A reserve fund is a savings account put in place by the condo board and contributed to by all unit holders in the condominium through their condo fees. The funds are accumulated in accordance with a reserve fund study that assesses the various common components of the structure. The common components include the exterior (roof, windows, doors and paving), systems (heating, plumbing and electrical) and the building amenities (fitness centers, social rooms and pools). The reserve fund study is conducted when the building is complete and projects when the various components of the building will require major repairs or replacement. A new reserve fund study should be done every five years to maintain accuracy of the projections.
The amount invested by each unit is based on the percentage of the building the unit owns; this is divided in various ways, some equally, some based on square feet, and some on the location in the building.
At times the reserve fund will appear to be very robust and other times to be very lean, this should not be reason for alarm as there is usually a reason behind the numbers. The condo board will save up funds for a major project, spend them on the upgrades and begin to save again for the future.
Ultimately the reserve fund is another layer of protection for the condo buyer. Imagine buying a house that came with a pre-set savings fund for future repairs as well as already having a good sum saved up. There is security in knowing that you have money in the bank for when those things come up.
The benefits of purchasing a condo versus renting an apartment is an interesting idea to ponder whether you are considering your first purchase or looking to downsize from your family home once the kids are off to school. Your monthly payments will increase, but what will I get for this additional investment? In this post I want to look at some of the benefits.
Pride of ownership comes to mind first, nothing feels as good and provides the same satisfaction as owning your home.
Freedom to renovate and truly make your condo an expression of yourself and your lifestyle is another great benefit. If you like a cozy space with lots of places to hang your art, or if you’d like to have an open concept condo with lots of room to entertain, perhaps you want a gourmet kitchen to create delicious meals, or even if all you want to do is paint your walls funky colours, all of this is open to you when you own. This freedom also goes for repairs, if you have a leaky faucet you don’t have to wait for your landlord to send his maintenance guy when he finally gets around to it, you can call who you want, or take care of it yourself.
Stability is another great benefit, knowing that your monthly mortgage payments are locked in at a rate you can handle and that you can shop around when your term comes up is great peace of mind. Condo fees are also locked in, typically these are looked into and voted on by the condo board annually, and you know about any increases well in advance.
Commitment to investing in your future is no longer negotiable, when you own your own condo part of your monthly housing costs, that you would be paying anyway, are invested in your future. Over time you will build equity that can slowly bring your monthly costs down, or you can transfer that into a downpayment on your next move.
Halifax is a stable market to invest in property, and many believe it is going to get better. Over the last year condo values in the Halifax Regional Municipality have increased approximately 5% and there are no signs of that stopping. There are currently almost thirty commercial and residential buildings in various phases of construction around downtown Halifax. BMO stated this week that Halifax was one of the best places for investment in Canada. A stable workforce made up of the public sector, the military and reinforced by our many universities and colleges insulates our local market from large peaks and valleys. Annual Military postings and students moving in and out of the city helps keep the condo market consistently active as well. All of this is bolstered by the long term investment of the military shipbuilding contract awarded to Irving Shipyards in the North End, and Royal Dutch Shell’s $970,000,000.00 investment in oil and natural gas exploration offshore makes the future of investment in Halifax look quite bright.
In conclusion, if you have a decent down payment and plan on sticking around Halifax for at least a couple years, investing in the right condo is a sound investment, that may help you save or earn more than you would have had you rented for that time.
Welcome to the first of our monthly statistics update on the Halifax Condo market. The data below is based on MLS® statistics for condos in areas 1-40 which encompass all of HRM. Check back monthly for regular updates.
Figure 1 – All data based on MLS® statistics for areas 1 – 40 which encompass all of HRM
Figure 2 – All data based on MLS® statistics for areas 1 – 40 which encompass all of HRM
Average Price – Based on the data presented in the graphs above we can see that the average price for a condo in Halifax has increased over the first half of the year compared to 2010 and 2011. Especially in the first quarter which was due in large part to the $25 billion ship building announcement excitement. The third quarter prices have remained flat in 2012. It will be interesting to see how the numbers play out for the last quarter of 2012.
Number of Sales – The number of condo sales in HRM say a significant bump at the beginning of the year again due to the announcement of the shipbuilding contract. Sales remained flat for most of the summer before taking a dip in September.
Be sure to check back regularly for Halifax condo market updates.
An estoppel certificate is a binding document drawn up by a condominium corporation that states the financial standing of a given condo unit as well as that of the condominium corporation itself. It should detail if there are any assessments to be paid toward repairs of the common elements of the building, and if the unit you are considering owes anything against them. The document should also have the balance of the reserve fund and if there are any planned expenditures in the foreseeable future. The percentage of the common elements the unit owns and thereby how much the condo fees will be per month are also found in the estoppel certificate. The document will also have the contact information of the condo management company if there is one, and the names of the condo board members.
The estoppel certificate is issued along with the most current copies of the condominium declaration and the by-laws. These should all be provided to the buyer ten days in advance of closing and the buyer then has an opportunity to bring up any problems with the finances at this time, and even the ability to terminate the deal if the financial standing is unacceptable to them. Termination of the deal is fairly uncommon as typically the buyer will have seen a recent version of the condo boards meeting minutes and any large expenditures are usually discussed in the meetings.
The binding disclosure of the estoppel certificate offers an additional level of security to a condo buyer, allowing them peace of mind in the transaction.
Condo Fees Posted on Oct 02, 2012
Condo maintenance fees are your percentage of the total cost of managing and maintaining the condo building that you live in. They typically cover things like common area cleaning, snow and garbage removal, and landscaping. In a well managed condominium, there should also be small monthly deposits coming from the condo fees going into a reserve fund, these are saved for larger long term maintenance projects such as replacing windows, resurfacing the roof, plumbing repairs etc.
Some smaller condos and townhouses that have fewer amenities may tend to have lower fees. In some buildings the fees may be slightly higher if there are additional services and amenities such as security guards, concierge service, pools and hot tubs, or gardens that require extensive landscaping.
Condo fees can fluctuate slightly, increasing when there is a large project in the coming years and decreasing after the job is done. This information can often be found in the condo board meeting minutes with a little looking.
Condo fees should reflect what it would cost to maintain a home, provided you were saving for long term maintenance, and had someone to take care of shovelling your walk, etc. In the end, if the condo fees seem too high there may be a reason for it, and a skilled REALTOR® should be able to help you find out why.