# Best property to own for 25 years



## emperor (Jul 24, 2011)

Hello, I'm wondering if anyone knows a web site or has done research into the best property to buy for a 25 year window. 

Let's say you want to buy a 1200 square foot Condo, Town house, Duplex with condo fees, Duplex without condo fees or a house. Which is the best bang for your buck in the long term.

I noticed one duplex cost $300 more a month but it includes the same things as other duplex's, nothing extra. So over 25 years it would cost me an extra $90,000 to live there for no reason.

If you get a duplex with condo fees is it better than one with out? Let's say it has been 8 years since both places had a new roof. The one would be covered because of condo fee's the other you would need to pay yourself.

I've also seen condos with $400 a month condo fees and that includes heat and water. Some town houses are $500 just for heat and water, then you have condo fees on top of that. 
I'm wondering if anyone has crunched numbers and come to realize which type of property generally has the best value for 25 years. 

Thanks


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## Newby1983 (Apr 9, 2015)

Paying condo fees usually works out more than managing and paying for maintenance yourself. You have to pay a property management company. I lived in a town house and figured of the total amount I paid in condo fees it cost me alone $50 per month for their services. Don’t forget you could also be slapped with a special assessment. It’s happening to my friend now who owns a 8 year old condo that needs a new roof ($7000 extra each unit)...which sounds fishy to me. You have little control over budgeting or selection of contractors. 

On the other hand if you don’t want anything to do with maintenance, paying for it, cutting your grass or shovelling then there’s an advantage to condos. 

It really is up to you.


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## Just a Guy (Mar 27, 2012)

If you're speaking in general terms, there is no right answer. The best investment depends on what the options are at the time of purchase. For example, I know of a single family house that increased in value 3.5x in 10 years (went from 100k to 350k), but only generated about 1200/m in rent. 

I also know of a condo that had two suites on one title. The purchase price was 71.5k and the rent it generates is over 2k/month. The capital gains won't be as high, but the cash flow is unheard of. 

I also know of a duplex which sold for $240k both sides. It needed repairs bout would easily double the money, including repair costs in a few month. It would also generate about 3k/month in rent. 

Now I've also seen people talking about a 500k house which may rent for 2k in a bubble market (where he house could face a correction of upwards of 60%). There are also condos that are expensive and mismanaged facing huge special asssessments, lawsuits, and theft. Also a duplex which was expensive and hid all kinds of problems like mood, asbestos, not being built to code, etc.

Anything has the opportunity to become a killer investment, just like anything can turn out to be a dud. Each property has to be evaluated on its own.


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## emperor (Jul 24, 2011)

Yeah I'm just looking at a place to own not so much as an investment. 

For initial price it all makes sense to me, how new the building is, location, etc. What I'm having trouble with is the cost to live in the place. To me that seems like a very important piece of the pie. If you get a condo for example that's 380 with everything included or you get a house that's monthly bills are 700 and you will have to do some maintenance. I know you wont know for sure if you need special assessments but just to do regular maintenance, condo fees include that and houses don't. So if you were to add that up over 25 years that's a huge difference, probably around 114 -130 K difference.

I'm concerned about the big picture, how much is my bills to live in this place for 25 years. Not including appreciation or looking at something that might go wrong, I will just assume things will go okay. With all things equal is there a certain property that will be quiet a bit cheaper in the long run or are they all pretty comparable. Is there a way to find out my monthly bills at a place before I buy?


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## sags (May 15, 2010)

Location, location, location..........


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## 319905 (Mar 7, 2016)

Fwiw ... my plan simplified ... we'll be looking for places in the same area, rentals, condos, small bungalows preferably as is (the flips we've looked at I just don't care for), newer smaller semi-detached out a bit if have good bus service, gas heating, probably a 10 year stay then onto a retirement residence who knows where ... the condos have about $3M reserve, houses we'll go up to $600K with no major expenses for seen over 10 years ... I'm not including rising costs but that should be guesstimate-able e.g. 2%/year. Fwiw our operational costs current house were $12222 for 2016 and $12941 for 2017 ... of that, property taxes were 7605.28 for 2016 and 7801.89 for 2017 ... 3000 ft livable space, 2 gas furnaces, electric hot water. And if the current offer (7 figures) falls through we're happy to stay where we are ... 

Rent @ $25K/yr would be $250K/10 years; condo "a" expenses @ $17K/yr assume buy/sell at same price would be $170K; condo "b" expenses at $12K/yr assume buy/sell at same price would be $120K; and house expenses at $8K/yr assume buy/sell at same price would be $80K.

The house, as always ... wins :friendly_wink:

Off Topic: Having said all that, we'll likely go with condo "b" ... I'm done with being the custodian ... it'll be Molly Maids, lock and go, and some new stuff for us ...


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## tygrus (Mar 13, 2012)

You are looking at the property the wrong way. The land has the intrinsic value, not the structure. Condos are usually let to fall into disarray no matter how big the fees are but SFHs are pretty well kept and they have land you control.


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## banjopete (Feb 4, 2014)

Unless you never plan on marrying or having kids in the next 25 years, a condo isn't a 25 year house. Think of all the friends and families you knew growing up in apartments.... probably not as many as you know who were in houses, renting or owning. Houses offer a longer term move for sure. If you are going the usual condo to home route on the way, as other have said, make sure your condo is in a desirable area. Universities/colleges in proximity are great, downtown, and on transit routes are also great. It will help to maintain the long term appeal of the suite if you do choose to rent it out.

Condo fees are unavoidable, just the same as maintenance costs on a SFH. One can be ignored, but it's to your own detriment.


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## My Own Advisor (Sep 24, 2012)

Newby1983 said:


> Paying condo fees usually works out more than managing and paying for maintenance yourself. You have to pay a property management company. I lived in a town house and figured of the total amount I paid in condo fees it cost me alone $50 per month for their services. Don’t forget you could also be slapped with a special assessment. It’s happening to my friend now who owns a 8 year old condo that needs a new roof ($7000 extra each unit)...which sounds fishy to me. You have little control over budgeting or selection of contractors.
> 
> On the other hand if you don’t want anything to do with maintenance, paying for it, cutting your grass or shovelling then there’s an advantage to condos.
> 
> It really is up to you.


Yes and no. You need to factor in the costs of home ownership for a good comparison. Consider all capital costs such as roofs and major renovations over the years. Don't forget about your maintenance costs of the years as well; furnaces, air conditioner units every 15 years are required to keep your home comfortable.

I don't disagree that some condos cost more than a house but depending upon a multitude of factors this is not always the case.


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## ian (Jun 18, 2016)

We owned our own home for years. Sold and moved to a condo after months of travel. The condo we rented was very nice. The owner had just paid a $32K assessment. We intended to buy a condo but did not. We rented for four years. Our landlord had a second assessment of $5K. Plus, the building condo fees were increasing every year. During that time condo prices were flat and/or declining.

Three things that made us decide not to got the condo route. First, a major series in the news about leaky condos....so we decided that a concrete building would be better. Then a friend, who happened to be litigator whose practice as condo based, advised us to 'keep looking'. Finally, a friend who lives in a condo had lots of horror stories about the condo board that she was on. We did buy. But we own the dirt and we have a very good HOA association.

When we first moved into our rental unit most units were owner occupied. That mix changed drastically over four years. We could see the changes that this had on the building.


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## Just a Guy (Mar 27, 2012)

Ahh, when it comes to owning a home there's really no question about it. Buy a detached house. He problem with duplexes and condos is you're now stuck with communal living. Neighbours can be bad enough, but they are a lot worse when you share a wall, floor or ceiling. 

As for the condo fee debate, maintenance usually costs the same, since condos can usually get better pricing if run properly. Because people generally don't budget for a roof or windows until it's too late, they often don't consider those expenses which are paid in small chunks by condo fees. A properly run condo shouldn't have a special assessment. Those usually come because the owners don't want to spend the money to bank for a roof, windows, etc. They want low condos fees...just like the homeowner who doesn't do anything about their roof or windows until they are forced to.


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## ian (Jun 18, 2016)

The challenge with some condos is not whether or not there is sufficient money budgeted in the reserve fund for normal maintenance items. It can be an issue but it is not the one that concerned us when we were looking at condos for sale. 

The bigger issue by far is deficiencies in the building construction-most often the building envelope. The deficiencies may not become apparent for a number of years and they are exacerbated by the passage of time. Not good when, after five or six years, a hole is punched into the side of a building and the person pulls out rotting wet sawdust instead of touching hard, dry wood.

In our seven year old condo that we rented all of the cold water supply plastic pipe joints had the be replaced because they were leaking and in some cases fracturing. That meant cutting out large patches of drywal and ceiling (under floor hot water heated). Or when the balconies are not supported by the building foundation and, after a period of time, sink and then have water flowing toward the building, behind the stucco, and rotting the supports. This was another issue on our rental complex as we were moving out.

These are issues that can not only increase the monthly condo fees, add assessments, but can reduce the value of the condo itself. When prospective buyers research past condo minutes and see issues or concerns they tend to run away from the deal. We saw several very nice condos but there were problems with high monthly fees and condo management meeting minute disclosures.


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## emperor (Jul 24, 2011)

Can't there be issues or deficiencies in a house? Or is it just way more likely in a condo? I know someone who bought a house then 4 years later the roots from a nearby tree ended up cracking their foundation. I know another person who's underground grey water drain pipe collapsed and they had to get it fixed for nearly 15k. Do condos, townhouse and duplexes on average have more things go wrong with them than houses?

To me houses make sense, they cost around 350 -410 K for an average one and a condo is 230 - 300 to me that's worth the price. But I'm starting to wonder when I look at things in a long run.

Example 

In my 2 bedroom condo the fees are 491, property taxes 94, electrical around 100 and insurance 100 So to live here would be around 188,000 in 20 years or 376,000 to live here 40 years

My cousin has a house that cost 400K It cost 0 for Condo fees, property taxes are 266, electrical + Heat water + water + Garbage is around 600, insurance is 250. So to live there for 20 years would be $267,847 40 years would be $535,863

So unless I'm calculating this wrong a house that costs around 120K more than a condo. After the mortgage on the extra amount and with the higher monthly bills it will end up costing $242,019 MORE over 20 years.


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## Just a Guy (Mar 27, 2012)

You're missing maintenance. After 20 years you need to look at replacing things like roof, hot water tank, furnace, windows, siding, fences, grade, etc. These are costs usually built into a well run condo fee.

Also, even new construction of houses can have trades that build in deficiencies. It's not just limited to condos.


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## emperor (Jul 24, 2011)

So it would probably cost even more. So that goes back to my original question has anyone ever crunched the numbers for different properties in the long run?


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## Just a Guy (Mar 27, 2012)

If it's about a place to live, number crunching isn't the driving factor for most people, it's quality of life. There is a big difference between communal living and being in a detached house.

For example, you don't have restrictions on pets, you have a yard, maybe a deck and fire pit. Usually a garage, could be powered. You can have a workshop. You don't have people walking around on your roof, partying in the next room, or just plain crazy wandering the halls.

You actually own land, which can appreciate at a different rate than partial ownership. You have 100% say in how your place looks, when repairs are done, what products you use, who manages it, who makes decisions, etc.

A home is usually about more than the numbers and, even if it wasn't, they don't really compare as they use different scales.


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## Spudd (Oct 11, 2011)

Using common sense, it should cost less to live in an apartment than a house. Let's say you have a 10-storey apartment building. Your apartment will be using 1/10 of the roof over your head, so roof replacement (although probably more expensive than a residential roof replacement) would cost you only 1/10 of the actual cost. You will have neighbouring apartments on at least 2 sides of you, meaning maximum 2 sides of your apartment are exposed to the elements. This reduces your need for heating, as you will have shelter from the elements and also be getting some heat from the neighbours. 

However, if the apartment building has a bunch of amenities, then it might actually cost more. If you have a full-time concierge, a pool, a gym, cleaners to clean the hallways - these things cost money and the cost for them must be shared between all the tenants. On the other hand you might say well, I don't need to join a gym, I can just use my condo gym - so then it might save money.

It's not really possible to account for all the various factors because there is such a range of both condos and houses. You can't crunch numbers and say "a condo is always cheapest" because that might be true for a condo with no amenities in a well-built building, but might not be true for one with a ton of amenities in a shoddily built building. Similarly, a house could be a 1-bedroom brick bungalow, or it could be a 3-storey 5-bedroom McMansion. You would need to look at the individual properties you're thinking of buying and compare the numbers as best you can for the specific properties. 

Finally, one thing I can say is that it will always be cheapest to live somewhere that part of the property produces income, like a house with a basement suite or a duplex. You can then save all the income from the tenant and use it for any expenses, essentially living for free. But the downside is you have a tenant.


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## tdiddy (Jan 7, 2015)

I'm curious to see if anyone thinks buying a condo to live in for the long term is a good idea?

Most of the intangible aspects of home ownership (ie where your kids grow up, go to school, pets, not moving a family) are typically better suited for a detached home. 

On the other hand, if you don't value any of those things, your more likely to be okay with renting I would suspect? 

Renting + investing difference vs owning a condo over 25 years. How often does condo owner come out ahead? 

Personally we have no kids, no pets, like to travel, and am not handy, not exactly the ideal candidate for detached home. Looking at Vancouver condo market I'm much happier renting at the moment.


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## Just a Guy (Mar 27, 2012)

It's really impossible to say. If we go through a housing boom like the past 25 years, an owner may come out ahead, unless you got into things like apple stocks. Then again, if houses correct, stocks may do very well...unless stocks crash. 

There's nothing wrong with renting, and you can even rent houses, there is just no real way to answer the question which is better financially. It's the wrong question in my mind anyway, the real question should be which fits my lifestyle better. If you buy a house, you have different restrictions on your life than renting (harder to move for example, maintenance, etc.). 

Just because society pushes towards home ownership doesn't make it the right choice.

P.S. It takes discipline to invest the difference, something many people can't do, ownership is really a forced savings plan, not always the best return (rarely in fact), but the best most people achieve.


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## 319905 (Mar 7, 2016)

emperor said:


> ... My cousin has a house that cost 400K It cost 0 for Condo fees, property taxes are 266, electrical + Heat water + water + Garbage is around 600, insurance is 250 ...


$250/month insurance is pretty high my opinion ... that's $3K/yr ... mine's $950/year for a place valued at 3 x your cousins, and my hydro/water/gas/garbage for 4 adults is $400/month. Just saying, as others have said ... it depends. Was looking at a 3 bedroom apartment, electric baseboard heating ... previous renters cranked their hydro up to $500/month ... insane. My son had a place same building, same 3 bedrooms at about $200/month hydro, others he knew in the building paid half what he did ... less toys, kept it cooler in winter.


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## tdiddy (Jan 7, 2015)

Just a Guy said:


> It's really impossible to say. If we go through a housing boom like the past 25 years, an owner may come out ahead, unless you got into things like apple stocks. Then again, if houses correct, stocks may do very well...unless stocks crash.


I get that its usually a bit of a toss up with detached vs investing difference financially, esp with PR exemption factored in, add the intangibles I mentioned above and its easy to see why many people buy a detached home. But for condo? I had thought the sweet spot for new condo is 10-15 years typically (ignoring market factors)? After that I would think the building itself would be depreciating, if not sooner. With detached investment is more weighted towards land so long term typically would appreciate more. Maybe if condo is in perfect location (ie prime downtown Toronto) price appreciation of land and strong demand will offset any significant building depreciation. 

On the other hand I read somewhere lowest 20 year rolling return of SP500 since the 1970s is 6.1%/year. Its not like you have to pick the next Apple. 

I'm far from a savvy real estate investor, so happy to hear others thoughts on this if I've fallen for a fallacy. I would think potential different appreciation between detached vs condo a crucial aspect of the OP's question?


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## Just a Guy (Mar 27, 2012)

Don't confuse a home with an "investment". A home is rarely a good investment, its more of a poor return (when you factor in all the real costs which most people don't) forced savings plan. 

If you want to be a real estate investor, you should be buying investment properties (things that will generate money by say rent, flipping, etc.). A home is a place to live. It may go up, it may not that isn't the reason you buy it. Long term holding on something that doesn't generate money (often know as the hope and pray strategy) is gambling in investment terms.

When you buy an investment there should be a clear idea of where the money is going to come from (this is not to say that many people don't use the hope and pray strategy in stocks or business too, but it may explain the high failure rate). 

BTW, if you're happy with a 6.1% return (which is subject to upwards of 50% tax) then you're barely earning enough to ensure your spending power and not really getting ahead in the world (and some of us who actually buy stuff tend to suspect the rate of inflation is much higher than the government says).


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## tdiddy (Jan 7, 2015)

Just a Guy said:


> Don't confuse a home with an "investment". A home is rarely a good investment, its more of a poor return (when you factor in all the real costs which most people don't) forced savings plan.
> 
> If you want to be a real estate investor, you should be buying investment properties (things that will generate money by say rent, flipping, etc.). A home is a place to live. It may go up, it may not that isn't the reason you buy it. Long term holding on something that doesn't generate money (often know as the hope and pray strategy) is gambling in investment terms.
> 
> ...


I have no interest in real estate investing at the moment, nor am I happy with a 6.1% on equities, but it is a useful historical illustration. 

Semantics aside, what are your thoughts on condo vs detached home long term appreciation?


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## Just a Guy (Mar 27, 2012)

Meaningless in terms of home ownership, homes tend to remain relatively equal in terms of market price. His is because the homes which appeal to millionaires will always be the same type of house, just like a starter home will always appeal to new home buyers. Their prices generally remain in the affordable range for the people intending to buy them. A millionaire isn't interested in a starter home, so it's price range will never get there. 

In terms of investment, it depends on too many factors to make a general statement, however land has more options than a condo.

In terms of the market, as interest rates rise, I see a major correction (my back of the napkin calculations we could see 40-60%) as people can't afford to service the debts. For every 1% interest rise, you're looking at $50/month more on each 100k you borrowed. It adds up quickly and people can't absorb that kind of increase. 

Remember how rich people won't want starter homes? Well the starter home people can't afford those payments any more than the current homeowner, so the "bid" prices will drop. Eventually someone loses their shirt, the house gets foreclosed on and prices reset.

Personally, it's probably a good idea to rent until interest rates finish going up and stabilize. The. We'll know the true price of houses.


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## emperor (Jul 24, 2011)

Well a new piece of the pie just came out, I guess In Alberta they passed a law that your not allowed to have adult only buildings anymore. So I don't think a condo will be for me now, even if it is way cheaper over 25 years.


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## Just a Guy (Mar 27, 2012)

There will probably be grandfathered buildings.


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## redsgomarching (Mar 6, 2016)

with the new mortgage rules into effect this year i would wait out on properties. looking at a few new rentals as less people are able to afford or willing to wait until bigger downpayments to avoid paying more, bids can become scarce driving prices down even more.


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## emperor (Jul 24, 2011)

From what I understand 55+ buildings will stay the same, all the rest have 15 years to adapt. 15 years is a long time but I think it might just be better to pay the extra and get the house.

Ya I'll probably just wait unless something good comes up. Housing is just so much to buy and maintain, almost not even worth it.


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## Just a Guy (Mar 27, 2012)

The average Canadian moves every 7 years, staying in one place for 15 years is getting pretty far down the curve, 25 years in one place you're probably in the 1% range. That means the odds of you staying in one home, despite your best intentions, is not very likely.

Of course, there are exceptions. If you bought a house in Vancouver a long time ago when prices weren't insane, you probably couldn't afford to move later because prices became insane, since the only option was to move out of the city.


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