experts: real estate column Wednesday, August 30, 2000

How to Buy a Condo Right!

Buying a Condo? While Ozzie Jurock believes that other types real estate - such as townhomes, single-family and anything with dirt under its foundations - appreciates faster than condo product, this lopsided appreciation curve may change in five to 10 years.

By Ozzie Jurock

Buying a Condo? While Ozzie Jurock believes that other types real estate - such as townhomes, single-family and anything with dirt under its foundations - appreciates faster than condo product, this lopsided appreciation curve may change in five to 10 years. Certain areas of the Lower Mainland of Vancouver, British Columbia (finite land base; high level of incoming population) - as well as elsewhere in North America - continues to expand in population and existing and contemplated condo units are swallowed up. Result: upward pressure on prices, especially with good-quality product with that something extra - a guaranteed view, proximity to parks and green spaces, amenities, waterfront etc. and so forth. (For a caveat read Jurock's Facts by Fax about SPECIFIC AREAS AND SPECIFIC BUILDINGS NOT TO BUY IN!)

Pre-sale buying or 'buying off the blueprints' can be tricky. And possibly, a titch costly. You could be buying into the marketing sizzle and not the steak. Remember: In Canada new suites are liable to GST, resales are not; the more elaborate the building amenities, the more expenses incurred in the common-area fees. That great pool or suave health club all come with an ongoing price. If you're not using these facilities, why pay for someone else's pleasure?

Before going out...take a spec sheet and make notes. Compare the various potential buys:

  • Parking spaces? How many?
  • Bathrooms? How big and how many? Two full bathrooms is a large selling point.
  • Fireplace? Is it gas or wood-burning? (In an urban environment, wood-burning fireplaces are hard to fuel, messy to maintain and likely due to be banned as air-pollution standards harden.)
  • How large is it? Does the square footage on the list sheet actually jive with the physical property? (It's remarkable how many condos experience a slight 'shrinkage' between the pre-sale promo and the actual layout.)
  • Amenities; does it have a pool, health club, bicycle storage lockers etc.? Will you be actually using them?
  • What are the common-area costs? Are they realistic or can you expect them to rise?
  • Is there a view? Is it guaranteed? If so, make sure; check with City Hall and check the appropriate zoning etc. Again, it's remarkable how many 'eternal views' become DOA a few years after the sale.
  • Who built it? What's his or her reputation? Can you get references from those who bought from the same developer/builder before? It seems all pre-sales tout "luxury", "top-quality" "exquisite finishing" etc. However, your interpretation of these fine-sounding phrases may be diametrically opposed to the developer's lexicon. Find out.
  • What is the foreign-investor component of the building or the pre-sale mix? Too much off-shore can sometimes signal a risk. Such foreign investors are usually most pragmatic and more willing to take a loss than an owner/occupier. If too many investors bail for whatever reason, the building will acquire the tarnish of a 'bad' project and prices will be squeezed downwards.
  • Security? Car parks, common areas etc. Electronic 'card keys' are vastly preferable to common cut keys; if someone loses the plastic, the system can be easily coded to exclude the lost card from entry. Patio and first-floor condos are problematic for break-ins. Ditto for units close to stairwells (all the quicker to escape, my dear).
  • Higher is not always better. Marketers love to tell you that the higher the unit sits in the building, the better the view and hence, the better the resale value etc. Sure, but only to a degree. Once you get beyond a certain height, the views are pretty much the same, that premium of as much as $2,000 to $14,000 per floor as the identical suite climbs higher in the building simply doesn't warrant the extra cost. (Assuming, of course, the lower suites' view isn't being obstructed by an intervening structure.) A few years down the line when it comes to the resale, it'll be difficult to get that premium back, especially if your suite is competing with a cheaper but identical suite lower down. Buying higher up isn't necessarily the best way to get high value.
Once you've decided to make an offer and you've settled on price, ask for a:
  • copy of the strata's contingency fund and financials. Have there been any strange and unusual expenses? Is the contingency (rainy day) fund adequate?
  • copy of the minutes of strata council for the last six months. If there's any 'dirty laundry' or duking it out, they'll be aired at those meetings. Papers in hand, talk to an existing owner, the building manager and/or the strata-council president. They'll tell you what's wrong and what's right.

About the Writer
Ozzie Jurock is the president of Jurock International Net, Editor of Jurock.com's Real Estate Insider and author of Forget About Location, Location, Location




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