Condo ownership can be likened to a long-term personal relationship.
This is probably most relevant in residential examples; your home tends to be more sentimental than your work environment.
You spend a lot of time at work. Due to that time investment into your business you want to do everything to ensure a property will serve you for the long run.
Condos can provide attractive partnership
Owning your own piece of real estate can be difficult to find in a market like Saskatoon’s with limited inventory so commercial condos can serve as a good alternative.
This is especially true when seeking smaller sized commercial properties and lower overall price points.
In face, the benefits to condo ownership can sometimes be more attractive than other standalone options in this respect.
Condo developments are managed by their condo board corporation which can often mean far less hassle for the property owner.
Much like residential condos, the board will manage exterior repairs and maintenance providing hassle-free peace of mind for owners.
Typically the board will have a plan in place for large capital projects that may be projected and save ahead for those expenses within your condo fees.
Before committing to a purchase of a commercial condo, investigate some of the same background information you would on a roommate or partner.
What are their intentions?
Municipal zoning will dictate a lot of what can and cannot happen within a commercial condo.
It’s easier to see what types of businesses will be surrounding you in an existing commercial development but harder to determine if you’re looking at new construction.
If the site is more retail or office oriented, there should be a higher concentration of parking than an industrial property.
The property may have other specialized design features to accommodate specific types of users.
Marketing of the property will state whether the developer is looking for both tenants and owners.
Will you be compatible with others?
When looking at a resale condo you have a bit more insight into your neighbours because they’re already in place.
Still not a bad idea, though, to investigate who the tenants versus owners might be.
Tenants have some proverbial skin in the game, but the buck stops with owners.
If you’re surrounded by tenants as opposed to owners, there is a much higher chance that the occupancy could turn over more frequently.
While ultimately there is no guarantee an owner won’t sell, it’s less likely to happen overnight.
Are you going in eyes wide open?
Commercial condos come with a higher level of due diligence than other types of real estate.
You can expect the usual items such as an environmental audit or real property report.
Condo sales, however, also include an estoppel package that can be very telling about the health of the condo corporation overall.
The bylaws of the corporation will be provided for you to review along with meeting minutes of the recent condo board meetings.
Those minutes provide a look into ongoing discussions and disputes that have been occurring between owners.
There can often be tell-tale signs of trouble down the road with certain owners or an overall attitude of the total ownership.
Are they planning for the future?
I think the greatest value in condo purchases come from their budgets and the reserve fund study.
A reserve fund study is required for all new condo developments and a prudent condo management should be reviewing it annually.
Condo owners have a responsibility to make sure they are contributing the appropriate amount of cash to maintain the property overall.
If the condo corporation is not saving enough for big ticket items, there can be a substantial cash call to owners.
And what happens when someone doesn’t pay up?
The only mechanism is for the condo corporation, which is made up of individual owners, to compel the unwilling owner privately to do their part.
This escalated recently in a residential condo development in Saskatoon.
There were many elements to the story, but ultimately the owners couldn’t or wouldn’t inject the money required to make the building safe.
The condo corporation was eventually handed over to a Receiver and a court mandated sale of the entire building occurred.
Based on the sale price for the building as a whole, there is no way individual condo owners did not come up short from their original purchases.
This was an extreme case of a condo site gone wrong but serves as an example of what can happen if you enter into the wrong condo corporation relationship.
Posted by Kelly Macsymic