Real Estate

What happens to old condos?

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  • Aug 18th, 2019 9:58 am
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[OP]
Member
Jul 14, 2009
228 posts
77 upvotes

What happens to old condos?

I'm considering purchasing an older (30yo);condo and I was contemplating about its eventuality... This one's in an awesome location, well maintained, maintenance is in 700s and it's got big units. But say in 25 years, what will happen? Will someone buy it off of all the residents and build it again? Has anyone been through anything like this?
15 replies
Newbie
Jun 30, 2017
39 posts
34 upvotes
I think you should start by considering how long you intend to stay in that condo and work from there. If the building is well maintained as you said and it's in a good area, I think it's reasonable to assume it's got another 20+ years ahead of it. I have no heard about a developer buying out a condo/land like the scenario you're mentioning but I would assume it would still need majority approval if not all approval from the owners in your building? But that's just me speaking common sense lol who knows what the process actually is, I hope someone can chime in cause it's a good question
Deal Addict
Sep 20, 2014
1456 posts
661 upvotes
Toronto, ON, CA
I've heard high-rise buildings, well offices, have useful lives of around 100 years.
Look up the oldest buildings in the world, some of them are well over 100 years.
What shocks me the most is the maintenance fees on these older buildings!
If I ever buy, I'd buy for life (I hate moving and RE as an asset class), and I just can't fathom the op-ex of $700+++++ a month on maintenance fees, then add property taxes....OK let's not have a buy vs. rent debate haha.
Deal Addict
Feb 19, 2019
1240 posts
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Stouffville ON
You need 80% vote for the condo to be demolished, low rise buildings in desirable areas can be sold and torn down, and the owners can do very well financially if it is sold to high-rise developer, the unit holders also do have some land value.
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Deal Fanatic
Dec 20, 2018
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mefromparadise wrote: I'm considering purchasing an older (30yo);condo and I was contemplating about its eventuality... This one's in an awesome location, well maintained, maintenance is in 700s and it's got big units. But say in 25 years, what will happen? Will someone buy it off of all the residents and build it again? Has anyone been through anything like this?
What do you think happens to old houses or office towers? I mean the CN tower, empire state building and etc are all still around. And let's not forget other parts of world where apartments have been around for 100+ years
Sr. Member
Nov 16, 2013
750 posts
219 upvotes
GTA
I know in other countries old buildings are demolished and new and more floors come up where existing owner getter replacements and builder makes money on additional units.

I am sure same with happen here as well though the years may be 100+.

Everything including all of us have a expiry date.
Deal Expert
May 30, 2005
45901 posts
6392 upvotes
Richmond Hill
If it's over 10 floors tall, chances are really low it'll be demolished within our lifetime IMO. They're still working on those 4 floor tall buildings along Queen and King, and there are still tons waiting to be redeveloped. Notable exception being 480 University.
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Feb 25, 2018
567 posts
213 upvotes
The windows will all fail and start falling out and hurting people. Then hopefully the slush fund will cover replacement. If not you will be on the hook for major costs. Other things could go wrong too. Imagine replacing all that glass.

Maintenance fees get higher and higher and units become hard to sell.
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Dec 20, 2018
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DaveVentura wrote: The windows will all fail and start falling out and hurting people. Then hopefully the slush fund will cover replacement. If not you will be on the hook for major costs. Other things could go wrong too. Imagine replacing all that glass.

Maintenance fees get higher and higher and units become hard to sell.
This isn't a detached , they have engineers and audits so won't happen and as you say, will have a reserve fund so won't be an issue unlike a freehold
[OP]
Member
Jul 14, 2009
228 posts
77 upvotes
StatsGuy wrote: What do you think happens to old houses or office towers? I mean the CN tower, empire state building and etc are all still around. And let's not forget other parts of world where apartments have been around for 100+ years
I might not have been clear but I'm not talking about landmarks and historicals... I'm talking about plain old condos. Usually with detached after 40 years, units are teared down and rebuilt.... At some point the cost of maintenance surpasses it's worth so rebuilding is the most sensible option.
So as a buyer, thinking about long term, I wonder when that happens in condos or other units where land shared?
[OP]
Member
Jul 14, 2009
228 posts
77 upvotes
2009M5 wrote: I've heard high-rise buildings, well offices, have useful lives of around 100 years.
Look up the oldest buildings in the world, some of them are well over 100 years.
What shocks me the most is the maintenance fees on these older buildings!
If I ever buy, I'd buy for life (I hate moving and RE as an asset class), and I just can't fathom the op-ex of $700+++++ a month on maintenance fees, then add property taxes....OK let's not have a buy vs. rent debate haha.

Oh gosh. I really don't want to imagine that. My old office was in a 40 year old building that was a compete sh*t hole... Bugs in the bricks and all. They had a looot of trouble renting out the units and the cost of maintenance was added to the rent amongst the few that had stayed or had rented in. It was a vicious cycle because the costs kept going up so people couldn't move in but also unless people moved in costs kept going up.
I'm considering this specific condo as a starter home for my family (it's 1300 sqft which is a palace compared to what I've seen for the same price) AND a long term investment... The main reason I'm asking this question is what you mentioned about maintenance fees. I just don't know where the limit is. If maintenance gets to say $2000/mo in the next 10 years, then is it worth maintaining? Then what happens at that point?
[OP]
Member
Jul 14, 2009
228 posts
77 upvotes
DaveVentura wrote: The windows will all fail and start falling out and hurting people. Then hopefully the slush fund will cover replacement. If not you will be on the hook for major costs. Other things could go wrong too. Imagine replacing all that glass.

Maintenance fees get higher and higher and units become hard to sell.
That's what I think. So but then what?
[OP]
Member
Jul 14, 2009
228 posts
77 upvotes
senasena wrote: You need 80% vote for the condo to be demolished, low rise buildings in desirable areas can be sold and torn down, and the owners can do very well financially if it is sold to high-rise developer, the unit holders also do have some land value.
Agree. I was guessing along the same lines.
Deal Addict
Jan 17, 2006
2219 posts
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Toronto
mefromparadise wrote: I might not have been clear but I'm not talking about landmarks and historicals... I'm talking about plain old condos. Usually with detached after 40 years, units are teared down and rebuilt.... At some point the cost of maintenance surpasses it's worth so rebuilding is the most sensible option.
So as a buyer, thinking about long term, I wonder when that happens in condos or other units where land shared?
There are plenty 100 years old detached in Toronto.
Condos are built to last around 100 years I read.
Deal Addict
Feb 19, 2019
1240 posts
1748 upvotes
Stouffville ON
mefromparadise wrote: I might not have been clear but I'm not talking about landmarks and historicals... I'm talking about plain old condos. Usually with detached after 40 years, units are teared down and rebuilt.... At some point the cost of maintenance surpasses it's worth so rebuilding is the most sensible option.
So as a buyer, thinking about long term, I wonder when that happens in condos or other units where land shared?
For detached you have much more time than 40 years, if this was the case the houses built in 70s would be notoriously torn down, that’s only the case for small bungalows in desirable locations, or if something was really wrong that house, in normal circumstance those house can last for quite a bit longer. Many houses that are torn down are from the 40s or 50s, this was probably the worst period when it comes to quality of built, yet if they were maintained properly they can still serve the purpose for a bit longer, you see perfect examples of these in small towns or cottages, they can definitely survive but just weren’t built to meet today’s consumer conveniences. Older houses built from solid brick can last much longer. The detached built today, despite just meeting the minimum building standards, are built much better than the once from 50s and 70s, and can probably last longer than them.
Condos are a different ball game, they can and will last much longer than you think, we will long be gone before the buildings are gone, they are just built to different specifications, and for the most part maintained to much higher standards, there are regulations that have to be followed (reserve funds studies, performance audits etc), the maintenance is not DIY but done but professionals. With that will come added cost, and that translates into condo fees which should be an important factor when considering a purchase.
The interesting question IMO is the land value allocation, when buying a house you could assume the land value is a significant portion of the cost, it could be 50% range all the way up to 100%. In a condo the land value is allocated among all the unit holders, the land value of the purchase could be 5%, perhaps even less, so is there a risk? Probably yes, but if you want to live in a big city you will have very little choice unless you can dish out a much bigger sum of money for a house, the life span of a condo is very long, definitely over 100 years, and probably much longer than that with proper and ongoing maintenance, you nor your grandchildren are not likely to be faced with the decision to demolish it or not, but what if it does happen? You still do have some land value, the land is so valuable in a desirable location that you would still get fair amount of money. There are number of examples of smaller condo buildings (that includes both commercial and residential) where the unit owners voted to sell the whole thing to the developer, and they still did very well financially. From the perspective of the land value I would be more concerned with condos built in some smaller cities or stacked townhouse where the parcel of land is very small and you still have to divide it up among 4 owners.
mefromparadise wrote:
I'm considering this specific condo as a starter home for my family (it's 1300 sqft which is a palace compared to what I've seen for the same price) AND a long term investment... The main reason I'm asking this question is what you mentioned about maintenance fees. I just don't know where the limit is. If maintenance gets to say $2000/mo in the next 10 years, then is it worth maintaining? Then what happens at that point?
This is why purchasing a condo is more complex than purchasing a house, you need to look at the status certificate, reserve fund study, by-laws, quality and reputation of the management company, who was the builder, ask questions about kitec plumbing etc, your due diligence will help you avoid being faced with higher than expected condo fees. If a massive increase in condo fees happen it will affect the resale value of the unit.
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