for a term of 3-4 years, is a condo a good buy?

[HeavyD111]

This is referring to Saskatoon area, but the ideas are the same vs Calgary/Edm wherever.

Spouse has gotten into school at SIAST in Saskatoon, will be there for 2.5 years until program ends. We have a house in a small town an hour away that we can sell and make a bit of money on, so we are considering moving to Saskatoon area since we will be at the house very rarely.

Question is do we buy or rent for this time period? It is unknown how long we will be there after she graduates, and my job ends in about 3 years (hopefully find something steadier before then but my field is pretty bad shape)

Condos are expensive and there seems to be a ton of them, are they to be avoided? Keeping house and renting apt for her is same as expensive place in Saskatoon area. Any advice is welcomed..

Dalton

[omega50]

I vote Rent.

The market is likely different in Saskatoon, but we recently went thru this when buying a condo in Calgary for the MIL.

IMO Condos can be easy to buy and hard to sell. And the Condo fees continue on regardless if the unit is vacant or not.

She is in a great building, lots of amenities and prices seem comparable for the area. But there are units in her building that have remained unsold for close to 2 years.

Forcing most owners to rent their units.
A big issue in condos with a older demographic is probate.
Lots of units for sale, but they can't be sold until probate is cleared.

Happened in my MIL'S case-made an offer to purchase, But was still in probate. So the Condo owners let her move in and live there if she would cover the monthly Condo Fees.

She lived there 8 months for $345 a month until probate was lifted, then she bought the unit.

I am sure similar opportunities exist everywhere.

[58thecat]

Giving what you said, rent, rent out your house if you can too.
Too many unknowns after the 2-3 year mark so rent, after that and stability takes hold as in employment etc buy, condos are nice but you are surrounded by too many possible wankers that can impact you directly, at least with a house you got a buffer zone as in a yard.

[jpohlic]

What's the real estate market like in small town Saskatchewan? She could be done school by the time it sells - my in-laws have a house listed in Edam and it's been a couple years, nothing is moving in their town. I'd rent the house out and rent an apartment in Saskatoon to live in

[CaberTosser]

Having performed lots of condo maintenance contracts I’ve been through lots of the behind the scenes issues in them, some a fine and some are to be avoided like the plague. Some are poorly built nightmares with huge hidden repair bills that all owners will have to contribute to paying for and some have overbearing people on the condo boards. Some even have both! Personally I could not pay a mortgage while living under other peoples rules. I would theoretically rent one if needed, but I would never own one unless I got through the construction with a fine toothed comb and owned enough of them to vote myself a majority position in management board decisions.

[slough shark]

If you’re only an hour away I’d look into having her commute, maybe you guys have a friend she could rent a room out a few days a week. Small town houses normally don’t sell very quickly as well and I’m assuming your house is in close proximity to your work. Owning a property for less than 5 years is a waste, you end up paying whatever you paid down in realtor fees unless the value of the home shoots up which one can’t count on.

[Drewski Canuck]

I actually do friends and family Real Estate Practice.

I have never been happy to explain that Condo fees and Special Levies are the norm.

Most people THINK that all the maintenance is being done for the Condo Fees. the reality is that most Condo boards pay too much for the maintenance to contractors, because they use a "Management Company" to administer the day to day maintenance. If you can't understand what I am saying, imagine a "middle man" who charges a princely sum, and then finds Contractors who are charging as much as they can.

Normal cycle is that the old Board of Lay People / Owners gets ousted or quits, the new Board then fires the Management Company, because they are to blame, and finds a new Management Company that promises the moon and the stars, only to start the cycle over again.

Alberta's Condominium Property Act and Regulations have changed in the last 10 years that Boards now must do Studies to determine a proper reserve for Capital costs such as repairs, upgrades, etc. in the old days, a Condo Spin Doctor from Toronto would buy an Apartment, Condominiumize a 40 year old Apartment building, and put $10,000 in the Reserve Fund, while selling off the units over two years. And the buyers were lambs to the slaughter. A sewer main break in the common area in the Winter would occur, and each unit would get a $8,000 levy assessed as the 10 K did not cover the excavation.

Condo fees in the Edmonton area are commonly $500 a month for common area property taxes, maintenance, management, reserve fund, etc, and you get NOTHING for it. Now, what if you took that $500 / month, and simply applied it to Rent, and skipped the risk of a Special Levy, increased Condo fees, maintenance and insurance on Your Unit, Property Taxes on Your Unit, and avoided the risk of market fluctuations?

This is not 2004. Things are not going up $5 K a month. You are not being left out of the "boom".

And most important, if your Landlord or adjoining Tenant is a Jerk, you are free to leave!

Try that when you are stuck in a Condo with an out of control Management Company and Dysfunctional Board making decisions for you.

But if you want to know how I really feel, buy me a case of beer and watch me rage.

Drewski

[Trochu]

I'd rent.

Cousin graduated for U of S last year and still has the condo for sale.

[MyAlberta]

How ‘rentable’ is your Wakaw home? If it can cover itself or better, than holding may work. In s’toon Id be renting. I echo the condo horror. With that being said, it should be a great time to uncover good deals in the housing market, and it’s hard to pass on a good deal.

[SamSteele]

I owned a condo once. That was enough.

[jstubbs]

Rent. No question. In 2.5 years the equity gained over renting probably won't even cover acquisition and sale fees (realtor, lawyer, etc).

[badger]

Rent. The commissions and potential costs of ownership will never offset the gains from house price increase. You could also get hit with a big assessment from the condo association.

[EZM]

I think we are all in agreement - I and close friends of mine have been there done that with condos, investments in condos etc.., and they simply are much higher risk propositions with, like others have mentioned, uncontrolled variables like a poor management company and inept board.

A condo, IMO, is only good if it's new and in a short (quick flip) type scenario where you can pre-purchase a unit in a known short market (like Vancouver). A close friend of mine has made hundreds and hundreds of thousands of dollars doing exactly that - but there was a period where I'm sure he never slept a full and restful sleep. He's glad he did it now BUT also says he would never do it again ..... lol.

The other consideration, is that in a conventional financing scenario, your interest rate (on the cash) will likely break even with market increases (appreciation) leaving you with the little equity you have paid down on the front end of a load (interests are loaded front end).

Simply, under normal circumstances, this doesn't pay off unless it's a short and hot market - which is something you simply can't predict and count on.

[Red Bullets]

Maybe your wife should consider a one hour commute and don't move. Lots of people take an hour to commute to the other side of the city everyday. Just rent a room for the winter weekdays. I know people in Edmonton that have a one hour transit ride one way just to get to school.

[spyguy 0-0-7]

RENT,RENT,RENT..... For the short time that your looking at:Rent it.
If you purchase you now have monthly condo fees as well as you are responsible for the property taxes. Your condo fees do not cover property taxes. Consider also the bone head that may be living next door. There are tons of great rental property in Saskatoon.

[R3illy]

Everyone here seems to be replying from an emotional state as opposed to one that crunches the numbers and your return on investment.

If your only putting minimal money down on the condo its not worth it to buy in the short term.

Now if your paying for the condo out right it may work out numbers wise. I would look into how many condos are sold in saskatoon as the markets in every city are different. For example the condo market in downtown edmonton and around the u of a is very strong especially compared to the suburbs here. Perhaps you get a condo near sait and use that as a rental later.

Any decent realtor or investment banker can dive into a cost analysis vs renting.

[fishtank]

rental is the best option .

[Sundancefisher]

realtor costs and condo fees will likely be more than you will be able to get in a likely price rise over that period. Home prices have flattened and are sitting at a high mark already.

Plus if you buy...check the condo finances and see if they have enough to cover roof repairs and any other issues facing them like siding, sidewalks etc. Condos have a board and they can spend your money...and demand more believe it or not.

Plus you are in tight with others. If you don't like your neighbor you have a painful time before you sell.

If you go to sell and prices fell you lost money.

If market is soft it could be 8 months to sell in which time your equity is locked away and you can't use it.

That being said...work out the details.

If rent is $5000/month and a condo costs $80K there is a simple answer.

If rent is $800/month and a condo costs $500K there is a simple answer.

Any money you can save on renting versus owning you can put into tax free savings account in blue chip dividend stocks for when you do need it.

[R3illy]

rental is the best option???? No ones even asked about the market or the location that the op may buy or what price points...

Theres good reasons to rent and good reasons to buy that the op should consider.

I would buy a condo near the u of a in edmonton no problem. That rental market and resale will always be good.

[omega50]

Originally Posted by R3illy

rental is the best option???? No ones even asked about the market or the location that the op may buy or what price points...

Theres good reasons to rent and good reasons to buy that the op should consider.

I would buy a condo near the u of a in edmonton no problem. That rental market and resale will always be good.

Good advice
Except the OP needs something in Saskatoon

[R3illy]

Originally Posted by omega50

Good advice
Except the OP needs something in Saskatoon

im assuming siast is similar to the u of a?? Maybe not as big but certainly the fundementals of owning a rental condo around a post secondary institution is never a horrible idea..

Ops maybe better of renting but there are lots of reasoms where buying may make sense. It seems most here are afraid of condos or making money.

[HeavyD111]

Thanks for all the replies. We have a lot of places to look at and some decisions to make..all the opinions will help us do the right thing.

[tri777]

I would never touch anything Condo living
Unless I was stupid rich/won Lotto max.

[MyAlberta]

Originally Posted by R3illy

im assuming siast is similar to the u of a?? Maybe not as big but certainly the fundementals of owning a rental condo around a post secondary institution is never a horrible idea..

Ops maybe better of renting but there are lots of reasoms where buying may make sense. It seems most here are afraid of condos or making money.

I buy single detached and multiplexes. Don’t believe in sharing ownership with whoever happens to land on the condo board. But that’s just me.

[mattthegorby]

Originally Posted by Drewski Canuck

I actually do friends and family Real Estate Practice.

I have never been happy to explain that Condo fees and Special Levies are the norm.

Most people THINK that all the maintenance is being done for the Condo Fees. the reality is that most Condo boards pay too much for the maintenance to contractors, because they use a "Management Company" to administer the day to day maintenance. If you can't understand what I am saying, imagine a "middle man" who charges a princely sum, and then finds Contractors who are charging as much as they can.

Normal cycle is that the old Board of Lay People / Owners gets ousted or quits, the new Board then fires the Management Company, because they are to blame, and finds a new Management Company that promises the moon and the stars, only to start the cycle over again.

Alberta's Condominium Property Act and Regulations have changed in the last 10 years that Boards now must do Studies to determine a proper reserve for Capital costs such as repairs, upgrades, etc. in the old days, a Condo Spin Doctor from Toronto would buy an Apartment, Condominiumize a 40 year old Apartment building, and put $10,000 in the Reserve Fund, while selling off the units over two years. And the buyers were lambs to the slaughter. A sewer main break in the common area in the Winter would occur, and each unit would get a $8,000 levy assessed as the 10 K did not cover the excavation.

Condo fees in the Edmonton area are commonly $500 a month for common area property taxes, maintenance, management, reserve fund, etc, and you get NOTHING for it. Now, what if you took that $500 / month, and simply applied it to Rent, and skipped the risk of a Special Levy, increased Condo fees, maintenance and insurance on Your Unit, Property Taxes on Your Unit, and avoided the risk of market fluctuations?

This is not 2004. Things are not going up $5 K a month. You are not being left out of the "boom".

And most important, if your Landlord or adjoining Tenant is a Jerk, you are free to leave!

Try that when you are stuck in a Condo with an out of control Management Company and Dysfunctional Board making decisions for you.

But if you want to know how I really feel, buy me a case of beer and watch me rage.

Drewski

I have bought, renovated, and sold 2 condos and rented 1 in the past 5 years before moving back into a house 6 months ago. (Calgary) Was also on the condo board for most of this time and that is something any condo owner should do so you have a say in things.

Reread Drewski's post about 10 times. He has said it better than I could.

Sent from my SM-G920W8 using Tapatalk

[EZM]

Originally Posted by R3illy

It seems most here are afraid of condos or making money.

I'm sorry but I need to respond to your comments .....

You have no idea what each of us has accomplished in the real estate and investment markets. Perhaps some of us "hillbillies" might have a very well qualified opinion based on an extensive track records of real estate, and other investments and maybe, just maybe, we have scrapped together a few nickels ourselves - you don't know that - but painting everyone as a fool as you school us all doesn't sit right with me.

Either way - I think most contributors here are on the right page and here's why .....

The expected return on investment of a short real estate investment only works if a market is short of inventory (prices going up faster compared to the typical market increases because there's not much out there or it is in a hot area) AND if you can still net a positive return when considering you are basically eroding you annual return year over year by spreading our your financing and closing costs over a shorter maturity window.

I'm not going to pick on everything you said, nor do I want to go back and forth discussing every point - so I will use one thing you said about down payment on investment properties to illustrate a different perspective.

If you are suggesting that putting more than 20% down on a condo investment on a 3-4 year term, with closing fees of, say 10-15K plus the basic cost of cash will return you, in that particular market more than say, 9%*** year over year .... it's a good investment.

BUT, my friend, a typical return on real estate is far less that the 9% YOY - so generally, I'd say the contributors here faced with a general question, have provided an excellent and accurate general answer and I agree the option to rent, given these circumstances, is in fact the best course of action.

****The 9% I quote is the average return on a S&P 500 equity or something similar - and I always suggest that a real estate investment is closer to a high yield bond - more secure but not as high returning generally speaking versus an equity which generally have stronger returns but come with a higher risk.

For this very same reason, many real estate investors do not put more than the 20% down, avoiding the default insurance costs on a property YET preserving the cash to be used in higher yielding investments. This allows your higher risks investment to be self-secured based on the equity position in the property.

I'd rather pay, say 3% of interest on the extra $200,000 I did not "put down" as a down payment and loose that 3% on the 200K knowing, that I can "make" 9% on that same cash in conventional, garden variety equities, yielding me a benefit (improvement) of 6% over tying up my money in a down payment.

The one, and only point you make that I agree with - is that you do have to look at the specific market and the circumstances specific to what you are doing specifically to make an intelligent decision.

HOWEVER, general question and general answers here are spot on and I 100% agree with most contributors - rent.