Which Condo Building is Most Financially Sound

Financial Thinking for Condo Owners

June 2017

Imagine purchasing a 1,000 square foot condo suite and having to choose between one of three buildings.  All condo suites are similar in terms of quality and amenities.  Your primary concerns are twofold.  You want to choose a building whose condo corporation is in good financial condition and unlikely to experience either a significant increase in condo fees or a special assessment.  You also want to keep your monthly expenses as low as possible.

Which of these three condo buildings would you choose?

There is no easy answer.  Much depends on personal preferences.  An important step is to understand the above information although this is by no means comprehensive.

Many would choose Building 3.  It is new and has the lowest monthly condo fees.  It is the most expensive to purchase but low interest rates make the monthly mortgage payment manageable.  Drawbacks include a low reserve fund balance and lower annual reserve fund contribution.  Condo fees  could reset within a few years to a level comparable to Buildings 1 and 2.  The lack of a swimming pool eliminates a large ongoing expense and will help to keep condo fees lower.  This building has the largest number of suites of the three buildings. which means more pipes, ducts and windows to maintain.  Finally, the cost of heating and cooling is not included in the monthly condo fees.

While Building 3 has more suites, and residents, it does not have more elevators.  This will help keep condo fees down.  It is also likely to mean longer wait times particularly when an elevator is out of commission or on service for use by contractors or a move-in / move-out.

Building 3 is poised for an increase in condo fees until they reach a level comparable with the other two buildings.  Its current budget may have been set by the developer and possibly not a realistic indication of ongoing operational costs.  Any significant unexpected repair could result in a special assessment to all condo owners.