Should I Buy This Condo?

I’ve been thinking of making a move for some time, and the “perfect” property just came onto the market.

The building literally backs onto where I currently live, so I wouldn’t exactly be moving out of the area!

Despite the fact that I sell people houses and condos for a living, I just can’t answer this question for myself: “Is it time?”

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Good gawd, y’all, I absolutely LOVE living in the St. Lawrence Market!

Not actually “in” the market itself, because that would be strange….and it would smell like fish…

But in case you haven’t noticed the “St. Lawrence Market” has become a term that also describes a neighbourhood roughly bordered by Parliament, Richmond, Church, and Front Street, and I enjoy living right in the epicentre of it all.

I would never move out of this area….”never-ever-ever-ever-ever” as said by a five-year-old child during a tempter-tantrum…

But if I did find the right property, I would consider relocating within it the neighbourhood.

Not too long ago, I posted a blog about a very unique unit at Mozo Lofts across the street from my building.  The unit was about 1000 square feet and had a 1300 square foot terrace.  If you read my blog often enough, you know that I love terraces.

I passed on that unit and its $600,000 price tag, and since then I’ve been having daydreams about living in that magnificent condo (once I renovate, of course) with all the toys that an immature 30-year-old desires.

My Dad told me that I was being “irrational” when I said that I wanted a huge “sick” condo where I could buy a Street Fighter II arcade version like this:

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I probably wouldn’t have much time to play with it, but at least I would know that I own a condo that comfortably fits an arcade game console.

My Dad told me that we was surprised by my actions, since everything I do financially is well thought out and with every dollar and cent in mind.  It wasn’t like me to get emotional and delusional about something as important as one’s primary residence and largest asset.

He’s right, and ultimately I know if I make a move, it has to be the right move.  The unit at Mozo was overpriced and needed a ton of work, and it wouldn’t have been a good “investment.”

Yesterday, a unit came up for sale at 383 Adelaide Street east, also known as “Liberty Lofts.”

I emailed this new listing to three of my clients who are looking for a hard loft in the St. Lawrence Market area, and then to a brand new client of mine: me.

Liberty Lofts should have been called “The Razor Lofts” in my opinion, since that name sounds sharp and has something to do with the history of the building.

In 1937, this beautiful red-brick building was constructed and used by Gillette to manufacture razors, long before we’d ever heard the term “Mach Three Turbo.”

In 1990, the building was converted to residential units and “Liberty Lofts” condominium was born.

The unit I am looking at is priced at $499,000, and they are reviewing offers next week.

Whether or not they receive multiple offers is of little concern to me.  I could care less if I pay $499,000 or $525,000; it might cost me an extra hundred dollars per month in my mortgage.

But this condo is definitely a rare find, and that is what intrigues me.

I can’t show photos of the unit since that would constitute unauthorized advertising, but I’m sure you are all creative enough to picture the following…

The unit is 1100 square feet with one bedroom, a den, and two bathrooms.

It is a two-storey unit with an open concept living-dining room and a kitchen on the main floor, and a master bedroom and den on the second floor.

The ceilings are 12-feet on the main floor, and an incredible 14-feet on the second floor.

The unit is a very traditional hard-loft with beautiful yellow-brick walls, timber support beams running vertical from floor-to-ceiling as well as horizontally across the entire ceiling on the main floor, and there are massive picture windows.

The parking space is owned which can only be said by a handful of residents in the building.

But the icing on the cake for me is the 300 square foot terrace on the second floor that would be a slight step down from my current 440 square foot terrace, but would enable me to BBQ and keep my thumb green.

The current owner paid $420,000 for the condo over three years ago, so at $499,000 he would be seeing a less-than-average appreciation in value.

I paid $277,500 for my current condominium, and if I sold it today, I think I would bring in about $325,000 – $340,000.

I owe about $195,000 on the condo.

Assuming I paid $500,000 for the condo at Liberty Lofts, and used $130,000 as a downpayment, I would have a monthly mortgage payment of about $1620.  I currently pay about $1200 where I live now.

The maintenance fees for the penthouse at Liberty Lofts aren’t easy to swallow – $719.70 per month including all utilities, which at $0.65 per square foot is on the higher end.

I currently pay $350 per month for maintenance fees.

Factor in the extra $420 per month for my mortgage and the extra $370 per month for my maintenance fees, and my cost of living increases by almost $800.

So now I ask: Is it worth it?

Will I be “happier” at the new, larger condo?

This is what my Dad asked me.  “Do you think living in a larger condo will make you a happier person?”

Ummmmm……yes, question mark?

There has been about a $50,000 capital appreciation in my principal residence but I haven’t realized that gain yet.  By selling my current condo, I’d be able to use this in addition to my original downpayment, and I would be putting down more than 25% on the new place.

That alone tells me that I can afford it.

But what about the monthly carrying costs?

How am I going to like writing those $720 cheques for my maintenance fees in a building with zero amenities to speak of?  Not that I would use them anyways…

To be perfectly honest, I have no clue what I want to do.

I’m very content living in my 585 square foot condo with a 440 square foot terrace, but it’s small and I’m outgrowing it.

I spend seven days per week showing clients these beautiful condos and then I return home to my cramped 1-bedroom unit.

I’m really struggling with this one, and writing about it helps to put things into perspective.  This blog isn’t just for all you people reading it, you know.  It’s also an outlet for my thoughts, feelings, opinions, and often my rants…

Well, I have a week to think about it, and in the meantime, I have to show the unit to three perspective clients!

Talk about not getting emotionally involved…

12 Comments

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  1. Thanks for the update!!! Wow, awesome real estate blog

  2. dogbiskit says:

    Yep, it’s time to move but those maintenance fees are stooopid. Better to wait and find something else.

  3. IanC says:

    I agree with LC.

    Sure, it’s time to move into a place that you will be right sized 5 years from now. But If you are looking soon at 70+ cents a square foot (with the HST coming), you should be more compensated with a lower price per square foot. There has to be a better place out there. Keep looking.

    The no brainer is that it is time to replace your no name TV. Get something with decent contrast! You pay hundreds and hundreds a year in cable each year, don’t you? Watch something decent.

  4. PK says:

    David, long time listener, first time caller and I love this blog.

    My take: Great location, unique space, etc. If you can comfortably afford it, and it will make you happy, go for it.

    The 0.65 psf maintenance does seem high at first glance, but that is just one metric. Another metric I like to look at is annual maintenance cost as a percentage of property value. I think most decent places will be at 2% or below and this property seems good from that perspective.

    Which makes sense to me. BMWs aren’t cheap to maintain either, but that doesn’t affect their high market value.

    The only worry I would have with re-saleability of this property is that it is one bedroom for such a big space. Most people wanting that kind of space would probably want 2 bedrooms.

  5. LC says:

    If understand correctly, you would be paying about $0.65/sf in maintenance fees. That’s really high for a building that has no amenities. Infact, that is ridiculously high and will only go higher with HST. I would really study the stat certificate and anything else you can get your hands on before making an offer. The space is gorgeous, but that $719 a month needs to be justified, as it’s only going to go higher.

  6. Aguduser says:

    Also, if you do decide to go for it for both purposes, don’t put all your money into the down payment. It would just reduce your monthly payment a little bit; but as an investor, you don’t put all you have in one investment, do you?

  7. Aguduser says:

    Okay, David, here it goes:

    You like this unit! The question is: should you go for it?

    1. If you think of it only as a move up for your main residence, the question is simple: with your current income, can you afford $2340 a month for this?

    It sounds like it’s currently a weak “Yes”.

    2. If you think of it as an investment, let’s suppose a client of yours, Ken, has an eye on this unit. He told you that he likes the location, the building, and the unit itself. The price seems okay too. He has a good chunk of money for the down payment, and he also already found a person who is willing to pay $2340 a month to rent it. That would cover his monthly cost. He’s hoping that this unit will gain good appreciation in the next few years, and that’s the main reason for this investment. As his trusted agent, would you advise him to go for it?

    It sounds like you haven’t thought much of it this way. Give it some more thoughts. Evaluate the unit as an investment.

    3. Now back to your situation, if you think of it as both the move-up residence and an investment, a “Yes” for the second question would be a strong support for the weak “Yes” of the first question. As you can always switch the two purposes: get the place, live in it, see if you like it. If you later realize that it’s a little beyond your means, or you just don’t like it, treat it like an investment, and move back to your old place, or if you’ve already sold that, get another one that suits your need.

    When I say “treat it like an investment”, I mean if you do make that decision to switch the purposes down the road, treat it like any other investments of yours. You can sell it right away, or keep it rented until you can sell it for a profit. If you’re confident that it would be a profit, no matter how small, I think you’ll be okay. Or even if it would be a small loss, it might be as well worth a try. After all, if you don’t take the risk, how would you know what would be in store for you?

    Note: when you think of it as an investment, the high condo fees might be a bit of an obstacle for resale, though.

    Hope it helps.

  8. DEW says:

    GO FOR IT!! It sounds like your living beneath your means right now. it this condo is as rare as you say then you might not get another chance!

  9. BobbyV says:

    ummm, yes ….. personally i would not consider anything less than 600 sq ft as it would be way too cramped but going to a 1100 sq ft is pretty extreme. Unless you’re getting married and planning kids in the next few years then i”d pass. Also, that maintenance is killer. Imagine all the other options you have if you put that $800 elsewhere every month ….. you can do a lot more.

  10. JG says:

    I think the unit is great and looks amazing! Easy to find on MLS! Maybe I am cheap, or have pre-conceived ideas of maintenance fees should be, but that $720 is a hard bit to come to terms with. Especially if there are no amenities. Not that the bulk of people use them, but a nice pool table would come in handy once in a while.
    On the re-sale issue, how many buyers would want to stomach that maintenance fee. Again, maybe I am just cheap but it could be an issue down the way. And what about future potential appreciation – it didnt increase that much since the existing buyer purchased it. can you get a similar cost property elsewhere with greater appreciation to help facilitate your next residence purchase when time comes to move on? (think that might be a run on sentence)
    Anyhow, those are my quick thoughts on the matter. Best of luck with this one.

  11. LM says:

    I think liking somewhere we live really enhances our quality of life. It sounds like this place could enhance your happiness factor bigtime. I don’t know if anyone else thinks like me, but I think it’s a huge plus to have two levels in a condo. Being neurotically noise-sensitive, it appeals to me because if neighbours on one floor are being noisy, you have the option to sleep on the other floor if they are having a one-off party and you don’t want to seem like a killjoy Scrooge. At $475ish a sq ft (using $525k) it is ok pricing vs new builds, and the design sounds very current for an older condo. I am bullish about the market- I think rates will stay low for longer than anyone expects, that the BOC is paranoid about doing anything which might strengthen the loonie, so I should confess that this is my bias.

  12. earth mother says:

    Sounds amazing — and so much space!! after 3 years in your current condo, a move could shake things up — in a good way!! I’m easily persuaded… why not throw your hat in the ring??

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