Future Proofing Property

All about investing in property

There are several important questions that require a definitive answer before you invest in a condo. Toronto condos are a great real estate investment; however, they are quite tricky and can cost you thousands of dollars if you do not research each complex thoroughly. It is important to look at three critical areas before you make that initial investment.

The Power of the Homeowner’s Association
HOA’s have extensive power over all of the condominiums within the complex. The bylaws are often extensive and affect how and when an investor can make an investment. You should contact a real estate attorney and have him or her make sure the bylaws are in accordance with state laws. New investors often overlook the importance of the repair fund that is controlled by the homeowner’s association. If the complex is over 20 years old, the fund must contain at least 25 percent of the cost of replaceable items. Replaceable items include the cost of repairing a roof, roads and pool maintenance. If the complex is 1 to 10 years old, the repair fund must contain 10 percent of the cost of replaceable items.

To Rent or not to Rent
If you are an investor looking to rent out your properties, you must find out if the complex is renter-friendly. Once again, look at the HOA’s bylaws and find out what restrictions are associated with renting out the units. Rental policies must be clear and easy to understand, especially if the rental population exceeds 10 percent of available units. Look at the lease provided by the homeowner’s association. Determine if the lease is clear and east to understand. Make sure the terms benefit you and the renter. Keep in mind that an HOA can change their policy at any time that prohibits owners from renting out the units.

The Certificate of Insurance
New investors fail to recognize the amount of coverage provided by the HOA’s insurance company. Never underestimate just how much coverage you have because the HOA says you are fully covered. Analyze the policy thoroughly from the certificate of insurance. It will give you detailed information on what is covered by the insurance company and what you are ultimately responsible for. Many new investors lose thousands of dollars after closing because they failed to determine how much of their own money they have to pay when the unit needs major repairs.

Is it Worth it
Ultimately, real estate is a very lucrative investment. Although the housing market is suffering through tumultuous times, there are some quality deals available. The price of an individual condo in nearly every major market in America is at all-time lows. This means savvy investors can invest in a unit for pennies on the dollar. Aggressive renters are seeking out condominiums to use as a primary residence until the housing market recovers. Essentially, there is an endless supply of renters who can ultimately guarantee you a passive income. However, do not underestimate the power of the homeowner’s association.

This post was provided by Julia Willison. Julia is freelance writer and lover all things real estate related.


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