Buying

We have a client right now who has been searching for freehold townhouses with NO CONDO FEES.

“There’s no way I would EVER pay condo fees.  What a rip-off!”

We hear that language all the time.  But if you examine what condo fees include – exterior maintenance, including roofs and windows in some cases, road maintenance, lawn care and monthly water bills – it doesn’t seem as bad.  Right?

But still… most people have an aversion to the condo fees.

Let’s have a look at the costs.  Right now, you can buy a freehold townhouse for about $600,000.  The equivalent value for a condo townhouse might float around the $440,000 range with an average of $350/month in fees in Milton.  Both houses would provide three-bedrooms, similar size, a functional basement and a smallish backyard.

Let’s have a closer look at the two expenses that REALLY matter:  how much you need UPFRONT, and how much ONGOING, and we’ll see where that takes us.

FREEHOLD $600,000

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Downpayment:  $120,000 (assuming 20% down, although you could buy with 5% down)
Mortgage payment:  $2,160/month
Taxes:  $300/month
Condo fees:  $0

TOTAL PER MONTH:  $2,460 + utilities
TOTAL UP FRONT:  $132,000 (with 2% closing costs)

Now let’s look at the condo townhouse option…

CONDO TOWNHOUSE $440,000

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Downpayment:  $88,000 (assuming 20% down, although you could buy with 5% down)
Mortgage payment:  $1,584/month
Taxes:  $150/month
Condo fees:  $350/month (includes water)

TOTAL PER MONTH:  $2,084 + utilities
TOTAL UP FRONT:  $97,000

Now we’re talking!  You save a total of $35,000 in up-front expenses, and a little less than $400 per month.  Over the next 25 years, you would save $112,800 by buying a condo townhouse, including all those extra monthly condo fees.

That certainly makes it worth considering, don’t you think?

Comments

  1. Hi Chuck,

    Very well explained, however, the monthly condo fees increases 2%-3% every year (never stays the same) so the $350 monthly would go up to $500.00 monthly in no time, also the fees are sometimes misused by the property managements, that is the draw back. In freeholds (no condo fees) you don’t have to worry about that.

    • Hi Shawn, I’ve seen some condo corporations freeze increases for multiple years, and others have increased by large amounts year over year. Despite that, the 2-3% increase is somewhat normal because the cost of everything increases over time – hydro, gas, salaries, supplies and materials.

      Before buying, it’s always a good idea to request a Status Certificate, which shows the rules and the budget of the condo… and have a lawyer look at it. There are many great & well-managed condos, and some that you should avoid at all costs.

      Thanks for the great reply!

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