# Do you think these condos are priced right?



## revv (Oct 8, 2014)

http://www.minto.com/ottawa/Orleans-new-homes/Avalon/collections-tag/condo-flats.html

The rent is usually around 1300$ per month and condo fees are around 130$ per month I believe, do you guys think this is a good investment to buy now?


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## andrewf (Mar 1, 2010)

$130 condo fees? What are they after 5 years?


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## Just a Guy (Mar 27, 2012)

I'd usually look closer to the 1% rule on rent to purchase price...so for $1300/month rent, I'd be looking to pay closer to $130k than the $200k amount they are asking...it's not terrible, but it would be tight.

Also, if there are any problems from construction issues (like they are having in Toronto or had in Vancouver) where the builder walks away and declares bankruptcy, you could be on the hook for major costs.

Not something I'd touch personally, but that's not to say it couldn't work. I'd prefer to wait and buy two places for the same amount of money thereby lowering my risk...of course those wouldn't be new builds, but that's more my style.


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## Maltese (Apr 22, 2009)

Revv, on new condos developers always price the condo fee low to entice buyers. The fees charged do not reflect the actual costs of running the building. Then when enough units are sold and a board is elected, it will create a budget and the owners' fees will increase. Based on my experience with condos, expect the fee to double.


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## JordoR (Aug 20, 2013)

Maltese said:


> Revv, on new condos developers always price the condo fee low to entice buyers. The fees charged do not reflect the actual costs of running the building. Then when enough units are sold and a board is elected, it will create a budget and the owners' fees will increase. Based on my experience with condos, expect the fee to double.


While this may be generally true, my first condo I bought that was presale the fee stayed exactly the same - and my friend who bought about 4 years ago, his actually decreased.


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## Just a Guy (Mar 27, 2012)

Many condos can operate for about 10 years or more on low fees, as no major maintenance is usually required. Of course, by the time you need to do major repairs, you haven't saved up any reserve to pay for it, so you are hit with large special assessments to cover the cost.

Personally, I prefer special assessments as I can use my money elsewhere until it's needed...plus I get involved in the boards, so I know when there will be a need for the money and can plan for it, but for most home owners, especially those who bought the condo because of the low fees, this can be a devastating blow to them.

The purpose of higher fees is to slowly build up the funds required for future repairs. It's not free money, its not cond money, it's a savings plan to ensure your building stays standing and in good condition.


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## revv (Oct 8, 2014)

well I think I might just end up selling all my gold/silver that I purchased a while ago since it isn't making me any money and hasn't preserved my wealth like they said it would and buy a condo and rent it out


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## Cal (Jun 17, 2009)

Given that the gold/silver didn't work out for you 'like they said', and that Just a Guy who is an experienced landlord said he wouldn't touch it based on the numbers given, why do you think the properties listed above are such a great investment?

I look at what would be the best use of that amount of money, and the return I could get on it. Taxes are also a factor imo, as rent is taxed higher than other forms of investment income.


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## Newby1983 (Apr 9, 2015)

My first house was a pre-construction townhouse in Ontario. The developer advertised $99 condo fees. I got onto the board after occupancy. We found the reserve fund under-funded and insurance appraisal very low. "Loopholes" exist. Needless to say after year 1 condo fees increased to $190. 

My lesson learned: expect the condo fee to double after year 1. If I did it again, I would look at some of the builder's past developments and ask original owners who live there if condo fees increased after year 1.


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## sags (May 15, 2010)

Those units actually look pretty good.

Somewhat of a low rise.........less maintenance involved, windows facing different directions.......a nice feature, a den and two baths...........and the price is pretty good.

Only problem is they are artist renditions, and the price is "from"...........might they be "bait and switching" with no units actually available for those prices ?


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## Just a Guy (Mar 27, 2012)

It may depend on the stage they are at. I used to have builders as clients, every few months, as the build got closer to being finished, the prices would go up. Often the price rose more than 1/3 as they moved from concept to finished. Of course, "investors" who bought presales, often flooded the market all at the same time in the 45 days after completion to try and cash in (since they were on the hook for the sale price otherwise), so prices may have fallen just after the last person payed full price.


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