Check owner-to-renter ratio when buying a condo

Buying a house is a big learning experience for most of us, since we do it infrequently. Buying a condo presents even more challenges.

I always advise people to do lots of research, talk to neighbours and check the minutes of the condo board meetings. Don’t make an impulse purchase, as Jody White described doing in a MoneySense article, “Went for a coffee, came home with a condo.”

I recently talked to Peter C, a reader who bought a condo apartment in downtown Toronto before it was built. This was a first home purchase for the school teacher in his late 40s, who hoped to pay off his mortgage quickly and retire early.

So, how is he doing? What has he learned since moving into his unit two and a half years ago?

“The condo was a great decision,” he says. “I’m on an ambitious plan to pay off my mortgage in five years. Then it will truly be Freedom 55 for me.”

But if he had to do it over again, Peter would have checked out the ratio of renters to owners in his building on Carlton St. near Yonge St., an area popular with college and university students.

“I was disappointed in the large number of units reserved for student renters,” he tells me. “I was horrified when seeing the hordes of students moving into this building and then not caring for it, being loud and obnoxious.

“I remember calling a friend and saying how wonderfully quiet it was (noise is a VERY big issue with me), when a group of students appeared on the balcony below me at that exact moment, blasting music so loud it thumped its way through a foot of concrete and into my suite.”

It was a rough three months until the condo board was set up, he says. Once strict rules came in, the students moved out.

“I had them kicked out after two warnings,” Peter says about the noisemakers in the unit below him.

“I am very proud of my building and nothing angers me more than seeing absentee landlords renting out to these frat kids, who are completely oblivious and indifferent to the owners.”

Tough talk for a teacher? His students are eight years old, an age he enjoys. Loutish  lads in their late teens are a different story.

In 2006, I did a column series on buying a condo and talked to Ulla Colgrass, who called herself “a semi-expert in condo buying, with three under my belt.” She preferred to buy an existing unit, rather than one that was under construction or in blueprint only.

It’s easier to check out an older building. You can wander in the halls, ride the elevators, speak to building staff and owners, trying to sniff out any problems.

Soundproofing can be an issue in newer buildings. And if you buy before construction is finished, you can’t walk around to see how loud everything is.

Condo expert Douglas Gray, author of 101 Streetsmart Condo Buying Tips for Canadians , recommends asking this question: “How many units are owner-occupied?” Beware if more than half the units are rented to tenants, who may not have the same pride of ownership.

Peter has other regrets about his condo purchase. The monthly fees were $250 when he moved in. Today, they’re $410.

In another column in my series, I warned that condo fees can almost double in the first three years if you’re buying a newly-built unit. Developers calculate the first year’s budget as tightly as possible, leading to significant fee increases when the condo board takes over.

Peter also wishes he took a variable-rate mortgage, rather than a four-year fixed-rate mortgage at 4.7 per cent. But he’s devoting all his resources to paying off the mortgage quickly.

“I decided to live again like a poor student so I could be debt-free in five years,” he says.

Living like a student is one thing. But living with students is another. Make sure you know the percentage of owners versus renters before making a condo purchase.

Also read:

What to do when 14 students move in next door