Browsing the MLS, not that I don’t have plenty of work on the go right now, but it is more fun to hunt deals out than it is to execute on a project. Some curious ‘deals’ always pop up, houses that’d be mostly cosmetic to fix and not require a vast amount of time and energy. Yet these ‘opportunities’ become unglued when you read the fine print. First of all, what looks to be a semi detached is in a condo complex. If that isnt bad enough the monthly freaking ball and chain is $1023. If it was a bareland condo, I could get behind that. But the monthly second mortgage on this sucker includes ‘insurance and common area maintenance’.
common insurance within a group is now a negative not a positive. You get lumped in with a group of people and you cant control their behaviour, frivolous claims, or general dumbassery like leaving a bathtub running and flooding a neighbour. The neighbour then tries to squeeze the insurer with hotel bills and repair quality expectations that add up to enormous supplemental damage claims. Deductibles and premium bills escalate quickly
common area maintenance - is this more than snow removal and lawn care that you are paying for? If so find a good contractor and bill the actual cost, it can’t be that high for this type of property that is wide open and snow removal can be done with large machines (quick and easy, low manpower)
reserve contributions - this is a vinyl clad building, that stuff is cheap to fix. With those huge condo fees, the building should have already been redone in something more hail resistant.
Over an ownership horizon of five years, that is $60k in fees, for that sum you could fix anything that goes wrong on a building yourself and hire someone to shovel and mow. Perhaps the agent would argue if the condo fee was lower than the unit would be priced $100k higher. Maybe that is true, if so the condo board should then be decertified and each unit owner would accrue $100k of free equity. To me the unit is basically unsellable, because no buyer wants that condo fee. There must be some serious craziness going on inside the condo board for those involved to think this $1023 is reasonable.
Imagine this was a rental property. The condo fee and property tax is $1500/mo. Maybe this rents at $2k if it a $50k makeover done to it. Factor in a 20% down payment after reno you’ve got a loan of $440k, even with favourable rates the mortgage is $1750, making this property negative cash flow by $1250 per mo. ouch.