Buying a condo can be a fantastic step towards reaching your financial goals. If you’re a first-time buyer, they provide one of the most affordable paths to homeownership and allow you to begin building equity. If you’re an investor, they can be a source of passive income, especially with the growing need for rental housing in Guelph.
You may even decide to move up a step on the property ladder by acquiring a condo now as a vacation home and possibly a retirement destination later. Depending on your situation, condos can represent the perfect real estate opportunity. However, there are a few nuances you will want to be aware of before moving forward.
1. Review the Status Certificate
A status certificate is a document created by the condo corporation that provides a wealth of information about the building and its management. Understanding the content can give you an idea of the financial health of the corporation and how well the building is maintained.
Getting a status certificate and reviewing it carefully is potentially the most important step you can take before making your investment! There are sometimes regulations within the fineprint that the untrained eye may pass over that could cause you a lot of grief. Therefore, it is always best to make the offer conditional upon your lawyer reviewing the status certificate. This document can be complicated, but an experienced professional can help you understand what you need to know before placing an offer.
Guelph is the perfect place for young real estate buyers and investors! Learn more about the possibilities in the posts below:
- Should I Buy a House for University Instead of Renting?
- Benefits of Buying a Student Rental
- The Ultimate Guide for First-Time Buyers in Guelph
2. Are Pets Allowed?
Check the rules on pets because every condo is different. Some buildings may welcome them with open arms, while at others, you may be lucky to even be allowed a fish.
Some restrict based on the type of pet, weight or the ability for them to be carried in the common areas. If you have a pet or plan on getting one in the future, it is important to know the exact rules.
3. Check for Outstanding Work Orders
The last thing any new condo buyer wants is to be held responsible for debts or repairs incurred by the previous owner. Make sure there aren’t any specific work orders against the unit you are considering. If the previous owner added an awning or washer/dryer that was breaching the rules then you may be responsible for solving these issues. You may have to remove them yourself or the condo corporation may remove them and send you the bill.
4. What Are the Rules on Rentals?
As a university town, Guelph has an insatiable need for more student rentals. Condos may seem like the perfect fit, but it’s important to know the rules ahead of time.
Some corporations have rules about how many students are allowed in one unit. Regulations like these can affect your ability to generate enough cash flow if you had planned on renting out multiple rooms.
5. Is There a Sufficient Reserve Fund?
Check that there is enough money in the reserve fund to cover ongoing maintenance costs. If the reserve fund is low and the window and roof are old, you can count on your monthly condominium fees increasing.
6. What Does the Insurance Policy Cover?
Make sure you understand the insurance policy. Building insurance doesn’t cover your personal items or condo improvements. For example: You spend $80,000 completely gutting the kitchen and bathrooms in the condo and a while later the building burns down.
Chances are, the insurance company will only pay to restore the unit back to its original state without any of your upgrades. You are now out $80,000 in addition to the cost of all your personal possessions.
Therefore, it is important to understand what the insurance covers to make sure you protect yourself and your belongings. You will want to purchase condominium insurance which includes content and improvements.
Looking for a comprehensive list of resources for successful real estate investing? The posts below will get you off to a great start:
- Five Best Cities in Ontario to Buy Recession-Proof Investment Properties
- How An Experienced Guelph Real Estate Team Can Help With Your Investments
7. Are Special Assessments Likely?
If there is unexpected damage done to one of the common elements in the building, then you may be asked to pay a portion of the cost of the repairs. Special assessments can be unexpected and expensive, especially if you didn’t fully understand the status certificate ahead of time.
Before investing, be sure to partner with an experienced real estate team and lawyer who understand the regulations around condo transactions. With the right guidance, you can be well on your way to acquiring the perfect unit for your needs!
Do you want to further explore the opportunities in Guelph real estate? Our experienced team is happy to help and answer any questions you have. Reach out to info@gowylde.ca or call 519-826-7109 for more information.
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