To accommodate the concept of shared ownership, a condominium corporation is set up to manage the maintenance and repair of common areas. You may be "king of the castle" within your own home, but you are only one of the "knights of the roundtable" controlling the rest of the community.

A Board of Directors is elected from among the owners to oversee the corporation's business, and by-laws are established to govern the safety, security and welfare of all residents in your development. You are part of a total community. You can choose to get involved as a director on the Board or leave the decision making to the others.it's your own personal choice. In selecting a condominium community, it may also be worth considering whether the other homeowners have similar lifestyles, financial circumstances and age groups.

The shared ownership can translate into additional benefits for condominium homeowners, ones that they may be able to afford otherwise. The most common "extras" attributed of the condominium lifestyle are security systems and special amenities for recreation and social functions. It's important to examine the features being offered in relation to your own personal lifestyle because, of course, their cost will be included in your maintenance fees.

Just as you pay municipal taxes to pay for your share of city services, you are responsible for contributing your share of the common expenses for your condominium. These costs are covered by your monthly maintenance fees and vary according to the size of the community, its facilities and the services required. The kinds of expenses can include: security, landscaping, snow and garbage removal, underground parking and interior roadway maintenance, possibly recreation and social complex, and common-area utilities, insurance and janitorial service. They may also include the services of a property management company.

In addition to these regular maintenance costs, a percent of your monthly assessment is deposited into a reserve fund to pay for any major repairs or replacements that may be necessary later on.

Some specific things to remember:

1- Size of the complex and size of the home

2- Facilities offered - do you need or want them?

3- Cost of operation, which impacts your maintenance fees.

4- The mix of residents expected to buy or that own in the development.

5- Read the bylaws. Are they too restrictive?

6- Read the latest annual financial statements to satisfy yourself this is a fiscally sound operation.

7- Location is important.

8- Make sure your lifestyle isn't opposite to the majority of your co-owners.

9- If you are buying into an existing development you might want to ask current residents about such things as sound proofing, management.

10- Will you receive adequate parking space? Is parking space included in the purchase price?

There's nothing like moving into a brand-spanking new home, be it a single-family house or a condominium apartment, townhouse or villa. Clean and modern, its has everything you ordered and in exactly the colors you chose for yourself. 'Mighty nice.

Then again, you may not be able to afford new construction. Perhaps no housing of the style you require is being built in the neighbourhood you need or choose to live in. Or perhaps you simply can't determine which is the better value for future resale. Let's examine the considerations in this choice.

*New construction carries a 4.48% net GST cost after the builder gets the tax input rebate. Some developers roll the GST into the advertised price, while some list it separately. For uniform comparison, you should ensure all your prices include the GST. For a price-per-square-foot comparison among projects, and to pre-owned condos, divide asking price (with GST in) by the square footage to arrive at the dollar cost per square foot.

*A pre-built purchase can save you money, because builders often discount prices to those initial buyers who lay down some cash, must wait for occupancy, and help the builder show the construction lender that there is market demand.

*A pre-built purchase can yield a tidy profit for an investor in a popular project who sells at completion when demand is high and the developer has largely sold out of homes. But in cases where units remain available, or when there are further phases being built, resale buyers may not be interested in a near-new unit when they can get an absolutely brand-new one next door for the same price.

Condominium reserve funds are vital.  Whether it is a new development or a long-standing condominium complex, every condominium corporation should have a capital-replacement reserve fund.
This rainy-day fund is simply the cash reserve that condo homeowners put aside jointly to ensure they will have the money needed when major work needs to be done, such as re-roofing the building, repairing a major water leak, or replacing a hot-water heat boiler. Unlike regular maintenance paid from the annual operating budget, these are "capital" items that can cost big dollars.

The reserve fund can be built up over a number of years, sometimes following a reserve-fund study, which lays out which components are expected to wear out at what year in the future. Their projected replacement costs at that time are calculated, and then annual contributions to the fund are made to cover the projected expense by the time that year arrives.

But even without a fancy study or projection, every homeowner knows darn well that they'd better have some money in the bank for that rainy day when the roof finally starts to leak in a serious way.

This applies to new developments, as well as older places, which, of course, can expect greater costs in the near future, as aging components need replacement. A brand-new condo apartment building or townhouse development may have all new components, yet things can and do go wrong.

Older developments are well advised to build up a larger reserve. Perhaps $1,000 per living unit would be a rule of thumb, and annual contributions of perhaps 20% of the operating budget, so the account is replenished as capital spending takes place. In a 20-year-old townhouse development of 150 units, then, you would hope to see a reserve fund of at least $150,000. This amount will rise and fall as expensive projects are completed or are pending.

Before buying a condominium, the budget and reserve fund should be looked at closely. A condominium-specialist Realtor will be able to give insight into the issues. Otherwise, a professional review of all the condominium documents before you finally buy is well advised. Some condominium Realtors now include such a thorough review in their package of professional services.
Take a critical look at the monthly condominium "fee"-really a contribution to your own joint monthly operating expenses AND to the reserve fund. The community of owners could find they need to self-impose an increase to fund operations and to build up the reserve fund.

If your target condominium project is older, look for a more substantial reserve savings account and generous annual contributions to it from the operating budget. 'All the better if there is a reserve-fund study in place, but that's not as vital as the corporation simply having the cash. A walk around the development will soon reveal if major work needs to be done. If it does, and if there's little money in the bank, find yourself a better-managed condominium corporation.

And who owns the reserve fund? You all do; and it stays with the living unit when you sell it--that's one reason some condo owners fight making contributions. Yet condominiums obtain their highest market value when buyers are confident that the corporation is well run, well funded, and that a modest but necessary cash reserve is part of the land and housing asset they are buying.

It's no way to get rich quick, but buying one or several condominium homes as investments can be part of a larger strategy to increase your wealth faster than working only for an hourly wage. Don't take my word for it. Let's listen to financial planning columnist Brian Costello, who writes regularly in the Calgary Herald.
"Many people are aware of the strategy of highly-financed rental real estate," Costello wrote in a recent column (Herald, Dec. 24, 2000). "You make a very small down payment with a huge mortgage. The rents cover the cost of servicing and managing the building but, if they don't, you get a tax writeoff for the difference. You increase the rents, pay down the debt, and hopefully sell at a profit."

Costello's passing reference was part of a column focused on other investment tools.
The average working stiff isn't able to swing the purchase of a multi-suite rental property, either in terms of the cash needed or the hands-on maintenance involved. For those of us who must start small, or who want to diversify a little after being rattled in the stock market, one option is single condominium units, be they brand new (perhaps not yet even constructed), or older condo homes in established neighborhoods.

Halifax is blessed in that rental vacancy rates are low, with newcomers and locals clamoring for good-quality rental accommodation. These are often hard-working people who will some day buy for themselves but, meantime, need a decent home without coming up with a down payment. Yet Halifax is not an over-priced real estate market (Hello, Vancouver!).

While there are formulas for calculating rates of return, a simple rule of thumb is to target a one per-cent of purchase price return in rent per month. If not, remember Mr. Costello's comments about the tax write-offs. In lower-priced real estate markets-and neighborhoods in the city-rents can match or exceed the one per-cent target. In classy neighborhoods, in new buildings, or closer to downtown, they may not meet that criteria, but those are also likely to be appreciating more quickly.
Let's use one of my own recent investments as an example. I just bought a one-bedroom, downtown-view, condominium apartment in a concrete building for just over $90,000. The seller allowed me to assume the mortgage, and I paid the $13,000 difference in cash. The rent of $800 per monthly matches almost to the penny the initial monthly mortgage payment, the condo fees and the taxes. Maintenance of the suite and management of the tenant I do myself at virtually no cost.

Close-in suites like these have been appreciating at more than five per cent annually in recent years-compounding. Rents have been rising to keep pace. Each year, then, five per cent of $90,000 is $4,500, which works out to a 34.6% return on my $13,000. As well, the mortgage principal is declining. A higher rate of inflation would amplify my progress. Mr. Costello is starting to make sense.

Mind you, there are any number of complications that could arise. Market values may not continue to increase as they have in the past. Quality suites with large assumable mortgages can be hard to find. Slowing in-migration and completion of several multi-family projects could ease the rental demand. Interest rates could be higher when you need to renew the mortgage. Just like the stock market, there are up sides and down sides. Does that keep us out of mutual fund and equity investments?

Regardless of the possible bumps on the road to greater wealth, condo investment is at least an easily-understood investment tool that most of us can handle. 'And you'll work for the money. Like in any business, there are hands-on aspects some will not prefer. There are duties to tenants and to condo corporations that landlords must perform if they are to be successful. But in my experience, the payoff is there to be had.