[district]

I am looking at assignments right now. I am trying to understand maintenance fees. I really prefer low maintenance fees. However, sometimes I just don’t understand how 2 condos in similar locations with similar amenities can have very big differences in their condo fees.

But, that’s not what I have a problem with. What I don’t understand is how one condo in a certain location can offer amenities almost identical to another building that is in the same location and have similar estimated maintenance fees before the condo is built. However, in the first few years, the maintenance fees can drastically increase in one building and not change much in the second building. I know that condos can have a different amount saved as a reserved in case something happens (building with bigger reserves might have higher condo fees) etc...

However, is there any ways to determine which condos might have a significant increase in the maintenance fees in the first few years (aside for the obvious where buildings offer a lot of amenities and have ridiculously low maintenance fees advertised when the unit is selling in preconstruction...just to attract buyers)? Is there a pattern with some builders having a steeper increase in maintenance fees than others?

 

[DSC]

Maintenance fees are composed of two quite different things. One is the day-to-day costs of running the Building and if you have 24-hour doormen, swimming pools etc etc your running costs will be higher than if you don't. The size of the building also has an effect because some costs (24-hour doorman, for example) will be about the same whether there are 50 or 150 units. If the cost is spread over 150 units it is obviously cheaper per Unit. Then there are the contributions to the Reserve Fund. These are determined following an official Reserve Fund Study which must, under the Condominiujm Act, be done every three years. The amount of money required is based on the anticipated needs to replace major things like roofs, boilers, elevators etc. To understand the maintenance fees you need to look at both the components and see when the latest Reserve Fund Study was carried out and what it recommended regarding the $s required. A Status Certificate package includes the latest study. (When you compare fees you also need to look at how the maintenance fees are apportioned between Units - this is in the Corporation's Declaration. Most modern condominiums do so by square feet but some do it by Units or number of rooms. Be sure you are comparing apples with apples!)

 

[interested]

The management people also have alot to do with it. If you have a good board, and if there is an in house manager or a good management company, they will look out at your interests better than in other circumstances.
The expenses (not the Reserve fund) are a function of how many units, but more importantly, how much sq. footage you are dividing the expenses over. Obviously a doorman for a 30 unit condo which say costs $120,000/year (for 24 hours/day) is alot more for a building with 1/2 as many residents, sq. footage. as pointed out above. Similarly with the pool, gym, theatre etc.

What will be more proportional is the common expenses for utilities (as while the lobby may be somewhat similar, the common areas usage and if there is common hot water will be proportionately higher.

Reserve Fund Study has just gone up for all condos due to the addition of the HST. However, as DSC said, a look at the Status certificate should be helpful in this regard. Also, check the past 3-5 years condo maintenance fees and see what has happened. If they are escalating but at a reasonable rate of increase, and the Reserve Fund is adequately funded, then I think you have assured yourself as best as you can that at least in the past the management has been doing reasonable due diligence. While the past does not predict the future, it can give one at least an idea of what to expect.

 

[Willy Wong]

DSC, interested

Very well explained!!

 

[district]

Thanks for your great response DSC and interested. I knew many of the things you wrote but I really appreciate your response. I wanted to be sure that I was not missing anything when looking at maintenance fees (I felt like I was missing something). Also, from what I have seen, I think that for the average person, it is usually cheaper to try to find condos where maintenance fees do not include heating, electricity etc...


It is easier to have a clear idea of the maintenance fees when looking at a condo on the resale market than with preconstruction or assignments (which is the route I will probably select).


Is it just me or is it hard to find a nice condo building downtown (or near downtown) that doesn’t come with a long list of amenities and either a 24 hour concierge or security guard?

 

[DSC]

I think that for the average person, it is usually cheaper to try to find condos where maintenance fees do not include heating, electricity etc... i

Glad it was helpful - on electricity costs I doubt many new buildings would NOT be separately metered. Separate meters do mean each Unit is hit with a fixed charge each month from Hydro but you CAN control your costs somewhat if you are careful and pay atention to Time of Day usage rates.

 

[W. K. Lis]

Glad it was helpful - on electricity costs I doubt many new buildings would NOT be separately metered. Separate meters do mean each Unit is hit with a fixed charge each month from Hydro but you CAN control your costs somewhat if you are careful and pay atention to Time of Day usage rates.

Older condos are converting to the separate suite meter route as well. Good for some, not so for others. More likely less catering orders and small scale grow opps. Remember to turn off the lights when you are not using them.