The Ultimate Buyer’s Guide for Buying a Condo in Toronto

While home prices and the real estate market in the Greater Toronto Area (GTA) have been steadily increasing over the past few years, condo prices especially in Toronto, have been steadily increasing. Given the growth in Toronto’s real estate market, it is no surprise that 10%, 1 in 10 condos, built in Toronto during 2016 and 2017, are owned by non-Canadian residents.

While you may not have considered purchasing a condo, there are many advantages to condo living you can enjoy purchasing and living in a condo. These advantages range from saving money and ideally seeing a large return on your investment when the time comes to sell your condo, being able to live in a more desirable neighbourhood, proximity to public transportation, restaurants, and more. However, buying a condo and condo living might not be the right choice for everyone. It is important to consider the pros and cons and whether or not buying a condo is the right choice for you before you consider purchasing a condo.

Pros for Buying a Condo in Toronto and the Greater Toronto Area (GTA)

One advantage of condo living is that you can live in a more desirable neighbourhood with excellent restaurants and plenty of amenities in Toronto’s urban center that you will not find in neighbourhoods further away from Toronto’s urban center. The closer you are to downtown Toronto, the more you can take advantage of easy access to public transportation. This means that you might be able to survive or thrive without needing to own a car and you could save thousands of dollars on car insurance, gas, parking, etc. since you could very well be walking distance from public transportation, stores, restaurants, supermarkets, and more. This is a notable benefit given that there are reports of people paying over $40.000 CAD per year for access to a parking space in downtown Toronto. Also, car ownership can be expensive and headache inducing.

Choosing condo life means you might have the opportunity to live in a more expensive neighbourhood in Toronto, where you might not otherwise be able to afford to buy a house. Given the high cost of rent in Toronto, it might be possible that a mortgage + condo fees might be the same price as rent or not much more than monthly rent for an apartment in a desirable neighbourhood. For some, condo ownership might be more economical than owning a house.

Living in a condo with amenities such as a pool, fitness center, party room, etc. means that you might be more social and will allow to more easily meet and interact with your neighbours as opposed to living in a detached house. Having these shared amenities provides you with the opportunity to meet more people. You might even be more active since you will have fewer excuses for skipping the gym if there is a gym in your building. Living in a condo also means that you might have access to some of the amenities you could enjoy renting an apartment along with some of the benefits that come with owning your own home.

Another benefit of condo living is all the costs for maintaining the building are shared. This means the costs for repairs for the building, maintaining the building and communal areas, paying someone to shovel snow, mowing the lawn, etc. are shared between residents. When it snows you can relax since someone else will be responsible for shovelling snow and spreading salt and sand out onto the walkways outside of your building. If you do not enjoy doing maintenance or are looking for a low-maintenance home, this can be a huge benefit for you.

Security is another benefit of owning a condo. If you are lucky you might find a condo building with a doorman, concierge, and/or controlled entrances. Given that you will probably have neighbours on both sides of your unit, this is great if you travel frequently since you will be able to worry less about your home while you are gone. If you are a person who shops online frequently, condo living can be great since your packages will not be left in front of your home where they could be easily stolen by someone walking by your house.

Finally, condos can be a great choice for those who want to own their own space without buying a house and who do not want to deal with all of the headaches associated with owning a house. This makes condo ownership a great option for people looking to downsize, people who want to have a more minimalist lifestyle, and/or looking to invest in the real estate market who might not be ready to buy a house. While there are many pros for condos, there are some potential cons you need to be aware of. It is important to remember that condo living is not for everyone.

Cons for Buying a Condo Toronto and the Greater Toronto Area (GTA)

Condo Fees, Assessments and more

A potential con for condo ownership are the fees you will be responsible for paying as a condo owner, such as special assessments, condo association fees, condo association dues, and more. While your condo fees should cover the maintenance, insurance, and other costs for everything outside of your unit, if need to do repairs in your unit, you will be responsible for paying these costs and completing these repairs.

Condo fees are not fixed fees, they have a tendency of increasing over time. While what you pay in for monthly condo fees helps pay for the maintenance and upkeep for your complex, if unexpected damages occur, you and the owner condo owners will be responsible for paying them. For example, if one of your neighbours damages the common area, everyone in the complex would be assessed for the cost of repairing these damages even if you, yourself were not responsible for the damages that your neighbour caused.

Theoretically, a well-managed condo association capital reserve fund will ensure that repairs and maintenance for the complex will be done without any additional cost for condo owners. However, this is not always the case. Legally, by owning a condo, a board member from your condo association could show up your condo, knocking on your door, informing you that you are on the hook for thousands of dollars for a special assessment. This means if your condo association runs into any legal issues, any unexpected costs come up or your condo association is over budget, you will be responsible for paying these fees along with everyone else. Legally, this is possible because owning a condo means you are responsible for paying these fees whether you want to pay them or not.

It is important to remember that when you are owning a condo, you are jointly owning a property with people you might not know or otherwise choose to own property with. And the people who are joint owners in your complex will be continuously changing throughout the time that you own your condo. It is important to keep this in mind since you will only be able to control what happens within the confines of your unit, you might not get a say or choice when it comes to group decisions affecting the complex. In other words, if other condo owners/condo association members want to redecorate the lobby or make a decision about what colour to paint the hallways, it is up to the others whether or not this happens and when this work is completed.

Unlike other types of homeownership, once you finish paying the mortgage for your condo, these condo fees and condo association dues will not ever be going away. While monthly condo fees can range from $300 to $800 dollars or more per month depending on where you are, what is included in the condo fees, and the amenities you have at your complex. Amenities such as a swimming pool, fitness center, or elevators can drive up your condo fees. While older buildings generally need more repairs and maintenance.

If your condo fees hypothetically tripled during your ownership, when it comes time to sell your condo, it might be hard for you to find a buyer who is willing to take on a mortgage plus condo fees. This might mean that when you are selling your home, you might have to lower your asking price and risk a loss for your investment in order to find a buyer for your condo. This is a risk you are taking when you decide to purchase a condo.

Condo Association Rules

Another important con to consider is condo association rules and bylaws. These rules and bylaws can govern what you can do in your unit, and other things such as whether or not you can have a satellite dish, what types of pets and how large the pets you can have can be. Not everyone might be willing to have to abide by rules set out by a condo association since they are restricting what you can and cannot do as a condo owner. While others might have problems living in such close proximity to others, especially since you cannot pick your neighbours when living in a condo complex.

Appreciation and Return On Your Investment (ROI)

Another possible risk you run with purchasing your condo is if you treating your condo as an investment, is the possibility that you might not see as high of an increase for ROI over time with a condo like you might see with a house. You should compare past real estate prices for condos in your area to see whether or not this might be the case for you. This is important to consider since so many condos are currently being built all around the City of Toronto and the Greater Toronto Area.

Furthermore, major repairs and renovations for a condo might not necessarily lead to an increase in value for your condo when it comes time to sell. While completing major repairs and renovations for a house might help raise your house’s value and allow you to list your home and have buyers pay a higher asking price.

Possible high costs of ownership for a condo

While purchasing a condo in the short term might be more economical than buying a house for some, your costs of ownership for a condo, in the long run, might be higher for a condo than a house. It is possible that while the initial purchase price condo might be lower, you might have a better return on your investment when you are buying a house as opposed to buying a condo.

You’re responsible for everything in your unit

When you are renting you are usually not responsible for repairs inside your unit. When renting, if one of your major appliances breaks, you will not be on the hook for replacing this or the repair costs associated with fixing it. This is not the case with condo ownership. When you own a condo, you can paint the walls and renovate your unit, but you are also responsible for repairs inside your unit. This means that you are responsible for repairing and replacing appliances if they break. And you will be doing repairs if you have a problem inside your unit. You will also be responsible for ensuring your unit and all of your belongings inside your unit. Before buying a condo, it is essential that you have a clear understanding of what you are responsible for and what you are not responsible for.

While buying a condo might be an ideal choice you, there are some lifestyle factors you should consider before making any decisions. It is important to remember that you are not only buying a condo, you are also buying a home and into a neighbourhood.

There are several steps involved in the process of purchasing a pre-construction condo. The steps in this process will vary from agent to agent, broker to broker, and developer to developer. However, the steps listed here are the basic components of this process.

Related article: GTA home buyers and sellers are overpaying by thousands

Steps for Buying A Condo in Toronto and the Greater Toronto Area (GTA)

1.  Determine your budget, and desired neighbourhood(s)

Before buying a condo, you will need to determine what your budget is. You will need to consider how much you are willing to spend and how much you will be able to pay for a given condo? These amounts will determine what condos are available to you. You will need to have an idea of how many bedrooms, bathrooms and anything else you might want in your ideal condo. Before looking at condos you should have a list of must haves and things you are looking for in your ideal condo, a list of amenities you want in your ideal complex and have a list of things that would be nice to have but you can live without them. And you will need to know what neighbourhood(s) you are interested in moving to.

Another important consideration is are you willing to renovate or do things to a condo that might be right for you even if it not is move-in ready or not designed in your style? Are you willing to purchase a fixer-upper? If you are, you will need to consider your budget for repairs, renovations, additions, etc. Are you willing to purchase a condo that is in the pre-construction phase or new construction or do you want a condo that has already been built? Once you have figured out your answers for these questions, you can proceed to step two.

2.  Find a great real estate agent/broker to represent you, the buyer

Before you begin looking at condos, you should find a great agent or broker who has experience finding condos and is knowledgeable about the neighbourhood(s) you are interested in. It is important to remember that the condos you might be visiting during open houses on weekends are staffed by real estate agents who have a relationship with the seller. These agents are usually representing the seller, as the seller’s agent and they are duty bound to act in the seller’s best interest, not necessarily your (the buyer’s) best interest. The seller’s agent’s primary job is to ensure that the seller is getting the highest price possible for the home they are selling. Therefore, it’s important that you have your own real estate agent or broker who can best represent your interests, as the buyer.

3.  Get pre-approved for a loan

Ideally, before you are looking at homes with your agent or broker, you have been pre-approved for a loan or have sufficient funds ready for when the time comes for you to make an offer on the condo of your dreams. Ideally, you want to have the money lined up before you are looking at homes and have your financial situation figured out before you begin to seriously look at homes to buy.

4， Look at homes

Now, this is the fun part, it’s time to start looking at homes and hopefully, you will your dream house soon! At this point you are probably looking at houses with your agent or broker and/or possibly by yourself, visiting open houses on weekends. Hopefully, you are enjoying this process and are finding good prospect homes with your agent/broker.

5.  Find your condo

At this point, you have hopefully found your dream home! Congratulations! Now it’s time to make an offer and then it’s time to wait. It may take some time to hear back as to whether or not they chose to accept your offer.

6.  Sign the Agreement of Purchase and Sale (APS)

Congratulations, the seller(s) accepted your offer! Now it is time to celebrate and then you will sign the papers so you can purchase your future home! When the day to sign the APS arrives, you will need to arrive prepared with your government-issued photo ID and your chequebook, since you will not be able to purchase your home without these items. Your real estate agent/broker will walk you through the signing process and answer any other questions you might have at this time.

7.  Home Inspection

Before closing and taking possession of your condo, it important you have the condo inspected. Having your condo surveyed will help you avoid possible nasty surprises. leIt is important to have your home inspected before closing so you can have the seller fix anything that needs to be fixed or add to the contract a discount or money to have anything that needs to be fixed.

8.  Closing

Time for closing, today you will meet with your lawyer and/or agent/broker possibly meet with real the seller and their lawyer(s). Today, you will make your final payments and get the keys to the house and the property will be yours!

9.  Moving In And Occupancy

Congratulations! The big day has come and it is time to move into your new home! Hopefully, you have secured movers and ready to live in your new condo or prepare for any work you need or want to do for your condo. In an ideal world, you will be planning a housewarming party after you have settled in for friends, family, and if applicable colleagues to come to visit you and see your new home.

Questions to ask when looking at condos

Before deciding to purchase a condo or move into a condo community, there are a series of questions that you should ask. Finding out the answers to this series of questions can help you to decide whether or not living in a certain condo community is the right choice for you and your family.

What are the condo association rules?

Before deciding on whether or not condo living is right for you, you need to figure out what the condo association’s rules are, whether or not you are willing to abide by these rules. In other words, are you are ok with restrictions about things such as pets, and rules regulating any upgrades you wish to add to your unit?

You should ask to review a copy of the Homeowners Association’s or condo association’s covenants, conditions, restrictions, and bylaws, so you can understand all of the rules and ascertain if living in this community is the best choice for you. You should ideally have your attorney also review these documents.

How much are the monthly and yearly HOA/Condo association fees and assessments?

You should find out what things from this list are included in your monthly and yearly HOA/condo association fees and any assessments. You should inquire as to whether or not any major renovations or expansions are planned.

Is there any additional work planned for the community (for example: building more units, adding any new amenities, changes to the common areas, etc.)?

This is especially important since finding the answer to this question can help you to figure out what if any phases of the community have been completed. And if any planned phases for the community have not been completed, how long additional work may take and whether or not any additional work is planned.

How much money does the association who manages the complex have in reserve in their capital fund?

If you are looking into moving a condo complex, it is recommended that you find out how much money the condo association which manages the complex has in its capital reserve fund. The funds in the association’s capital reserve fund usually are used to cover any additional expenses which arise. Generally, this reserve fund should contain at least 10 percent of the association’s annual revenue budget. This information is important since if the association does not have sufficient funds in its capital reserve funds this means that you might be at an increased risk for paying a special assessment (additional fees that the association will charge owners to cover the costs for capital improvements).

Who fixes what?

It is important that you find out which repairs and possible maintenance issues you will be responsible for and which items the condo association will be responsible for fixing.    

If you are living in a condo complex, who manages the complex?

If you are looking into moving into a condo, you should find out if there is a professional management company responsible for managing the complex. Having a professional management company charged with managing the complex might cost you more money up front, but in the long-term, it might save you money. This is important since companies or people charged with managing a large number of complexes might have greater negotiating power for maintenance services such as lawn care.

How many units are currently for sale in the complex and are any units in foreclosure?

Is the condo association involved in any legal disputes?

This is an important question since it can signal trouble within the association and possible future costs you might be responsible for paying, such as attorneys’ fees.

More questions:

• What are the community’s common areas? What are the rules and hours regulating their use?

• What does the parking situation look like? Where would your parking space(s) be? What is the situation with guest parking?

• How many investors have bought into the building?

Additional Questions/Information:

You will need to speak with your lender to figure out which type of loan will be the best for you to purchase a home within a given community. Your lender will have specific questions about the complex, how many units are occupied by owners, what percentage of association fees, are delinquent, etc.

Finally, if there are already people living in the complex, you should definitely speak with them. When you speak with them, ask them what they like the most and the least about living there, get their opinions about maintenance quality and the condo association. You can also find out whether or not there are community activities they can recommend that you can participate in.

These conversations can be incredibly illuminating and helpful as you make your decision to buy a condo in a given community. While finding the answers to these questions before deciding to purchase a home, can help you to avoid some headaches down the road and aid your decision-making process. While you should try to find the answers to these questions, there are some additional things you will need to keep in mind.

Related article: Tips for Buying a Condo in Toronto

Things to Consider When Buying A Condo in the Greater Toronto Area (GTA)

An important consideration for condos is what distinguishes them from townhouses and regular, free-standing houses. When you own a condo, you own your unit, but you also own a share in the ownership of the land where your complex is located, the building where your condo is located and the common areas in your complex. When you have a condo, and you share the costs for upkeep with fellow members/condo owners in your condo association. In this scenario, the Board of Directors for your condo association or the property management company charged with managing your complex is entrusted makes the big decisions about the maintenance, upkeep, etc.

Conclusion

While buying a condo might be the right choice for some people, it is not the right choice for everyone. And there are inherent risks you face whenever you are buying and investing in real estate, this is especially true for purchasing condos. However, if you do your research, negotiate well, are patient and are prepared for all the possible trials and tribulations that are part of buying a home, with some luck, your investment has the potential to turn out well for you. In order for you to reap the rewards of your investment, you will need to do your due diligence and seriously consider whether or not buying a condo is the right choice for you.

Photo by Nadine Shaabana on Unsplash