Click the video above to learn about Net Operating Income, Gross Rental Income, Operating Expenses, Cap (short for Capitalization) Rates and more

What terms would you like explained? Let me know in the comments, by sending me a reply on twitter (@benjaminbach), or via email, Benjamin[AT]BenjaminBach[DOT]com

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There are many condominiums in the Kitchener Waterloo area – our thriving community in Southwestern Ontario – especially at this attractive, accessible entry level price point.

How can an Investor know which complexes to invest in – to separate the duds from the great investment opportunities ?  Here are a few things to keep in mind:

Here are 3 things you need to look at before you make the decision to invest in a condo:

1) Location Location Location!

This is the #1 non negotiable aspect of a real estate investment, whether it’s a condominium or a student complex.  One of our investor’s owns complex under contract at a prime corner a stone’s throw from Wilfird Laurier University (and yes, I have the arm to make that throw – I was a pitcher in little league!) in Waterloo.  There is an intrinsic value in the location of a property that you can’t change or upgrade later on.

Some of my favourite investments are on the outskirts of the city, where lots of growth and development is taking place.  For example, we have a unit in a complex very close to where Smartcentres just opened a new Mega centre anchored by a Walmart.  When a major Real Estate company like Smartcentres invests millions into a new development, I feel confident investing a few thousand dollars to buy a condo for $120,000 (and many of our clients have bought units in this complex too).

There are also some great opportunities for equity growth in the city centre, an area that is seeing lots of rejuvenation.  There are several new projects downtown that are attractive, and one of them is right across the street from the brand new  (still under construction) University of Waterloo Downtown Kitchener Health Sciences Campus and a satellite campus of the McMaster School of Medicine, and the University of Waterloo School of Pharmacy.  We have clients who have succesfully invested in the landmark Kaufman Lofts building, and we can show you how this investment can work well for you too.

2) Age & Condition

I typically like condominium complexes that are less than 25 years old. There are some older complexes in good shape, but often the older buildings have higher maintenance and repair fees.

Interior cosmetic condition of the unit (paint, flooring, decorations etc) isn’t such a big concern for me – I like a condo that needs updating! I can get a better price on it than a unit that is staged and presented properly.  Once I update it, I’ll be able to generate more revenue from the unit, raising the value, and my cash flow.

Amenities of the building are important to consider – while a pool, exercise room and guest suite might be amenities you’re happy to pay for when you’re living in a condo community, they aren’t usually things you want to pay for your tenants to use (high end complexes excluded).  Buildings with these amenities will usually have condo fees that are hundreds of dollars higher than condos without them.

Another BIG BONUS with buying newer condos is that properties built since Nov 1 1991 are partially exempt from rental increase guidelines laid out in the Residential Tenancies Act.  Curious ?  Contact me and I’ll explain how this can work out in your favour!

3) Financial Health of the Condominium Corporation

When you invest in a Condo in Ontario, you’re buying part of the condominium corporation, and a specific interest and title in that condo unit. If you buy a condo in a complex that is not financially well managed, they corporation may come to you (as an owner) and demand a ‘contribution,’ which is likely allowed under the specific by-laws of the corporation.  They’ll probably call it a ‘special assessment,’ but that won’t make you any happier about paying it

What you want to look for is the Reserve Fund – this is cash set aside for repairs and maintenance, including planned and unplanned work.  A corporation should be able to provide you with a reserve fund study, and an accounting of what has been spent in past years, and what is budgeting for future years.

This information will be contained in the Status Certificate for the condo.  This certificate, which is a series of documents, costs $100 and has to be purchased anytime you buy a condo in Ontario.  It contains information on the corporation, it’s directors, by-laws, governing documents, articles of incorporation, special addendums, financial documents, possible minutes from past Annual General Meetings of the Board of Directors etc.  Some Status Certificates will contain more than others.  Allow 10 business days to receive this, and then another day or two to review it with your lawyer.

You’ll want to read over, and understand, the operating budget of the corporation.  If there is zero money budgeting for snow removal….  better buy a good shovel

Whenever you’re buying a property you should have a Fiduciary professional representation and advice.  When you’re investing your hard earned investment capital – often your nest egg -  this is even more critical.  Buying and owning a condominium is different than a standard ‘freehold’ property (where you solely own the property), and you need someone to guide you through the intricacies and ensure your profit is being maximized.

There are currently great opportunities in the Kitchener Waterloo Condominium market – if you are interested in increasing the rate of return on your equity, email me right now to set up a Free 30 minute investment consultation.

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Originally built in 1908, the building was formerly the Kaufman Footwear Plant.

One client saw a 750 sq foot unit in Waterloo for $135,000, and preferred the 710 sq foot Kaufman Loft at $210,000. The loft has a ‘cachet’ that just isn’t seen in most other developments in the area.

OK – people want to buy these to live in… but this brings us to the question: Is this an appealing real estate investment?

One of the biggest factors is location.

Located right on the corner of King St and Victoria Street in Kitchener, Ontario, it sits across from the brand new Downtown Kitchener Health Sciences Campus – which will house the University of Waterloo School of Pharmacy, the McMaster School of Medicine and the UW Optometry School.

OK – the condo’s are across the street from the new university campus. Sounds pretty good so far – let’s look into it a bit more.

* The school is projected to have 480 undergraduate and 70 graduate students, 50 faculty and staff.
* Upon completion, the UW Downtown Kitchener Health Sciences Campus expected
to bring hundreds of faculty members and staff to the city’s core each day.

This is no ordinary campus – it’s a campus full of people studying to be professionals, not regular undergraduates.

Most of these students tend to be academic-focused, want a nice, clean rental property near campus, and demand little else.

For the convenience, cleanliness and cachet, they’re usually willing to pay a premium.

I’ve seen 1 bedroom units renting between $1,000 and $1,200 a month, depending on upgrades and square footage.

Pretty healthy rental rates, but not a surprise when you consider how tight the rental market is in Kitchener Waterloo right now (click to read Vacancy Rate Falls in Kitchener Waterloo – Again).

What are the condos like inside?

This gorgeous 1 bedroom condominium at Kaufman (410 King Street West) recently sold in the low $180,000′s.

It features polished concrete floors, twelve foot high ceilings, exposed ductwork and access to a roof top patio.

More things your future tenants will appreciate are the upgraded cabinets, luxurious Kitchen featuring a granite island,
stainless steel appliances, electric fireplace and an upgraded deep soaker tub.

How have these units performed for investors so far?

Great question! Let’s take a look at some numbers.

“When the lofts were first introduced to the market by the builder, prices ranged from $114,990 for a 515 sq. ft. unit, to $197,990 for a 1,120 sq. ft. unit. On a per square foot basis they averaged $203. Today, on the resale market, sold units have ranged from just under $150,000 to $299,900 with an average per square foot price of $281. For those original buyers of Phase 1 units (those who purchased prior to the builder adding two storys, increasing the number of units from 113 to 155 and the prices to an average of $249 per square foot) that means they have seen an average appreciation of 38 percent.”(source Exchange Morning Post (Exchange Magazine, March 17 2008)

Since Exchange published the story above, recent sales of condos in the complex have had listed prices between $164,900 and $219,900.

Currently there are available units with listed prices between $167,700 and $304,900.

If you are interested in learning about how a Kaufman Loft in Kitchener can fit into your real estate investment portfolio, call me now @ 519 570 4447 or send me an email.

I promise you a free, no obligation, educational discussion about your developing & reaching personal real estate goals.

Doesn’t get much easier than that.

–
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It was not listed on the MLS when we bought it – it was an opportunity that we brought to our real estate investor.

Today, I take you out into the market to look at a great opportunity an investor just bought.  The property was not available publically, we had already secured it with an offer by the time it hit the open market on the MLS.

How can you get great deals like these ?  Watch the video and find out.

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