Much has been written about high real estate prices over the past couple of years. With so many people now able to work from home, combined with those who have cashed out and sold their properties in the GTA to move to the Forest City, the secret about how awesome London is, is finally out of the bag.
Like in most places, the lack of supply is the major driving force to escalating home prices.
It ought be considered that, traditionally, London has been under-valued. This is not commonly understood. Finally – and in actual fact – prices are starting to creep up to levels more befitting such desirable (& desirably located) city. After all, London and surrounding area have a population around 500k (making it the 10th or 11th largest city in the country). A pokey cow-town no more.
Bet you hadn’t likely considered that perspective, eh?
Together, these factors only make it especially challenging for first-time buyers to get a foot in the door – and purchase their own place. As a result, condos are becoming the de-facto choice for a first-time property.
Lower price-point aside (well, for smaller units, at least), condos can be a sensible option for anyone with a particularly active life outside the home (i.e. those who do not spend that much time in the house); simply turn the key and lock the door on your way out – not much else to worry about, really. This means they appeal to many different people and various stages of life.
And that’s a good thing.
For those buyers who are particularly price-conscious, be sure to look at what amenities are offered in condo buildings and the size of the building’s property itself (i.e. how much landscaping and snow removal will be required); be mindful that everything you see is ultimately paid for by the owners’ monthly condo fee – regardless of whether you use an amenity or not. One particularly important amenity to question is a common pool… do you really want to pay for the added maintenance and insurance costs for that in perpetuity?!
Know the total cost of what you’re buying (and what’s included in the condo fee). Be sure to ask your lender if they use the cost of the monthly fee as part of their funding criteria and calculations. If buying a pre-construction unit, ask the builder if you are permitted to assign your unit (i.e. sell it before it is finished being built) should your plans change. Also, be clear on the difference between the occupancy vs. ownership dates. These are often not one and the same; the last thing you want to do is to pay rent to occupy your own condo until the builder hands it over to the newly-formed condo corporation.
And in the future, once it comes time to buy bigger, one nice benefit from owing a condo is that, instead of selling, you retain the option to use it as a rental property. Added monthly cash flow, passive payment of an appreciating asset and tax write-offs are often offer a more compelling value proposition than a slightly larger down-payment. Moreover, condos lend themselves well to easily-manageable income properties (provided you do so within the framework of the condo’s rules, regulations & bylaws; for example, lease terms are, at a minimum, one year – no Air B&Bs or other short-term stays). Further, as they are often located in desirable locations and come with minimal/contained risk of maintenance issues and associated costs, condos tend to be easily rentable.
If you are curious and have any questions, comments or thoughts, please reach out to me any time. There’s a lot to learn and I am pleased to share my first-hand knowledge. As a multiple income property owner myself, I’m always happy to explain and help you to start your path along the same wealth-building side gig – the benefits of which can be highly lucrative in a number of ways.
