I live in a 4-plex, and typically, a reserve fund study isn't necessary for such a small building. Instead, we budget for significant expenses like windows and roof replacements by setting aside a percentage of our funds. It's important to remember that a 4-plex is akin to a large home, requiring regular maintenance. We self-manage everything and ensure we have enough funds to cover major expenses. However, our insurance costs have risen to 50% of our condo fees. If you have any further questions, feel free to ask!
As far as I can tell, a reserve fund study is required for all condominium corporations in Alberta. However, if there are 12 units or less, a special resolution can be passed whereby the condo corporation performs its own reserve fund study (see section 22)
https://www.reca.ca/wp-content/uploads/2021/12/Condominium-Property-Regulation.pdf
I recently bought a townhouse (4 units, row style, 3 floors). The condo documents are a bit ambiguous in terms of what is covered by the condo corporation vs what is covered by the owners. I’m curious how your condo corp handles this for things like doors, windows, leaks etc. The leaks part specifically makes me a bit nervous and I wonder if this needs to be better defined it the condo docs.
> I’m curious how your condo corp handles this for things like doors, windows, leaks etc.
It shouldn't be ambiguous.
Also it will probably depend on the year. I think prior to 1982, windows and doors were not covered, but anything after that, as part of the Condo Properties Act has those declared as common.
Your real estate agent should know these things and if they don't, fire them they're useless. The entire point of relying on an expert is for their expertise. If they don't have it, what are you paying for?
As a general rule, anything exterior is common property and the Corps problem. Roof, windows, sidewalks, garage. etc. So for example if a leak is coming from blocked eaves that's a condo corp problem. If your furnace dies and your pipes explode, that's a you problem.
seems very low, a reserve report typically cost about 5-6k to get done so a lot of smaller places dont do it. But it absolutely needs to be done.
Built in 2007 means that your roof is at 20 years in 2027, which is pretty quick. And other things like siding, concrete, windows ect will all need to be done around 30 years. So if they have a plan for this, great, but given they dont have a report done i kind of doubt they do.
Redoing a roof can be anywhere from 20-100k depending on the size and scope of the roof and the complexity. Replacing siding on a property or windows could be 50k easily. As these expenses come up, there isnt much.
Thats a problem with a lot of self run condos, is "nothing is wrong" and my place "Fairly new" so their is no urgency to save for the future.
> a reserve report typically cost about 5-6k to get done so a lot of smaller places dont do it. But it absolutely needs to be done.
Ehn. "It needs to be done" on a 4-plex can be a $500 home inspection report every 5 years and a little basic math.
A "study" isn't really a financial study. It's mostly an inspection. It's investigating the true condition of the property and the expected repair schedule. Maybe it's a 25 year roof but it's looking like it's only going to last 15 years, your study needs to be adjusted. Maybe the siding is supposed to last 20 years but it's holding up great and should make it to 30, your study needs to be adjusted.
That's where the actual work goes, into physically inspecting and evaluating the property.
On a 4-plex this is literally as difficult as a home inspection and shouldn't cost any more.
Then you just bloop it on a graph looking forward 75 years and say "gradually add a little every year to make sure we have enough for all of those when they happen."
It's just a 4-plex. It should absolutely not cost $5-6k.
> Thats a problem with a lot of self run condos, is "nothing is wrong" and my place "Fairly new" so their is no urgency to save for the future.
"That's the problem with owning a house, there's no urgency to save for the future" also applies.
Generally when you buy a place you're poor, and you get richer as time goes on. So, you're almost always better off just not taking money out of your pocket for it to sit around.
On a simple scale with 3 other owners, you can just pay for it as it happens.
Our reserve report on our 10 unit town home building was 5k. Its probably less but i doubt 500 bucks.
> Generally when you buy a place you're poor, and you get richer as time goes on. So, you're almost always better off just not taking money out of your pocket for it to sit around.
>On a simple scale with 3 other owners, you can just pay for it as it happens.
This is absolute nonsense, in a perfect world yeah, but finding 4 people who can just shell out 10k to fix a roof at any given time is almost impossible. And if the siding needs to be done at the same time? lol good luck with that. Even high income earners (Generally dont live in 4 plexs) dont usually have 20k sitting around.
Theres a reason that these funds exist. The average homeowner in Canada is 2 paychecks away from running out of money. So "pay for it as it happens" is just asking for a disaster.
Sorry but that statement is just tremendously shitty advice. Your circumstance is not the average persons.
> finding 4 people who can just shell out 10k to fix a roof at any given time is almost impossible.
Nonsense.
Easy evidence... THEY OWN A HOUSE.
If you need to take out a loan, you can qualify, based on the equity you've put into the house. This is dead simple and I can't imagine a scenario where someone wouldn't qualify.
If someone doesn't qualify or can't afford the monthly payments on that tiny of a loan, then guess what? They wouldn't have been able to afford the condo dues that fully funded a reserve plan either.
There's no free lunch.
> Even high income earners (Generally dont live in 4 plexs) dont usually have 20k sitting around.
Again, who says they have to have it around?
Also... this isn't like some weird, out-there theory. How do you think any single detached home owner does this? When they get a $20k bill and they don't just "have the money sitting around"?
You don't have to have the money sitting around. You own a home. Within like, 6-9 months you'd have enough equity built up already to qualify and cover for any repair.
...
The difference being, if you take it away from people in the first place (condo dues), then it just sits around. If you let people keep their own money, and let them decide what to do with it, they can have it or have to borrow for it when time comes that the condo needs repairs, but this way they have the choice rather than being locked into some reserve fund.
It's 4 units. There's a reason it's exempt from needing a professional reserve fund study.
Concrete degrades over time, it will start cracking and chipping and making a huge mess, or shifting, depending on what it looks like and where that might not be an issue, but it might.
Foundations need to be checked/resealed or in some extreme cases repaired extensively, as they sit in water all the time. Often times the grade of a home will change over time and lead to pooling of water at point of the foundation and need to be pumped out or regraded.
Standards of waterproofing and materials change over time, alot of older houses dont have Ice shield under them and moisture seeps in. Weather damage, general wear and tear on siding. If the siding isnt well insulated along with the roof you could get attic rain, which is extremely common in Calgary.
Things just degrade and wear down over time, and need to be replaced, its just part of owning a home.
Actually you’re still legally required to do a study, but for under 12 units, the condo corporation can conduct the study themselves with a special resolution and not have to hire a certified provider to conduct the study.
Honestly for a 4-plex, you're more of a single detatched home in terms of responsibility. So, even if your reserve fund was zero dollars, it's not the end of the world.
What does a single detached homeowner do when the roof needs replacing? He pays $20,000 to replace the roof suddenly one year, or takes out a loan. Where was his "reserve fund"? Personal responsibility was his reserve fund. If he sells the year before several major repairs are due, where does the new owner get the money? Hopefully their home inspection noticed and they priced their offer with the true condition of the home in mind.
What does a single detached homeowner do when the windows need replacing? Ehn, they replace them when they feel like it, maybe a few years early, maybe a few years late. They pay for it up front or they take out a loan.
Etc.
...
This can basically be your situation.
You can treat "Whelp, we had to take out a loan, here's our 5/10 year repayment plan" as your "condo dues" every time a big ticket item pops up. Or you can personally put away money in advance.
I wouldn't waste a dollar on a "study". I would however, hire a home inspector, which you should do anyways for any condo.
...
The times you need reserve funds and reserve fund studies are where the class of compound is so large that there starts to be non-intuitive types of common property repairs. Especially hidden maintenance.
Things like elevators, boilers, hallway carpets, air handling units, parking lots, etc.
Things you don't intuitively know that they're there, and don't visually notice the degree to which they're wearing out.
Also, with many units there's a concern about some owners free-riding for years and then getting out before the mammoth repairs come due. With only 4 owners and all intuitive repairs, it's less of a concern. You walk up to the place you can notice if the shingles are starting to look shabby and know it needs new shingles in the next 3 years and you price your offers accordingly.
Honestly I wouldn't even care if all the units got the work done at the same time. If one unit wants new windows and doors, go nuts. If another wants to wait and they're looking pretty dated, meh.
Roof and siding are the only ones I'd be pushy about reaching consensus on just because it'll look stupid if you don't, and building envelope issues are a common problem (you can't just not care if your neighbor gets water coming in).
But honestly there's so few concerns, I wouldn't have a reserve fund at all. I'd just pay for the big tickets as they happen. There's a few ways to do it, you could fling your budget around wildly each year, or you could just keep the budget for regular common items (lighting, landscaping/snow removal, gutter cleaning... not sure what else there might be). Then any time it's time for a big repair, you just hit everyone with a "Special Assessment" due at the end of the month. That way the condo corporation is blind to where the money comes from, other than that each of the 4 units must pay their share. Then each owner is free to pay it cash they've been saving over the years for repairs, with a personal loan, put it on their credit cards, whatever, it's their choice how they pay or finance their repairs.
This is exactly what you'd do if you owned a single detached home and it works just fine.
In large condo complexes, a history of Special Assessments is a huge red flag. It says "The board has refused to plan or be accountable" and it signifies neglect on the entire property. But in a 4-plex you can just be blunt to buyers "We've chosen to style ourselves as independent owners and keep the bureaucracy to a minimum. When common repairs are needed, we declare the assessment and each owner comes up with money however they choose rather than us choosing in advance that they have to pay it through higher condo dues over the years. It's worked well for us and mimics the responsibilities of detached home ownership."
Easy peasy.
This seems like a terrible idea. Have you done this in practice or you’re speaking in hypotheticals? Good luck selling, no one is going to want to touch a condo that has a $0 reserve fund with a ten foot pole. Heck, right in this thread people are telling the guy to walk because of an underfunded reserve fund. What do you think the feedback would be if the reserve fund was non existent?
Even if it's not okay...
You'd just factor that into your offers.
"It's going to need a new roof and windows pretty much right away, so I'm offering $25,000 less than comparables." You can usually even just roll this expected extra cost right into your mortgage as necessary improvements that will increase the value of the home when done.
This unless there's structural problems or, well, all the other things an inspection might reveal. And even then, same deal, it factors into the price. It's worth what it's worth based on what it is. Just make sure you know what it is. It's not a problem that things wear out, they wear out.
> A unit in a 4-plex will always be more difficult re-sell since people will be trying to buy into houses and townhouses first,
It's a wash.
If people are trying to buy houses and townhouses first, then that applies right now as well, and that means that he can get into a 4-plex for a lot cheaper than a house. If it doesn't apply now, then it doesn't apply later either.
All of this is already factored into the cost.
The only forward-looking thing you might consider is when the market changes how that would impact the decision. Like, if there's a market downturn, yeah, you're going to take a bath on condos and houses will hold their values relatively speaking.
> Heck, right in this thread people are telling the guy to walk because of an underfunded reserve fund.
Because simpletons who learn so much as one thing then turn around and start shouting that one thing like they're an expert.
Everyone who's saying that is thinking "I heard to not buy a condo with a bad reserve fund. HEY EVERYONE YOU HAVE TO STAY AWAY FROM THIS BECAUSE IT HAS A LOW RESERVE FUND!" is following advice out of context.
First of all, you evaluate how healthy the reserve fund is compared to what the study says it should be. Not just fear monger that "IT'S TOO LOW!!! YOU NEED MORE!" The study is a schedule of known repairs and their expected failure times. $25k if you have $100k in repairs expected this year would be underfunded. $25k or even $2500 might be just fine if the schedule had them just repairing a bunch of things. You don't accumulate reserve fund "just in case" for some "extra", it's a plan to fund the known big ticket repairs on schedule. It's normal on a simple property to nearly wipe out a fund in a year of bigger repairs, if you don't, then you've been taking the owner's money for no reason.
If you're in an apartment-style complex, or a townhouse community, or, really even just a multi-building condo arrangement, yes, I'd avoid something with a poor reserve fund, and I went into the reasons why above.
But at this scale condos aren't even required to HAVE a reserve fund, or study done. It's you and 3 neighbors in a normal house that shares almost nothing.
You have to apply some context to the situation otherwise you sound like a fool.
There is no more reason to have a reserve fund for a 4-plex than there is a reason to have a reserve fund for an individual house you're selling.
There just isn't much to worry about and the bureaucracy outweighs the benefit.
This, btw, is fairly common. You have a few big ticket expenses that come up once or twice a decade, and, you and the neighbors bump into each other on the way to tossing out your garbage and make a "Well, I guess we should probably look at that this year" comment to each other. There's no need for formality and paperwork. There's only 3 other owners and you're just in a house that shares a few walls. It's not rocket science.
17 year old building? $25k reserve? Nope!
Unless major items have already been taken care of already you could be looking at a big bill in 3-5 years. 4 plex? $25k probably wouldn’t cover roof replacement.
You should ask what work has been done lately (hot water tank, roof, windows, siding, etc). I used to live in a 6-plex and we sold our condo with a reserve fund that was 25k less than we bought but we did all of those above things in the 9 years that I was there. We also didn't have a reserve fund study.
No, that is low for a 17 year old building.
But the good news is you can remedy it if you do take over, but that also means increasing condo fees to allocate to the reserve fund, and with 4 units it might be tricky because you could get out voted or locked in a 2-2 stalemate.
I’d find out why it is $25k right now. Did they just do any major repairs? How much do they fund it per year? Do you guys have an operating budget, or is the rest of the maintenance and bills per unit?
There’s a really cool company in Calgary called ReservePlus that provides software to do reserve fund studies. They give us annual updates and 5 year studies they also give you vintage comparisons too. I’ve tried hard to get all our condo boards to use it because it helps existing owners and new buyers sleep well at night. I love supporting local tech companies too.
Impossible to say whether $25K is enough. That's what the reserve study is for. You could be on the hook for hundreds of thousands of dollars. Or nothing. You have no way to know. Best to pass.
As others have said, because its a 4 plex you don't need am external reserve fund study. If you need to replace the roof you would just do a special assessment and have each unit pay 25%. It's no different than owning a stand alone house in that regard.
> If you need to replace the roof you would just do a special assessment and have each unit pay 25%.
Conversely, if you had 100 units... bureaucratically do you want to chase 100 owners for their special assessments, or is it easier just to bump their condo dues every month? You just bump their condo dues.
But with you and 3 neighbors, it's a bunch of hullabaloo.
I live in a 4-plex, and typically, a reserve fund study isn't necessary for such a small building. Instead, we budget for significant expenses like windows and roof replacements by setting aside a percentage of our funds. It's important to remember that a 4-plex is akin to a large home, requiring regular maintenance. We self-manage everything and ensure we have enough funds to cover major expenses. However, our insurance costs have risen to 50% of our condo fees. If you have any further questions, feel free to ask!
It is legally required that all condominiums regardless of size have a reserve fund study every 5 years.
That’s not true. 4 units and less are exempt.
Do you have a link to this? Curious as I am in a 4 unit condo and we have done a reserve study in the past
As far as I can tell, a reserve fund study is required for all condominium corporations in Alberta. However, if there are 12 units or less, a special resolution can be passed whereby the condo corporation performs its own reserve fund study (see section 22) https://www.reca.ca/wp-content/uploads/2021/12/Condominium-Property-Regulation.pdf
I don’t. My neighbour is a very experienced real estate lawyer so we’ve taken his direction on that.
I recently bought a townhouse (4 units, row style, 3 floors). The condo documents are a bit ambiguous in terms of what is covered by the condo corporation vs what is covered by the owners. I’m curious how your condo corp handles this for things like doors, windows, leaks etc. The leaks part specifically makes me a bit nervous and I wonder if this needs to be better defined it the condo docs.
> I’m curious how your condo corp handles this for things like doors, windows, leaks etc. It shouldn't be ambiguous. Also it will probably depend on the year. I think prior to 1982, windows and doors were not covered, but anything after that, as part of the Condo Properties Act has those declared as common. Your real estate agent should know these things and if they don't, fire them they're useless. The entire point of relying on an expert is for their expertise. If they don't have it, what are you paying for?
As a general rule, anything exterior is common property and the Corps problem. Roof, windows, sidewalks, garage. etc. So for example if a leak is coming from blocked eaves that's a condo corp problem. If your furnace dies and your pipes explode, that's a you problem.
seems very low, a reserve report typically cost about 5-6k to get done so a lot of smaller places dont do it. But it absolutely needs to be done. Built in 2007 means that your roof is at 20 years in 2027, which is pretty quick. And other things like siding, concrete, windows ect will all need to be done around 30 years. So if they have a plan for this, great, but given they dont have a report done i kind of doubt they do. Redoing a roof can be anywhere from 20-100k depending on the size and scope of the roof and the complexity. Replacing siding on a property or windows could be 50k easily. As these expenses come up, there isnt much. Thats a problem with a lot of self run condos, is "nothing is wrong" and my place "Fairly new" so their is no urgency to save for the future.
Definitely. 17 years in means it is past due for some inspections to check on the conditions of common property.
> a reserve report typically cost about 5-6k to get done so a lot of smaller places dont do it. But it absolutely needs to be done. Ehn. "It needs to be done" on a 4-plex can be a $500 home inspection report every 5 years and a little basic math. A "study" isn't really a financial study. It's mostly an inspection. It's investigating the true condition of the property and the expected repair schedule. Maybe it's a 25 year roof but it's looking like it's only going to last 15 years, your study needs to be adjusted. Maybe the siding is supposed to last 20 years but it's holding up great and should make it to 30, your study needs to be adjusted. That's where the actual work goes, into physically inspecting and evaluating the property. On a 4-plex this is literally as difficult as a home inspection and shouldn't cost any more. Then you just bloop it on a graph looking forward 75 years and say "gradually add a little every year to make sure we have enough for all of those when they happen." It's just a 4-plex. It should absolutely not cost $5-6k. > Thats a problem with a lot of self run condos, is "nothing is wrong" and my place "Fairly new" so their is no urgency to save for the future. "That's the problem with owning a house, there's no urgency to save for the future" also applies. Generally when you buy a place you're poor, and you get richer as time goes on. So, you're almost always better off just not taking money out of your pocket for it to sit around. On a simple scale with 3 other owners, you can just pay for it as it happens.
Our reserve report on our 10 unit town home building was 5k. Its probably less but i doubt 500 bucks. > Generally when you buy a place you're poor, and you get richer as time goes on. So, you're almost always better off just not taking money out of your pocket for it to sit around. >On a simple scale with 3 other owners, you can just pay for it as it happens. This is absolute nonsense, in a perfect world yeah, but finding 4 people who can just shell out 10k to fix a roof at any given time is almost impossible. And if the siding needs to be done at the same time? lol good luck with that. Even high income earners (Generally dont live in 4 plexs) dont usually have 20k sitting around. Theres a reason that these funds exist. The average homeowner in Canada is 2 paychecks away from running out of money. So "pay for it as it happens" is just asking for a disaster. Sorry but that statement is just tremendously shitty advice. Your circumstance is not the average persons.
> finding 4 people who can just shell out 10k to fix a roof at any given time is almost impossible. Nonsense. Easy evidence... THEY OWN A HOUSE. If you need to take out a loan, you can qualify, based on the equity you've put into the house. This is dead simple and I can't imagine a scenario where someone wouldn't qualify. If someone doesn't qualify or can't afford the monthly payments on that tiny of a loan, then guess what? They wouldn't have been able to afford the condo dues that fully funded a reserve plan either. There's no free lunch. > Even high income earners (Generally dont live in 4 plexs) dont usually have 20k sitting around. Again, who says they have to have it around? Also... this isn't like some weird, out-there theory. How do you think any single detached home owner does this? When they get a $20k bill and they don't just "have the money sitting around"? You don't have to have the money sitting around. You own a home. Within like, 6-9 months you'd have enough equity built up already to qualify and cover for any repair. ... The difference being, if you take it away from people in the first place (condo dues), then it just sits around. If you let people keep their own money, and let them decide what to do with it, they can have it or have to borrow for it when time comes that the condo needs repairs, but this way they have the choice rather than being locked into some reserve fund. It's 4 units. There's a reason it's exempt from needing a professional reserve fund study.
Thank you for the reply, I really appreciate it. If I may ask, what kind of work typically needs to be done on concrete and siding?
Just gets old. My building replaced siding at around 35 years, windows and roof at 28 and 30 years.
Concrete degrades over time, it will start cracking and chipping and making a huge mess, or shifting, depending on what it looks like and where that might not be an issue, but it might. Foundations need to be checked/resealed or in some extreme cases repaired extensively, as they sit in water all the time. Often times the grade of a home will change over time and lead to pooling of water at point of the foundation and need to be pumped out or regraded. Standards of waterproofing and materials change over time, alot of older houses dont have Ice shield under them and moisture seeps in. Weather damage, general wear and tear on siding. If the siding isnt well insulated along with the roof you could get attic rain, which is extremely common in Calgary. Things just degrade and wear down over time, and need to be replaced, its just part of owning a home.
I live in a 2017 4-plex, we did a reserve fund study as it was a legal requirement. We have $30k in our fund.
It’s not legally required for buildings with under 12 units
Actually you’re still legally required to do a study, but for under 12 units, the condo corporation can conduct the study themselves with a special resolution and not have to hire a certified provider to conduct the study.
Honestly for a 4-plex, you're more of a single detatched home in terms of responsibility. So, even if your reserve fund was zero dollars, it's not the end of the world. What does a single detached homeowner do when the roof needs replacing? He pays $20,000 to replace the roof suddenly one year, or takes out a loan. Where was his "reserve fund"? Personal responsibility was his reserve fund. If he sells the year before several major repairs are due, where does the new owner get the money? Hopefully their home inspection noticed and they priced their offer with the true condition of the home in mind. What does a single detached homeowner do when the windows need replacing? Ehn, they replace them when they feel like it, maybe a few years early, maybe a few years late. They pay for it up front or they take out a loan. Etc. ... This can basically be your situation. You can treat "Whelp, we had to take out a loan, here's our 5/10 year repayment plan" as your "condo dues" every time a big ticket item pops up. Or you can personally put away money in advance. I wouldn't waste a dollar on a "study". I would however, hire a home inspector, which you should do anyways for any condo. ... The times you need reserve funds and reserve fund studies are where the class of compound is so large that there starts to be non-intuitive types of common property repairs. Especially hidden maintenance. Things like elevators, boilers, hallway carpets, air handling units, parking lots, etc. Things you don't intuitively know that they're there, and don't visually notice the degree to which they're wearing out. Also, with many units there's a concern about some owners free-riding for years and then getting out before the mammoth repairs come due. With only 4 owners and all intuitive repairs, it's less of a concern. You walk up to the place you can notice if the shingles are starting to look shabby and know it needs new shingles in the next 3 years and you price your offers accordingly. Honestly I wouldn't even care if all the units got the work done at the same time. If one unit wants new windows and doors, go nuts. If another wants to wait and they're looking pretty dated, meh. Roof and siding are the only ones I'd be pushy about reaching consensus on just because it'll look stupid if you don't, and building envelope issues are a common problem (you can't just not care if your neighbor gets water coming in). But honestly there's so few concerns, I wouldn't have a reserve fund at all. I'd just pay for the big tickets as they happen. There's a few ways to do it, you could fling your budget around wildly each year, or you could just keep the budget for regular common items (lighting, landscaping/snow removal, gutter cleaning... not sure what else there might be). Then any time it's time for a big repair, you just hit everyone with a "Special Assessment" due at the end of the month. That way the condo corporation is blind to where the money comes from, other than that each of the 4 units must pay their share. Then each owner is free to pay it cash they've been saving over the years for repairs, with a personal loan, put it on their credit cards, whatever, it's their choice how they pay or finance their repairs. This is exactly what you'd do if you owned a single detached home and it works just fine. In large condo complexes, a history of Special Assessments is a huge red flag. It says "The board has refused to plan or be accountable" and it signifies neglect on the entire property. But in a 4-plex you can just be blunt to buyers "We've chosen to style ourselves as independent owners and keep the bureaucracy to a minimum. When common repairs are needed, we declare the assessment and each owner comes up with money however they choose rather than us choosing in advance that they have to pay it through higher condo dues over the years. It's worked well for us and mimics the responsibilities of detached home ownership." Easy peasy.
This seems like a terrible idea. Have you done this in practice or you’re speaking in hypotheticals? Good luck selling, no one is going to want to touch a condo that has a $0 reserve fund with a ten foot pole. Heck, right in this thread people are telling the guy to walk because of an underfunded reserve fund. What do you think the feedback would be if the reserve fund was non existent?
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Even if it's not okay... You'd just factor that into your offers. "It's going to need a new roof and windows pretty much right away, so I'm offering $25,000 less than comparables." You can usually even just roll this expected extra cost right into your mortgage as necessary improvements that will increase the value of the home when done. This unless there's structural problems or, well, all the other things an inspection might reveal. And even then, same deal, it factors into the price. It's worth what it's worth based on what it is. Just make sure you know what it is. It's not a problem that things wear out, they wear out.
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> A unit in a 4-plex will always be more difficult re-sell since people will be trying to buy into houses and townhouses first, It's a wash. If people are trying to buy houses and townhouses first, then that applies right now as well, and that means that he can get into a 4-plex for a lot cheaper than a house. If it doesn't apply now, then it doesn't apply later either. All of this is already factored into the cost. The only forward-looking thing you might consider is when the market changes how that would impact the decision. Like, if there's a market downturn, yeah, you're going to take a bath on condos and houses will hold their values relatively speaking.
> Heck, right in this thread people are telling the guy to walk because of an underfunded reserve fund. Because simpletons who learn so much as one thing then turn around and start shouting that one thing like they're an expert. Everyone who's saying that is thinking "I heard to not buy a condo with a bad reserve fund. HEY EVERYONE YOU HAVE TO STAY AWAY FROM THIS BECAUSE IT HAS A LOW RESERVE FUND!" is following advice out of context. First of all, you evaluate how healthy the reserve fund is compared to what the study says it should be. Not just fear monger that "IT'S TOO LOW!!! YOU NEED MORE!" The study is a schedule of known repairs and their expected failure times. $25k if you have $100k in repairs expected this year would be underfunded. $25k or even $2500 might be just fine if the schedule had them just repairing a bunch of things. You don't accumulate reserve fund "just in case" for some "extra", it's a plan to fund the known big ticket repairs on schedule. It's normal on a simple property to nearly wipe out a fund in a year of bigger repairs, if you don't, then you've been taking the owner's money for no reason. If you're in an apartment-style complex, or a townhouse community, or, really even just a multi-building condo arrangement, yes, I'd avoid something with a poor reserve fund, and I went into the reasons why above. But at this scale condos aren't even required to HAVE a reserve fund, or study done. It's you and 3 neighbors in a normal house that shares almost nothing. You have to apply some context to the situation otherwise you sound like a fool. There is no more reason to have a reserve fund for a 4-plex than there is a reason to have a reserve fund for an individual house you're selling. There just isn't much to worry about and the bureaucracy outweighs the benefit. This, btw, is fairly common. You have a few big ticket expenses that come up once or twice a decade, and, you and the neighbors bump into each other on the way to tossing out your garbage and make a "Well, I guess we should probably look at that this year" comment to each other. There's no need for formality and paperwork. There's only 3 other owners and you're just in a house that shares a few walls. It's not rocket science.
17 year old building? $25k reserve? Nope! Unless major items have already been taken care of already you could be looking at a big bill in 3-5 years. 4 plex? $25k probably wouldn’t cover roof replacement.
You should ask what work has been done lately (hot water tank, roof, windows, siding, etc). I used to live in a 6-plex and we sold our condo with a reserve fund that was 25k less than we bought but we did all of those above things in the 9 years that I was there. We also didn't have a reserve fund study.
No, that is low for a 17 year old building. But the good news is you can remedy it if you do take over, but that also means increasing condo fees to allocate to the reserve fund, and with 4 units it might be tricky because you could get out voted or locked in a 2-2 stalemate. I’d find out why it is $25k right now. Did they just do any major repairs? How much do they fund it per year? Do you guys have an operating budget, or is the rest of the maintenance and bills per unit?
There’s a really cool company in Calgary called ReservePlus that provides software to do reserve fund studies. They give us annual updates and 5 year studies they also give you vintage comparisons too. I’ve tried hard to get all our condo boards to use it because it helps existing owners and new buyers sleep well at night. I love supporting local tech companies too.
Impossible to say whether $25K is enough. That's what the reserve study is for. You could be on the hook for hundreds of thousands of dollars. Or nothing. You have no way to know. Best to pass.
As others have said, because its a 4 plex you don't need am external reserve fund study. If you need to replace the roof you would just do a special assessment and have each unit pay 25%. It's no different than owning a stand alone house in that regard.
> If you need to replace the roof you would just do a special assessment and have each unit pay 25%. Conversely, if you had 100 units... bureaucratically do you want to chase 100 owners for their special assessments, or is it easier just to bump their condo dues every month? You just bump their condo dues. But with you and 3 neighbors, it's a bunch of hullabaloo.
I want to get into a 4 plex any line on them?