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Why Buying a Condo is a Scam...

If you were to listen to the big wigs from Winnipeg's Real Estate business elite they'll tell you that buying a condo in Winnipeg is simply awesome! And, they're praising the fact that condo sales are soaring in this town.

So, is this really the truth? Is buying a condo one of the very best things that you could do in this town?

The fact is (even though condo sales in Winnipeg are setting all time record highs), it is absolutely NOT a good idea for 90% of folks to buy a condo. Truth be told, buying a condo ANYWHERE is probably one of the very worst possible things that you could ever do. Why? For literally dozens of reasons. Too many to list in this short blog post. But, just to cover a few...

REASON #1). Condo Associations
Consider that the most common problem (head ache /nightmare) with owning a condo is the condo association. They can decide what to do with a majority vote. And, that means you don't count. Even worse many associations are nothing but a panel loaded with people who have "Good Buddies" in just about every one of the trades. These good ol' pals get lot's of business from their bud's on the association panel. With wonderful under the table kick backs. Read this article and get a quick education about how bad things can get. [Toronto condo fraud: Embezzlement, kickbacks and bid-rigging]

Let's say that your condo association decides to paint the outside of the building an environmentally friendly earth tone, (even though the paint on the building is still good), you have to come up with your share. Or they can place a lien on your condo and sell it to get your share of the cost of painting a wall that was perfectly fine in the first place. Same with landscaping, common area repairs, recreational room up-grades, etc., etc.

The Condo association can also decide that you can't make any noise after 10:30 p.m. and you must obey! Or they might make a rule that you cannot have visitors in the halls after certain hours, or flip from pet friendly to NO pets, or how about the condo complex in Edmonton that made a policy one summer of, "No Children Playing Outside," etc. etc. etc. are you starting to get the 'Condo' picture!

REASON #2). Condo Fees
One of the biggest expenses aside from your mortgage will be your condo fees. Keep in mind that these fees are paid every month. In Winnipeg they're low, (approx. $250.00 on a 700 sq.ft. condo). However, these fees can shoot up at any time. In Toronto the typical 700 sq. ft. condo fees jumped from $400.00 in 2008 to now as high as $600.00 here in 2014. Condo fees are sold (like snake oil) to the buyer as being more or less exactly what you'd end up paying for general maintenance and repairs each year if you owned a house. This is an absolute lie. For example, over a 14 year period condo fees for a 1,000 sq. ft. condo unit in Toronto will cost on average $100,000.00. Show me a house where over 14 years you'll need to spend 100k for up-keep!

REASON #3). Condo's Have been Over-Built & will be Tough to Sell in Time (soon).
Take a look at Toronto's condo market, (read this article; Toronto Condo Overbuilding Has Reached 'Ridiculous' Proportions). The thing that always happens in a housing bubble, (yes, Canada is in an epic housing bubble), is when the house prices swell out of reach, the condo market begins to grow & grow. Toronto is the canary in the coal mine. Winnipeg isn't far behind. Soon they'll be a glutton of condos on the Winnipeg market, and the buyers will eventually dry up. Once this happens, that $250,000 condo won't be able to fetch $125,000. In fact the condos just won't sell. And, just as we've seen in Europe, the condos owners will walk away. The banks will repo the units and they'll become - you guessed it - apartments!

REASON #4). Too Small a Share of the Real Estate Market
Buying a condo might seem like a great starting point into "home ownership," (at least that's what most agents will try to sell you). Until you decide to sell it. What agents won't tell you is that the condo market is only 14% of the real estate market. This means when it comes time to sell, 72% of buys are NOT looking at your condo.

So, in wrapping up... who should buy a condo??? Condo's are great for people who don't want any responsibilities, have no pets and no kids, and who pretty much have no friends and deep pockets. Because when the condo association comes calling on you for $5,000 /$7,000  (or more), for a make-work project for one of their buddies, you better have it on hand - ready to give to them ...or else!

Run a search on the web for situations in Canada, the USA and across Europe about condo nightmares. You will find that Condo's are really nothing more than a Hell on Earth and people get sent to live in a Condo to pay for their sins.

Kevin F.
Winnipeg Report


4 comments:

  1. Anonymous says:

    Condo = Over-priced Apartment.

  1. The decision to become a homeowner is one of the most important decisions you’ll ever make in your life. Visions of decorating it the way you want, entertaining friends on Friday nights, and maybe even raising a family, almost always come with this decision.

  1. Phillip says:

    @buying a condo... So, you want to raise a family in an overpriced condo? Let's see I'll buy a $600,000 condo and pay $3,700 a month for my mortgage and then shell out another $488 a month for the condo fees, only to find a letter in my mailbox one Monday morning saying there's a problem with the railings on all of the units balconies and my share of the bill to repair that is $12,000. Ummmm, no fucking thanks. I'll stick to renting my little house in St. James for $750 a month thank you very much. I can entertain and raise a family there just fine. And, I have a yard!

  1. Anonymous says:

    Dear Kevin, Everything you said is true. I owned a condo in Mississauga and it was a nightmare from beginning to end. They were apartments which were converted -- they looked nice on the surface but had major structural issues which kept cropping up constantly - pipes, flooding, electrical, squirrels...you name it. The Board, of which the builders/owners were the majority, voted in whatever they wanted, the fees kept going up and up, and just before I moved, got stuck with a 5K bill for electrical repairs in the building. I will never buy another condo again.

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