase and renovation, upon completion landlords must refinance for a long-term mortgage. An apartment can be owned as an individual condominium, or it can simply be a rental unit among many others in an apartment building. Condo fees and HOA fees pay for some of the same operating costs, although they're not exactly the same. Talk to the condo association before buying, to get a sense for any upcoming assessments. Some insurers also include special assessments as part of their condo insurance policy. Everyday I show condos, the FIRST thing I hear is “I have to pay how much of a monthly maintenance fee?” Well…all I can tell you is that some people just don’t get it. If your home is a co-op, expect to pay a pretty hefty maintenance fee every month.. What exactly is a co-op maintenance fee, and why are they often more expensive than condo common charges?. You probably won’t, but you should. Maintenance fees are also referred to as common area expenses or condo fees. If you earn rental income from a condominium unit, you can deduct the expenses that you would usually deduct from rental income. It’s a shared pool of money that helps the building pay for expenses throughout the year. The maintenance fee for condo is a monthly charge that owners must pay to manage, maintain, and upkeep the whole strata property. ? All rights reserved. When you’re renting a condo, you don’t need to consider this monthly fee separately from, or in addition to, your monthly rent because your landlord is paying this condo fee. New flooring and paint? The monthly fee covers the cost of the upkeep of the buildings, grounds, … Approximately 35 to 45 per cent of condo fees cover utilities such as gas, hydro and water – items that are always over and above your mortgage and tax payments, … We take a closer look at mortgages in the next chapter, What is a Mortgage? With annual budget package distribution either fast approaching for some corporations or something that is an upcoming agenda item in the months or year to come. Our fee example uses price per square foot. One of the most common complaints of condo owners are maintenance fees. The average cost for parking in a condo is $46/month. They make the flat maintenance fees easier to swallow for buyers, which in turn, helps the condo sell faster. What amenities are included with each? An association uses fees to cover maintenance and upkeep on its holdings. When a resale condo has a parking space attached to the unit, it is priced into the sale price. Here is a simplified breakdown of a fairly efficient condo to use as an example. The monthly maintenance covers the shareholder’s portion of the operating expenses and property taxes for the building. Toronto property tax pays for public schools and libraries as well as emergency services, running water and waste treatment. As with single-family houses, LendingHome covers up to 90% of the purchase price, and 100% of the renovation costs. Depending on the local municipality, and on the condo association, trash collection and sewer usage fees may also be included in the monthly maintenance fee. The specific type of coverage depends on the building and what they have decided. And remember to always ask exactly what the condo maintenance fees include, when comparing different condominiums. If for example, a condo fee is $250 per month, the annual cost of $3,000 might be small in comparison to the cost of a large home repair. The more amenities a property has, the higher the maintenance fee will be. Condo insurance costs range from $20-50/month. The words “apartment” and “townhouse” are not legal terms, but rather names for physical structures. Taking into account that more than 50% population of Toronto lives in condominiums that problem became a community problem. Most of all, make sure the fees won’t serve as a deterrent to prospective buyers, or you may find your flip sitting on the market for six months with no movement. While scheduling a regular payment is easy enough, be sure not to fall behind on your monthly fees. If you'd like to know more, we explain the value price-per-square-foot analysis here. For example, if the maintenance fee is $.50 per square foot (although in GTA they’re known to range from $0.30 to over $1.00) the maintenance fee for a 1000 sq.ft condo would be $500/month. As a homeowner, there’s a lot of bills that you’ll have to pay every month, such as the home loan and utility bills. Likewise condo maintenance fees must be included with rental investors’ cap rate calculations. For example, the condo association takes care of roof repairs, exterior wall repairs, and foundation repairs. Because the owner isn’t responsible for exterior repairs or groundskeeping, there will be less in the way of renovations for you to tackle as an investor. Parking spaces in condos do get sold separately and can cost anywhere from $10,000 to $100,000, depending on the building. Condo maintenance fees, also referred to as homeowner's or condominium association dues, are levied monthly on most condo owners. Men noemt dit de ‘maintenance fee’ of de ‘common area fee’. The maintenance fees you pay each month have an indirect effect on the value of your condo. You’d want to put aside $316 a month to pay for that. Let’s take a closer look. Your property tax bill is based on the municipal tax rate, education tax rate, and the value of your property. Condo fees go toward providing the owner with a lifestyle that they desire – a maintenance free, amenities filled, attractive home. Here’s what you need to know depending on your real estate investing strategy. He’s also the co-founder of SparkRental.com, an online resource which provides free landlord education and video series for anyone looking to build passive income from rentals. Condo maintenance fees is one of the unexpected expenses when a couple calculates their financial planning. 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