So you’ve found the perfect place…except the maintenance fees are kinda high. What should you do? Go for it, or keep looking for something with lower monthly costs? We talked to Property.ca agent Arvin Reyes about things you should consider before putting in an offer.
1. Check what's included in the maintenance fee
If the monthly amount includes things like utilities, cable and internet, there’s definitely value in that. Think about how much you pay for all of those things separately – the monthly cost may not actually be as high as you think.
“Newer condos tend to have much more attractive maintenance fees,” says Arvin. “But a trend we’re seeing is that a lot of them don’t include utilities like water and heat – you should calculate what your costs would be for those elements when determining if it’s a good value.”
2. Look at the maintenance fee cost per square foot vs. the total amount
Maintenance fees are calculated on the size of your unit, so looking at price per square foot is the best measure of value. You’ll often find higher fees in older buildings, which typically have much bigger units than condos being built today. Condo fees for a bigger unit will be higher.
“If you’re looking at a 2,000 sf unit, it’s going to have a higher total monthly cost,” says Arvin. “I’d say 55 to 75 cents per square foot is pretty reasonable. Once you start inching towards 80 or 90 cents – or even a dollar – that's what I would consider expensive. If you buy a really small unit, you may be willing to pay more per square foot, but for a bigger property, it adds up.”
Read more: Let’s talk about maintenance fees
Not all older buildings have high condo fees, however. It completely depends on how well the condo corporation has managed their budget and reserve fund over time. There are plenty of buildings that are 20+ years old that have fees comparable to newer builds because of smart money management. So don't discount them outright: a well-managed older building that doesn't have the flash of a new development can offer a lot of value.
3. High maintenance fees can impact property value
If you see a condo for sale at an unusually low price – check the maintenance fee. (It’s in the top section of every listing on condos.ca.) A high monthly fee will reduce the pool of potential buyers and result in a lower selling price. So while you may be spending the same amount every month as you would if you bought a more expensive place with lower fees, you'll be putting less towards your equity and more towards an expense you’ll never recoup.
“These types of properties typically take longer to sell,” says Arvin. “They can sit on the market for 30 days or more, simply because they generate less interest. They do sell eventually, but it's a very niche group that may be interested.”
Read more: 7 myths about maintenance fees
4. For certain buyers, it’s the right option
For buyers who can’t get a larger mortgage, or who need a larger condo to accommodate family, a cheaper unit with a smaller mortgage and higher monthly fees can offer them what they need. If the only other option is renting, even recouping some of your money when you sell is better than sinking it all into someone else's mortgage.
“Overall, first-time buyers aren't willing to fork out a lot of money for maintenance fees,” says Arvin. “There’s less going towards their equity – which they need to max out to move up the property ladder. But there is a market for these properties…it really just depends on what's right for you.”
Do you have a maintenance fee number in mind for your condo purchase? Filter your search by maintenance amount on condos.ca – just use the slider to set your max. Start your search today.