Condo living provides a lifestyle desired by many: ease of maintenance, security, less worry, a sense of community, and most often, desired location. With all these benefits, condo life also gets associated with its very own “fee,” a monthly payment oft misunderstood to be an additional monthly cost only encountered by condo owners.
So what are condo fees? They are a monthly payment to the condo corporation which uses the funds to cover expenses such as general maintenance, building insurance, repairs, and utilities for the condo.
In a detached house, these inevitable costs are dispersed into several different types of payments, whether it's buying annual insurance for your home, paying for inspections/repairs, water utilities or hydro bills. As a condo fee, many of these costs are lumped together, shared by the condo corporation and divided up among homeowners to be paid in easier-to-budget monthly installments.
The annual cost of condo fees is most often less than the cumulative annual cost to insure and maintain a house (and the best part is – you don't have to worry about tackling any of the pesky yard duties or building maintenance).
As an example, take a look at the chart below comparing one of our MIX Condos to a comparably priced detached home (for this example we chose $270,000).
The above comparison for a detached home relates to newer homes, but if you are considering an older home, you will want to account for additional energy costs (as they are built less efficiently) and additional maintenance and rainy day costs for things that might break down after your investment.
• Reserve funds. Most condo corps will put a small percentage of your condo fees into a reserve fund that can only be used for important fixes down the line. Reserve funds cover items that have not been budgeted for in the condo budget, so anything above and beyond general maintenance. After the new home warranty period, this is extremely helpful to have. If you plan on staying in your condo for a long time, say 20 years, a reserve fund would contribute or help cover a new roof. If you are only in your condo for a short term, having a reserve fund set up and contributed to will be attractive to prospective buyers as you have helped them prepare for the future.
• Elevators and amenities. Those snazzy elevators that take you to your fourth-floor condo in a jiffy don’t maintain themselves. They require expensive servicing and general upkeep, which is all covered, along with the care and maintenance of common areas such as lobbies, lounges, exercise rooms and outdoor pools.
By the way – private gyms and outdoor pools may be out-of-your-reach if you are looking for a single-family home, but with a condo with these amenities, you can enjoy these perks as part of your monthly condo fee.
If you are weighing the pros and cons of buying a house versus a condo, make sure to add up what your “house fees” would be, or in other words, the cost of owning a home, so that you can make a fair comparison. There is no way to avoid homeowner costs when owning any property – these extra costs of ownership above and beyond your mortgage and property taxes will always be in play regardless of where you live.