An investment you can’t
How would like to invest $500,000 or more in a private condominium real estate
A lot of smart people that work in this industry say that
it is a very safe investment and the market looks rosy. According to
these experts, the market always looks rosy.
There are 40,000 licenced
agents in the GTA who can get you into the market for as
little as 10% down, sometimes less.
There are high—sometimes extremely high—front-end costs when you buy
this investment. There are also expensive back-end costs when you sell.
The corporation's board has five directors that you have never heard of
and you probably have never seen. They have no proven track record and
they may, or may not, have any skills in accounting, purchasing, human
relations, budgeting, inventory control or have any management
background what-so-ever. They may have little or no understanding of
the property that the corporation owns.
They hire a management company to look after all those details. As an
owner, you will have little or no knowledge about that company, its
track record or any of its
The directors can be replaced at the corporation's Annual General
Meetings by others who may have less knowledge and skills than the
incumbents or maybe more. It can be hard to tell.
Once you buy into a condo you will pay monthly fees
to cover the bills and maintain the corporation's assets. You will have
no direct say in how high those fees will be or what they will be spent
There is a possibility that this condo, from time to time, may
need extra capital. When this happens, you will have to pay—on short
from a few hundred to a few thousand dollars in special assessments.
It's rare, but it can happen, that you will have to kick in more than
If you fail to obey all the corporation instruments, policies and
rules, you may have to pay all the legal and administration costs that
the board spends in
getting you to obey. This can run into tens of thousands of dollars in
legal fees, sometimes more.
Finally, if the condo corporation runs into serious financial difficulties,
or if you cannot pay all of your monthly fees, special assessments,
and/or the extra costs that the directors and the corporation's law
firm hits you with, you could lose your entire investment plus be
driven into personal bankruptcy.
Are you interested? Sounds too risky? You think that no one would buy
such a pig in the
Hundreds of thousands
of people in Ontario have invested much of their savings in private non-profit condo corporations that are managed by amateur
control a cash flow of anywhere from a few thousand to a half-million
dollars a month with next to no oversight.
Most owners blindly put their homes, their biggest and sometimes only
investment, into the hands of unqualified amateurs—many who can't add
up the numbers on their grocery-store tape let alone read their condo's
monthly financial statements—and then don't keep an eye on what their
directors are doing until it's too late. Then it's too late.
If you plan to jump in, good luck.