Condos are a good option for anyone looking to invest in a new home, including first time buyers who want to build some equity. Buying a condo can be a good starting point, since it’s usually less expensive to own and maintain than a full size house. It can also be a great way to enjoy the life of luxury, for those who are looking for freedom from maintenance and regular upkeep.
Regardless of what your reasons are for considering a condo, it's essential to understand what you are buying into. Most people don't really know what a condominium is. They use the term “condo” and “apartment” as synonyms. However, “condo” refers to a type of ownership, and has nothing to do with the physical characteristics of the unit. In fact, a condo doesn't have to be an apartment at all! A condo can also be a flat, a townhouse, a link home, or any type of multi-unit residential property. What defines it as a condo is the form of ownership under which the unit is held.
Condominium refers to the ownership of a specific area or unit in a multiple unit residence; in addition, you have shared ownership of joint areas which you use with other owners. These common areas, also known as “elements”, can be a lobby, concierge, security, elevators, swimming pool, laundry facilities, gym, etc. The cost of operating and maintaining these common areas is jointly shared by the unit owners as regular monthly payments. Usually, the cost of this is determined by a governing body made up of the condo owners. Since the governing body is made up of the residents, the cost is kept low and general maintenance is affordable.
Condominium ownership has a number of advantages, mainly, the ability to build equity, as well as enjoying the privacy within your individual unit and title ownership. It also removes many disadvantages that home owners usually face, such as snow removal, lawn care and the financial burden of dealing with major repairs, such as roof or furnace replacement. With a condo, you have the peace of mind that your property will be maintained, with no extra hassle or sudden surprises. However, you need to keep in mind that the condo will come with a monthly fee attached for these services, and in certain cases, you might even be paying for amenities you never use! Another important consideration is that condos are run by management, and in case of bad management, the value of your premises, and your own lifestyle will greatly be affected.
On the other hand, purchasing a freehold unit means the grounds of the complex are maintained by the condo corporation but the units themselves are your responsibility. This means that you will be responsible to bear the financial burned of any repairs, as well as labor costs and contracting. Usually, since the services are less, the condo fees in a “freehold” condo will be relatively low. But keep in mind, if you’re opting for a freehold condo, then choose a fairly new complex, and don’t intend to make it your lifelong home. Since the rules and regulations in freehold don’t apply to the internal upkeep of the property, it can mean that years from now, your neighbor can have a broken window and leaking roof, which will negatively affect your property, but you can’t do anything about it!
On the other hand, there are numerous advantages in a freehold too. First of all, since you are responsible for your own upkeep and maintenance costs, so you have more control over your expenses. If you are buying a relatively new unit, you can safely assume that there won’t be any major repairs during the first several years, this can give you the opportunity to build on your personal equity by paying your mortgage faster.
For any questions about buying a condo or freehold property in Mississauga, contact me... Bill Orr at (416) 268 6228