Welcome friends, today were will try to unravel the financial implications of condo vs freehold ownership. There is always confusion when we meet clients, which is better and what it takes for owning these two diverse style of assets. Lets begin.
Condo Ownership: Long-Term Financial Implications
Maintenance Fees:
Condo owners pay monthly maintenance fees to cover shared amenities, building upkeep, and contributions to the reserve fund. These fees can increase over time due to inflation or unexpected repairs, as seen in the GTA where fees rose by 5.51% in 2023. Special assessments may also arise, requiring additional payments for major repairs or budget shortfalls.
Lower Upfront Costs:
Condos are often more affordable upfront compared to freehold properties, making them attractive for first-time buyers 14.
Predictable Expenses:
Maintenance fees provide predictability for shared expenses like utilities, landscaping, and building repairs, reducing the need for individual planning. However, these fees can offset the lower property taxes typically associated with condos.
Appreciation Potential:
While condos appreciate over time, their growth may be slower than freehold properties due to additional costs like maintenance fees and potential buyer hesitations about rising fees. This filters the buyers when we decide to dispense a condo, and it finally reflects in the appreciation.
Freehold Ownership: Long-Term Financial Implications
No Maintenance Fees:
Freehold owners avoid monthly maintenance fees but are fully responsible for all property upkeep, including repairs and landscaping. This can lead to higher out-of-pocket costs over time. Maintenance costs for freehold homes can average $6,500–$10,000 annually for major repairs spread across decades (e.g., roof, windows, heating and cooling equipment etc).
Higher Upfront Costs:
Freehold properties generally require a larger initial investment but offer greater long-term value due to full ownership of both the land and the property.
Greater Appreciation Potential:
Freehold properties tend to appreciate more significantly over time because land value typically increases faster than building value. This makes freehold ownership a stronger option for long-term wealth accumulation.
Flexibility and Control:
Freehold owners have full control over their property without restrictions from condo boards or shared governance. This autonomy allows for renovations or upgrades that can further enhance property value.
Key Takeaways
Condos: Offer lower upfront costs and predictable shared expenses but come with rising maintenance fees and occasional special assessments that can impact long-term affordability.
Freeholds: Require higher initial investment and ongoing maintenance costs but provide greater appreciation potential, flexibility, and financial independence.
Which Is Right for You?
The choice between condo and freehold ownership depends on your financial goals, lifestyle preferences, and ability to manage ongoing costs. If you value convenience and shared amenities, a condo might suit you better. If long-term growth and full control are priorities, you have budget, a freehold property is likely the better option.
For personalized advice tailored to your situation, feel free to reach out and we will be happy to help.
Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.
Mudit Mehta
Broker of Record
ELIXIR REAL ESTATE INC.
Off: 416-816-6001 | [email protected]