1) Research the Builder:
Not all builders are alike. Many build high quality condos and have a track record of success, while others cut corners and build substandard condominiums. Aside from reviewing the builders webpage, one should also do an internet search for watchdog reports, lawsuits and discussion boards for proposed and existing condos. One thing to look out for is whether the builder who’s project you are interested in, has a track record for completing their projects on time. I had a client who purchased with a builder (who shall remain nameless in this article) that habitually pushed back completion dates. My client was promised the keys a little under 3 years after purchasing the unit, and the builder delayed possession 3 times from their original projected completion date. After many frustrating delays, he final received the keys a whole 2 and a half years after the original scheduled completion date. This tied his deposit money up for an a total of 5.5 years. It was almost like a 2.5 year interest free loan to the builder! In retrospect, as an investor, he would have liked to invest in another project at 15% deposit, then take the other 10% and saved another 5%, and pooled that money into another project, returning him potentially double the return, and in 2.5 less years. This is why it pays to research the builder!
2) Choose the type of condo that meets your lifestyle:
Not all condos are alike. Some have age restrictions, and rules about pets. Other condos are more family friendly in terms of the unit sizes and amenities. Still others cater to retiree’s. A good way to determine this is have a look at the number of bachelor, one, two and three bedroom units in the entire building. You may also contact the property manager for the condominium to verify whether it is a lifestyle condominium catering to a certain demographic. Those that have fewer two and three bedroom units will likely not attract large families.
3) Determine financial status:
If you are a first-time buyer, getting pre-approved for a mortgage is a must. Contact your financial institution to determine your buying capability, and get a firm commitment letter from them locking in the rate, and approval amount. No one wants to be left on the closing day without a mortgage approval after you already made the purchase. I have had countless past clients that were given what they thought was an approval from their bank, where in fact it was nothing more than a verbal agreement. Some people have had credit issues in the past which would warrant a more difficult approval process, and possibly at a higher rate. It is always better to know that you received a formal pre-approval before you fall in love with a home that you can not afford.
4) Speak with local real estate agent:
Real estate agent’s can give you statistics of which condos are appreciating well in Mississauga as well as the most popular unit types, and floor plans. This will help you to make a direct comparison between different condo buildings in order to establish the true value of the unit you are interested in. Don’t just settle for any real estate agent. Again, not all real estate agents are the same. Try to work with a local expert who specializes in the type of properties that interest you. After all, why would you work with a realtor that sells mainly full sized homes in the suburbs, when you are looking purchase a condo in the city? It is like going to the dentist for your flu!
5. Do your own research:
If you plan to purchase a home without a real estate agent, you should look into the sales of the surrounding area yourself. Again, these resources will be less accessible to the general public, but you will have access to the asking prices of similar properties. This does not mean that those prices are the market values for that specific property, or even necessarily what they sell for. Be careful when information gathering. I have had a number of past clients praise me after their search for educating them on area values, and explaining to them what to look for when they are searching. Why not get the assistance of a local expert, when they’re services are free?
6. Find out customization capability:
Although freehold condo properties allow the owner to carry out renovations without anyone’s consent, condos have restrictions on what can be altered for each unit. A general rule of thumb should be to request written permission from the property management before making any renovations. The property managers consent is always required to various degrees depending on the condominium. Usually renovation work that involves removing a wall or upgrading bathtubs and showers will have limitations on what can, and cannot be done. Some require that a detailed renovation plan be submitted to the condo board for approval prior to the renovation taking place. It is always better to be proactive. You wouldn’t want to reverse the reno back once it has been completed! I had a client who removed all the carpet in their unit, to replace with hardwood. She did this to increase the value of their unit prior to selling it, only to find out that management had to approve any floor renovations. She tried to then sell the unit thinking that hardwood wood increase the value of her unit. It did increase the value of her unit, but in failing to apply and receive consent from the property manager, she was unaware of renovation restrictions in the building. It was later found that she did not use the proper sound-proofing underpad beneath the hardwood. The condo corporation deemed that this would hinder the enjoyment of the unit owner directly below hers because of noise. Consequently, she had to tear out the hardwood, install new underpad, and then replace the hardwood. This ate into all her profit, and her investment, and time was not rewarded. The moral of the story is to always look into these renovations with the property manager before you begin. It could save you thousands of dollars!
7) Ask for a disclosure statement:
The developer or builder of a new condominium is required to have an information booklet giving details of the building, and the legal terms under which the condominium will operate. The booklet is available immediately after the Agreement of Purchase and Sale is signed. And with resale units, this “Condo By Laws and Declarations” booklet is always made available during the 10 day conditional period when you purchase a unit. It is attached to the status certificate that is forwarded to your lawyer for review. Your lawyer then has 2 business days to review the certificate, and consult the purchaser with his/her findings. If everything checks out, the buyer may move forward with the purchase. If there are red flags in the documents, the purchaser always reserves the right to walk away within the conditional period.
8. Ask for a site plan:
It is important to know if the unit that you want to purchase is in the first, second or third phase of development so that you are aware of any future construction that may block your existing view. Of equal significance is knowing when, and where more development may occur around this building. New development adjacent to the building will impact the use and enjoyment of your condo due to noise, vibration, unsightly construction, dust and foul smells. It is also good practice to learn where your unit will be in proximity to the elevator, garbage disposal room, and amenities, as units near these elements usually have a stigma attached to them in the resale market. Besides, who would want to smell the garbage room after a long day at work.
9) Determine development plans for the surrounding area:
Many condos are sold under the premise of a clear view to the Lake, skyline, or green-space. To ensure that the view will be maintained in the long term, a quick trip to the Planning Department will allow you to ask if any other developments are planned nearby, and to have a look at the architectural drawings. The planners should be able to help you to understand the types of developments that are proposed around you. I have had many calls from people who bought privately through the builder units with south views of the lake as investment properties. These investors would hold onto the unit until they receive the keys, and the building registers as a condominium corporation. At this point, they would try to resell the unit, only to be shocked that a new condominium just began construction in front of they’re unit, obstructing their perfect south view. The investors mistake was being too excited in the purchase process, without taking a step back and asking the right questions up front.
10) Review amenity details:
If the developer lists a swimming pool, it is important to know what size and whether it is indoor or outdoor. The same goes for party rooms, exercise areas, gyms, sports fields, spas and lockers. Find out how big, how many, and where they will be located.
Again, these 10 considerations can affect both your enjoyment, and the resale value of your condo. It is always better to do your research upfront, and then enjoy the rewards of your hard work once you have moved in!