153 replies to this topic

[UrbanRail]

Hey
My girlfriend and I are looking to potentially buy a condo in about 4-5 years time. The reason being we will have a decent down payment and I graduate from college in less than 3 years.

I am curious to know about strata fees. What is the average?

We are basing a monthly mortgage/ strata fee of no more than a max of $1500 a month. We are currently paying 1325 a month in rent.

Cheers

Aaron

[Holden West]

The lowest possible fee would be just over $100--that would be for a tiny suite in a medium-to-large building with no management fees, landscaping or other amenities. More realistic fees are probably at least triple that. Make sure you're getting a good value. If you never plan on using the gym in Parc Residences in Vic West you'll still have to pay for it. 

Make sure the condo has a healthy contingency fund. If not, and the building needs an emergency repair, you could be on the hook for hundreds of dollars or more. There should be five figures in the fund; if there's only a few thousand, that's sign of a negligent council.

Edited by Holden West, 30 December 2013 - 08:17 PM.

[Mike K.]

Marko wrote in another thread that strata fees for downtown Victoria range between $0.30 and $0.40 per square foot per month.

[KAS]

Our fee is just over $300 per month, based on our 1000 sq ft unit close to downtown.  This pays for 32 separate expense lines in our annual budget which range from utilities to gardening to building insurance.   Some lines, like pest control, have never been used.  Others, like HVAC repair, have (dammit).  Last AGM we voted to include the costs of the depreciation report in the monthly fees, rather than as a special levy.  Our strata is also growing our reserve fund at an acceptable rate - according to both the owners and the Strata Property Act.

 

As said above, an older building, anywhere in the city, with a weak contingency fund is a recipe for disaster.   

[Nparker]

Approximately 900 square feet and I will be paying $261/month effective January 1, 2014.

[jklymak]

As said above, an older building, anywhere in the city, with a weak contingency fund is a recipe for disaster.   

 

I guess there are two schools of thought on this.  Would you rather a strata council hold onto your money, or would you rather hold onto it?  Flip side, do you trust that your neighbors can cough up for special levies?  I guess I'd personally rather have a proper depreciation report with expected expenses laid out for all owners, and then keep the contingency at the minimum, but regularly remind owners what they should be prepared to pay in the next 5 or 10 years.  

[jklymak]

BTW, we are 1190 sqft, 2008 building, fees are $420/mo = $0.35/sqft, so right in Marko's ballpark.  Heat and water are included, as is all building maintenance.   

[Mike K.]

I guess there are two schools of thought on this.  Would you rather a strata council hold onto your money, or would you rather hold onto it?  Flip side, do you trust that your neighbors can cough up for special levies?  I guess I'd personally rather have a proper depreciation report with expected expenses laid out for all owners, and then keep the contingency at the minimum, but regularly remind owners what they should be prepared to pay in the next 5 or 10 years.  

This could cause serious implications for resales and even lead to lawsuits if the seller does not disclose that there may be significant expenses coming down the pipes in 2, 5 or 10 years. And you can imagine the impact on prices this will cause for the entire building.

 

Long story short if a council is not on the ball with important repairs and maintenance that will eventually come back to bite them. A well managed building will deal with issues immediately, request engineering reports if a questionable situation may be in the making, and act as soon as possible on the recommendations of that report.

[Holden West]

I guess there are two schools of thought on this.  Would you rather a strata council hold onto your money, or would you rather hold onto it?  Flip side, do you trust that your neighbors can cough up for special levies?  I guess I'd personally rather have a proper depreciation report with expected expenses laid out for all owners, and then keep the contingency at the minimum, but regularly remind owners what they should be prepared to pay in the next 5 or 10 years.  

 

This is not a great option. A roof wears out or paint fades over a long period of time and then it's fixed all at once. It's not fair to dump the entire cost onto merely the residents unlucky to live there right at the time the bill needs to be paid. The cost should be spread out so all tenants past and present contribute to the cost. Some stratas will compromise and use a mix of contingency funds and special assessment so neither the fund nor the owners' wallets are destroyed.

[Mike K.]

I agree. If I were looking for a condo I would run the hills once I realized strata fees were the bare minimum and the council was frugal.

 

The implications of a frugal council could be financially catastrophic for a new buyer. Imagine suddenly finding yourself in a situation where you have to borrow $45k on top of your mortgage.

[Matt R.]

Good advice. You usually get what you pay for.

Our three bedroom 1200 sq ft strata townhouse has fees of about $375 incl heat and hot water. Very well cared for, great management company (Proline) and healthy contingency fund.

Matt.

[jklymak]

This is not a great option. A roof wears out or paint fades over a long period of time and then it's fixed all at once. It's not fair to dump the entire cost onto merely the residents unlucky to live there right at the time the bill needs to be paid. The cost should be spread out so all tenants past and present contribute to the cost. Some stratas will compromise and use a mix of contingency funds and special assessment so neither the fund nor the owners' wallets are destroyed.

Yes, but there is now a depreciation report that condos are expected to have. As a prospective buyer you will have access to this and could adjust your price accordingly. If there were no depreciation report, then sure, don't buy unless the contingency fund is in the five figures for your unit.

[Holden West]

I agree. If I were looking for a condo I would run the hills once I realized strata fees were the bare minimum and the council was frugal.

 

The implications of a frugal council could be financially catastrophic for a new buyer. Imagine suddenly finding yourself in a situation where you have to borrow $45k on top of your mortgage.

 

I was reading about a nightmare scenario in Toronto where a large high rise condo with a large percentage of absentee (non-resident) owners jeopardized the integrity of the building. They were holding their suites as investments and refused to authorize necessary repairs and normal increases in strata fees for many years. The responsible owners were in the minority. Important maintenance was ignored to the point the safety of the building was in doubt.

 

The best thing to do is to get on Council and then troll through the building looking for other reasonable, common-sense professional folks and convince them to serve a term as well. 

 

Yes, but there is now a depreciation report that condos are expected to have. 

 

 

A great document, true. But if only the buildings themselves would pay attention to them and not surprising us with unexpected emergencies!

[jklymak]

A great document, true. But if only the buildings themselves would pay attention to them and not surprising us with unexpected emergencies!

Yes, fair enough. But a contingency fund is just a bank account, so whether I manage that bank account or the strata council manages it is pretty moot in my opinion. If I had a choice between two identical places, one with a large contingency and one with a small, then I'd expect to pay more for the place with the large contingency by the amount of the units entitlement to the contingency. If a large unexpected repair happened the day after I bought the place, then I'd still be out the same amount of money.

It is worth making sure your council has a record of being proactive in keeping things maintained. I'm just saying a low contingency can be a rational way to run a building without it being a red flag, so long as the building is being run carefully.

[Holden West]

If a large unexpected repair happened the day after I bought the place, then I'd still be out the same amount of money.

 

Not really. Say you buy a condo and the next day an unexpected repair is discovered. If the building has a healthy contingency fund the person you bought the condo from yesterday and other former owners have already contributed to the cost of repair. If not, only you and your present neighbours are on the hook. A reduction in the purchase price due to a small contingency sounds reasonable but I doubt it exists in real life. Maybe Marko can shed light on this, I don't know.

 

I'm thinking of the poor people in The Wave building on Yates. The failure of that giant wave mural only a couple of years after it was installed was totally unexpected. The fact they haven't done a thing to repair or replace it for several years means council is probably paralyzed over what to do with it. The building is almost ten years old and will soon need normal big ticket upgrades like carpets and roof maintenance. It would be interesting to get ahold of their minutes to learn their game plan.

Edited by Holden West, 31 December 2013 - 09:14 AM.

[jklymak]

Not really. Say you buy a condo and the next day an unexpected repair is discovered. If the building has a healthy contingency fund the person you bought the condo from yesterday and other former owners have already contributed to the cost of repair. If not, only you and your present neighbours are on the hook. A reduction in the purchase price due to a small contingency sounds reasonable but I doubt it exists in real life. Maybe Marko can shed light on this, I don't know.

 

I'm thinking of the poor people in The Wave building on Yates. The failure of that giant wave mural only a couple of years after it was installed was totally unexpected. The fact they haven't done a thing to repair or replace it for several years means council is probably paralyzed over what to do with it. The building is almost ten years old and will soon need normal big ticket upgrades like carpets and roof maintenance. It would be interesting to get ahold of their minutes to learn their game plan.

 

Again, a contingency fund is just a bank account.  You can easily calculate how much money you have in the account by looking at your unit's entitlement compared to the total entitlements.  If someone pays for a condo irrespective of the size of the contingency fund, then they are being silly, but its not an argument that says a strata association should keep a large contingency fund.  The only good argument is that a contingency fund guarantees that my neighbors will pay their share of a special project w/o having to take them to court to seize their assets.  

 

As for the Wave (which is where I live), the (two year) holdup was getting the original development team to pay for the repairs/replacement.  A tentative agreement has been reached, subject to approval of the membership of the strata corporation.  I think it would be unfair to assume the strata council was "paralyzed"; these things take time and lawyers to sort out.  In my opinion, the Wave is very well run, with a decent contingency fund, and a solid plan for regular maintenance.  Implying the delay in getting the mosaic fixed is due to poor building management is very unfair.  

Edited by jklymak, 31 December 2013 - 09:31 AM.

[sebberry]

Here's something to remember:

 

It's the homeowner's contents insurance that typically pays their portion of the earthquake deductible for the building.  If a few homeowners don't have insurance and can't cough up their portion of the earthquake deductible, it puts the whole building at risk. 

 

It appears that the council can't pass a by-law requiring owners to have adequate insurance, either. 

 

 

As for the strata fees and contingency fund - I can see jklymak's point.  I can get a better return on my $$$ than the strata can, and it's available to me in a personal emergency.  Also, if you own a house it's the current owner (you) that has to take on the repairs when needed, the previous owner isn't building up a fund for you. 

 

But since you can't require owners to maintain their own savings, there's no guarantee that money can be raised quick enough to take on a major repair. 

 

 

There was a "Condo Smarts" article in the TC the other day.  A leaky roof was in bad need of repair and the damage was starting to progress beyond just the roof.  One of the owners petitioned the rest of the owners and blocked the repairs.  Imagine that - an owner doesn't want the leaky roof fixed.  Now imagine it was funded solely by a special assessment and a few owners didn't want to cough up their share of the bill. 

 

Sadly, it happens. 

[Holden West]

Sorry, I didn't realize you lived in The Wave. Weird co-incidence. I didn't take into account the original developers might be on the hook for repairs. Sometimes it's really hard to get them to fix things years after completion but you should have a good case as it's a failure of the outside envelope. Yes, if the developers are still in play legally, then the delay is normal and totally understandable.
 

 

If someone pays for a condo irrespective of the size of the contingency fund, then they are being silly, but its not an argument that says a strata association should keep a large contingency fund.

 

 

True, I have seen large contingencies highlighted as desirable features in condo ads. I want to hear from people if that has factored into the actual negotiations.
 

 

There was a "Condo Smarts" article in the TC the other day.  A leaky roof was in bad need of repair and the damage was starting to progress beyond just the roof.  One of the owners petitioned the rest of the owners and blocked the repairs.  Imagine that - an owner doesn't want the leaky roof fixed.  Now imagine it was funded solely by a special assessment and a few owners didn't want to cough up their share of the bill.

 

 

I read that. It's terrifying.
 

 

But since you can't require owners to maintain their own savings, there's no guarantee that money can be raised quick enough to take on a major repair.

 

 

We've had to deal with a few owners (one of whom was actually on council) who were flat broke and couldn't afford a special assessment. We had no choice but to put a lien on the unit but that's meaningless until the bill is paid or the unit is sold.

 

Sorry for getting this a little off topic. What are the monthly fees at the high end buildings like Shoal Point?

Edited by Holden West, 31 December 2013 - 10:00 AM.

[MarkoJ]

I am curious to know about strata fees. What is the average?

 

Concrete building downtown I would say approximately between $0.30 to $0.40 per square foot per month.

Wood framed building I would say approximately between $0.25 to $0.35 per square foot per month.

Townhomes are almost always going to be significantly cheaper per square foot.  (No elevators, etc.)

 

As said above, an older building, anywhere in the city, with a weak contingency fund is a recipe for disaster.   

 

Over simplification.  

 

I guess there are two schools of thought on this.  Would you rather a strata council hold onto your money, or would you rather hold onto it?  Flip side, do you trust that your neighbors can cough up for special levies?  I guess I'd personally rather have a proper depreciation report with expected expenses laid out for all owners, and then keep the contingency at the minimum, but regularly remind owners what they should be prepared to pay in the next 5 or 10 years.  

 

Exactly.  There is no right or wrong on either school of thought but the purpose of a depreciation report, in very simple terms, is to take inventory of a strata corporation's common property assets, make observations on their conditions and anticipated life expectancy, and project the cost of replacement.  What the strata corporation does with this information is entirely up to the strata corporation.  

 

This could cause serious implications for resales and even lead to lawsuits if the seller does not disclose that there may be significant expenses coming down the pipes in 2, 5 or 10 years. And you can imagine the impact on prices this will cause for the entire building.

 

Long story short if a council is not on the ball with important repairs and maintenance that will eventually come back to bite them. A well managed building will deal with issues immediately, request engineering reports if a questionable situation may be in the making, and act as soon as possible on the recommendations of that report.

 

I agree with immediate repairs, but what should a strata corporation do about a new roof and new elevators required in 15 years estimated at $500,000? Start saving today or make the owners/potential buyers aware of the upcoming expense and issue a special levy in 15 years?  No right or wrong here in my opinion, just a matter of preference.

 

This is not a great option. A roof wears out or paint fades over a long period of time and then it's fixed all at once. It's not fair to dump the entire cost onto merely the residents unlucky to live there right at the time the bill needs to be paid. The cost should be spread out so all tenants past and present contribute to the cost. Some stratas will compromise and use a mix of contingency funds and special assessment so neither the fund nor the owners' wallets are destroyed.

 

I was the strata treasurer at the 834 (115 units) and as a volunteer I don't know if I would enjoy, or be qualified, to handle millions of dollars in contingency to cover expenses years down the road.  Do people start saving for their single family roof 10 years in advance? Probably not.  Personally speaking, I would prefer to have my cash sitting in my bank account than being handled by strata council volunteers.  

 

At the same time, some will argue that some strata owners aren't disciplined enough to save for future expenditures; however, I personally don't believe it the responsibility of the strata corporation to impose financial discipline on individuals.

 

If a depreciation report indicates that a new roof will be required in two years and you buy into that building knowing it will need a new roof in two years I don't see how that is "unlucky."

 

I agree. If I were looking for a condo I would run the hills once I realized strata fees were the bare minimum and the council was frugal.

 

The implications of a frugal council could be financially catastrophic for a new buyer. Imagine suddenly finding yourself in a situation where you have to borrow $45k on top of your mortgage.

 

You are describing a lack of disclosure pertaining to a massive defect, such as the exterior membrane needs to be replaced.  No contingency fund out there will cover this.

 

People often get a little too caught up in the contingency fund numbers.  Let me give you an example.  

 

Building A has 150 units and an annual budget of $650k.

Building B has 150 units and an annual budget of $650k.  

 

Building A has an extremely healthy contingency of $1 million.

Building B has the strata property act bare minimum of  $162,500 (25% of annual budget).  

 

$1 million versus $162,500?  Seems like a pretty big deal until you break it down to per unit.  $6,666 per unit versus $1,083.

 

Building A needs to repair a parkade membrane leak at a cost of $2,000,000

Building B needs to replace the roof at a cost of $200,000

 

Which one do you go for?  (Everything else equal)

 

I was reading about a nightmare scenario in Toronto where a large high rise condo with a large percentage of absentee (non-resident) owners jeopardized the integrity of the building. They were holding their suites as investments and refused to authorize necessary repairs and normal increases in strata fees for many years. The responsible owners were in the minority. Important maintenance was ignored to the point the safety of the building was in doubt.

 

This can go two ways.  A few luxury buildings in Victoria that have a large percentage of absentee owners also have low strata fees (relatively speaking) as you have half the building not using water, hot water, gas, less janitorial work, etc.  The owners living actually benefit significantly on a monthly basis.  

 

Yes, fair enough. But a contingency fund is just a bank account, so whether I manage that bank account or the strata council manages it is pretty moot in my opinion. If I had a choice between two identical places, one with a large contingency and one with a small, then I'd expect to pay more for the place with the large contingency by the amount of the units entitlement to the contingency. If a large unexpected repair happened the day after I bought the place, then I'd still be out the same amount of money.

It is worth making sure your council has a record of being proactive in keeping things maintained. I'm just saying a low contingency can be a rational way to run a building without it being a red flag, so long as the building is being run carefully.

 

+1 

 

Not really. Say you buy a condo and the next day an unexpected repair is discovered. If the building has a healthy contingency fund the person you bought the condo from yesterday and other former owners have already contributed to the cost of repair. If not, only you and your present neighbours are on the hook. A reduction in the purchase price due to a small contingency sounds reasonable but I doubt it exists in real life. Maybe Marko can shed light on this, I don't know.

 

I'm thinking of the poor people in The Wave building on Yates. The failure of that giant wave mural only a couple of years after it was installed was totally unexpected. The fact they haven't done a thing to repair or replace it for several years means council is probably paralyzed over what to do with it. The building is almost ten years old and will soon need normal big ticket upgrades like carpets and roof maintenance. It would be interesting to get ahold of their minutes to learn their game plan.

 

What is a small contingency fund?  25%, 50%, 75% of annual budget? 

 

My final thought is look at the big picture.  If the contingency fund is small, the strata fees are high, the building needs big repairs, the strata corporation is suing the developer, they've fired their management company three years in a row, etc., etc. probably run away.

 

If the contingency fund is small, the strata fees are low, but everything else checks out than I don't see a reason to run.

 

Everything has to be taken in context using common sense.  Would I question a 20 year old building deferring a depreciation report? Yes.  Would I question a 1 year old building deferring a depreciation report? No.  

[MarkoJ]

Sorry for getting this a little off topic. What are the monthly fees at the high end buildings like Shoal Point?

 

$0.36 per square foot.