Sure there are plenty of options when buying Vancouver real estate, but unless you’ve got deep pockets the more affordable options are still condominium apartments and strata-townhomes.
A condominium is a property complex that is divided and sold as individual units. Typically, the property complex consists of one building that is divided into various individual condo-units, who share in the use and upkeep of common areas, such as parking garages, pools, lobbies and entertainment rooms. Compared to a single-family home, ownership of a condo-unit also means partial ownership of these common areas, which are also referred to as common property.
If you’re considering buying a condo in Vancouver, read on to learn a little more about this type of property, what ownership of a condo entails, as well as six tips for getting the best deal.
Get a comparative market analysis for the building and the area
Whenever you buy a piece of real estate, you should always conduct a comparative market analysis (CMA). Typically, real estate agents will provide this to their clients with insight into what has sold, terminated and expired in the recent past. When shopping for a condo, it’s important to get a CMA for the area, as well as the specific building. The area analysis will show you if the condo-units in this building are selling for fair market value, while a building CMA will help you see micro-trends unique to the units and building you are considering as a purchase.
Get to know the condo board
Since condo buildings are based on shared ownership of multiple units, all condo complexes are run by a condo board—a group of elected condo owners that make decisions collectively for the building. While it’s impossible to introduce and get to know this board personally, while shopping for a condo, you can get an overview of how the board works by reviewing the minutes of each board meeting.
Scan each record for each monthly meeting, as well as the annual general meeting minutes. See if you notice any red flags. For instance, is there one unit member that’s always complaining to the board? Does one board member always push for certain repairs? While you might not fully appreciate each discussion, meeting minutes offer a glimpse into the workings of this important group and, perhaps, insight into how healthy this board is as an influential group.
Check fees, reserves and depreciation reports
Unit owners in the building have to pay a fixed amount of monthly condo fee. The money collected from the owners goes towards paying for the maintenance and upkeep of common areas in and around the building complex. While the specific amount may not tell you much—what’s the difference between $200 and $275 per month in maintenance fees?—the trend of how these fees are reviewed and increased can tell you quite a bit.
For example, some condo boards will keep fees low for a long period of time in an effort to keep individual costs down and to artificially attract potential buyers. The problem with this is that condo fees are collected to pay for ongoing and necessary maintenance and to help build up a contingency fund that’s used for big repairs. If you don’t raise fees to match inflation or to keep your financial reserves healthy, you can run into a serious shortfall, which requires individual owners to pony up large lump-sums to pay for emergencies and expenses.
While reviewing fees and the history of fee increases, be sure to examine the building’s reserve funds. These funds are set aside for major repairs and renovations and a great indicator as to whether or not the building complex is financially prepared to handle sudden and expensive repair issues, such as replacing an old roof or dealing with structural problems.
Finally, make sure you ask to see a building’s depreciation report. This report is now a legal requirement for all condominiums with five or more units within the province of British Columbia. The report aims to tell the unit-owners and anyone interested in becoming an owner what common property and assets the complex may have and what the projected maintenance, repair and replacement costs will be on those assets over a 30-year time span.
Most strata corporations must obtain this report no later than six months after their second annual general meeting (AGM) and the reports must be renewed every three years. However, some condo boards can waive or defer getting this report, as long as three-quarters of unitholders vote to take this action. Still, if a report is deferred or waived, find out why. While there are legitimate reasons for taking this action, you want to be sure what those reasons are before committing to a complex.
Look at the demographics
The best thing about buying a condo is that it offers a sense of community, just make sure the community suits you. A retiree should not buy in a building where most residents are students or young professionals. Another factor to consider when buying a condo in Vancouver is how many units in the complex are vacant or rented out. Most would-be buyers dislike the ghost-town feel of vacant buildings so resale may be hard if you opt to buy a building facing this issue.
But don’t stop at the building. If possible, check the demographics of the surrounding area or neighbourhood. If hard statistics are hard to come by, consider spending time in the area before buying. Who hangs out in the lobby? The local park? Who is buying coffee and who is shopping at the closest grocery store? While not foolproof, this type of investigation will help you get a better idea as to whether or not the community fits with your lifestyle.
Location, location, location
That old real estate cliche—location, location, location—matters when it comes to buying a condo in Vancouver. Not only is the location of the building important, but so is the location of the condo-unit. That’s because not all condos in the same complex are created equal. Small details, such as which way the dining room windows face, can have a big impact on the unit’s current and future resale value.
The key is to buy the least desirable unit in the most desirable building. Why? Because highly desirable buildings always attract buyers and a cheaper or less desirable unit can piggyback on that desirability. Just remember, though, that some issues are hard to cover up like a unit positioned beside a noisy elevator or right beside the garbage chute. The trick is to get a less-valued unit in a highly desirable building. The value of that unit will grow faster, which helps build the equity you have in this property purchase.
Take advantage of buyer benefits
The federal government and the B.C. government each offer assistance to buyers who are either first-time home buyers or purchasing property valued at less than $500,000.
For instance, the B.C. government announced a first-time interest-free loan that offers up to $37,500, or up to 5% of the purchase price, on a 25-year mortgage loan. The loan is interest- and payment-free for the first five years you live in the home, then interest is charged at the current discounted mortgage rate. For more check out the B.C. Home Owner Mortgage and Equity Partnership program.
From the federal government, there are rebates on the land transfer tax you pay, if you’re a first-time home buyer, plus you can opt to put as little as 5% down if you purchase a condo that is valued at less than $500,000.
While we often buy a home as a place to live, we still need to keep in mind that it is an investment. The aim isn’t to get rich of the purchase, but we don’t want to lose money on the deal, either. If you do your due diligence and follow the tips outlined in the article, you can definitely find a great condo in Vancouver that suits your budget and lifestyle.