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Investing in Toronto condos for life
by Denise Lash
In the same way a chameleon changes colour to suit its surroundings, a well-thought-out condo purchase will adapt to its owner’s changing circumstances. A realistic assessment of your needs, a modest amount of investigation and planning, and a bit of luck are all that are required to make your condo a multi-purpose living space and a sound investment for years to come.
My friend’s son recently started university in Toronto. Faced with the realization that his rent was going to form a substantial part of his bill, she bought a two-bedroom condominium for him. The “rent” he pays is just enough to cover the mortgage and monthly common expenses, but is still below market rates. He can put his savings towards other expenses and she can use the rent to pay down the condo, effectively keeping the money in the family. As her other children graduate and enter the workforce, the condo may see double duty as an affordable first home for them.
The choice of the unit was made with an eye to her own future. She hopes to travel in her retirement and the condo will give her the security and peace of mind to remain absent for extended periods. My friend is also realistic. She loves her current home, but knows there will come a time when it will be too much for her to handle. At that point, with the nest empty, she can downsize into the condo. In the years in between, she plans to rent the condo and use that income to pay down the mortgage.
What factors should you look for if you’re considering this strategy? First, since you’re in for the long haul, look for a unit built by a reputable developer. Speak to other owners and search the Internet. And don’t overlook the obvious: examine the construction materials and finishings in the unit. You don’t have to be an expert to recognize quality at this level.
Next, look for an active board of directors and management. Are the grounds and common facilities maintained? Is the parking garage in disrepair? Regular and attentive maintenance can prevent owners from being faced with potentially crippling special assessments to carry out major structural repairs down the road. Consult with your lawyer or agent to ensure that the condo’s rules and regulations will be appropriate for your needs.
You also require a building that will suit your needs and those of your children over time. If you plan to live in the unit in your retirement, you may place a premium on a building that offers guest suites and has adequate guest parking. Is having handicap access likely to be an issue for you in the future? You may also want to have 24-hour security and indoor parking.
Another factor you need to consider is location. If the condo is going to serve as student housing for your children, proximity to the college or university is important. Try to get a sense of the local community. Is the character of the area likely to remain the same or is it changing? If you are counting on an unobstructed view from your balcony, avoid purchasing in a building where other properties in the immediate vicinity are likely to be developed.
Of course, life doesn’t always go according to plan, so be realistic about whether you want the financial commitment of a second home. You also have to be prepared to take on the time-consuming duties of a landlord—or pay someone else to perform that role for you. But a condo can offer many years of varied use to all members of your family.
Denise Lash is a condominium lawyer at Miller Thomson LLP and host of the television show MondoCondo.
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Buying New Contruction vs. Resale
When buying a new Toronto area home or condo, keep in mind that the representative you are dealing with at the new home site may not be a licensed real estate agent. The new home representative’s best interest usually lies with the builder and not you. In many cases, the builder will not allow your Realtor to protect your interests or help you prepare the agreement.
The builder’s agreements can be very one-sided in favour of the builder. Did you know that many agreements allow the builder to extend closing by 2-3 months twice, and then cancel the agreement if the house still isn’t built?
Your team of experts cannot fully protect you when buying a new home. For example, your lawyer will not be able to force the builder to sell you a house that’s not there yet. Whereas when buying a resale home, your realtor will be able to negotiate the price, and your mortgage expert will be able to arrange the best possible mortgage for you. If you do decide to buy a new home, try not to get confused with terms like “mortgage-paydowns” that are built into the price of the home.
Remember, your home inspector will not be able to inspect a house that’s not built yet and new homes are not always trouble free.
As a new home buyer you may have to spend money on additional expenses like driveways, decks, landscaping, decorating, recreation rooms, air conditioning and fencing. If you want all of the above without having to go through all the hassles a resale home might be the solution for you.
That said, buying a newly constructed home has many benefits. You will be the first owner of the home. You can choose all your finishes including colours and upgrades of anything from wall colour to floor coverings, kitchen cabinets, etc.
The choice is really up to you if you choose resale or new construction. Resale homes are in established areas, the landscaping is mature, the home will be settled, painted, even re-painted a few times. You may have to consider replacement/repair costs to items like the roof, deck, pool, carpet/flooring, décor etc.
We suggest you decide which you would prefer: new or resale and then go from there. Don’t rule out your realtor who can also advise you on new home construction in your area of choice and will usually know which sites work with realtors and which don’t.
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It Pays When You Buy Through A Realtor
by Amit Paul
Today most buyers who consider a resale home are increasingly educated in all facets of the real estate transaction, from the research to the viewings to how much they should be paying and the sale process itself. This knowledge has as much to do with the Internet as it does with a good buyer’s agent – a realtor who acts specifically on behalf of a buyer.
However, in my experience, the same isn’t true for those looking to purchase new. It seems that buying from a builder has a stigma of helplessness attached to it in terms of what the buyer’s rights are and what they can and should expect in the process.
The first thing I recommend to all my friends and inquisitors who are looking to purchase new is to seek the aid of a qualified realtor – someone who comes highly recommended from a trustworthy source, even after the sale has closed. Finding a realtor who meets this criterion can be challenging, but rest assured they do exist!
What many buyers don’t know is that purchasing via a buyer’s agent can be a huge advantage. The fact is that, contrary to popular belief, the builder’s terms, contracts, deposits, restrictions, and so on are all negotiable. What you need is a skilled and trained negotiator who can not only make sense of the phone-book sized documents presented to you, but is also familiar enough with the process to make the alterations that protect you as much as possible.
Yes, you read that correctly—builders’ contracts are not written in stone. I’ve worked with builders on numerous occasions, both directly and through buyers and sellers, and if there’s one thing I’ve learned it’s that they’re just as human as the rest of us. They’re understanding, willing to negotiate, and reasonable. The key lies in negotiating from a point of legality and sensible argument rather than emotional or subjective contention. When understood in this light, it’s easy to see why a realtor comes in handy when purchasing new.
Of course, as is the case with resale, your buyer’s agent would receive compensation from the builder, so there’s no financial loss to you. Also, the commission the builder pays to your agent cannot be taken off the purchase price if you go it alone. Remember, it’s all about legality – a commission is a tax-deductible expense, a cut in purchase price is not.
Everything from square footage variances, timelines, construction quality, design, appliances, potential fees, and everything else involved in the contract is subject to negotiation and should be put through the wringer to obtain maximum benefit for you. It only takes someone with the right influence and experience to find that perfect deal.
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Contact the Jeffrey Team for more information
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