Myth Busters: Maintenance Fees Edition
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In this episode of Myth Busters, we’ll tackle the “Maintenance Fee Myth”.
When I meet with first time buyers, there are certain things that I hear almost every time when I ask them, “What are you looking for?” The most common responses are usually
- Newer building in a great location
- Lots of light / Big windows
- Low price per square foot
- Low maintenance fees
The add-on to the maintenance comment is very often, “I wouldn’t mind living in a building with less amenities because that will mean lower maintenance fees”. When I hear this, a little orange flag goes off in my mind as it’s time to bust up another condo myth.
There is a pervasive belief that if you buy at a building with little or no amenities, you will pay significantly less maintenance fees compared to a building that has a pool, sauna, gym, bowling alley, roof top terrace etc. This is simply not true. Maintenance fees at most condo buildings in Toronto, whether they are loaded with amenities or have none at all, tend to settle around 50-60 cents per square foot.
For example, let’s take a look at a couple of listings out on the market today*,
Category 1 – Full Amenities: Pool, gym, party room, 24 hour concierge
- 80 Western Battery Road (Vibe Condos in Liberty Village) – ~55 cents PSF (Hydro NOT included)
- 35 Mariner Terrace (Cityplace) – ~55 cents PSF (Heat and Hydro included)
Category 2 – Some Amenities: Gym, party room, 24 hour concierge
- 438 King (The Hudson) – ~63 cents PSF (Heat and Hydro included)
- 230 King Street (King’s Court) – ~60 cents PSF (Heat and Hydro included)
Category 3 – No Amenities: No gym, no party room, minimal or no concierge
- 25 Oxley (GLAS) – ~55 cents PSF (Heat and Hydro NOT included)
- 10 Morrison (Freed building) – 48 cents PSF (Heat and Hydro NOT included)
As you can see, when you factor in utilities costs, the maintenance fees for all of these buildings, the difference between the high and the low is only about 5 cents per square foot, or about $35/month on an average 700 square foot unit. Hardly a significant difference, but what you can get in terms of services and amenities can vary greatly.
The question then is why are maintenance fees NOT much lower in buildings with fewer amenities? The reasons can vary from building to building, but the best answer is simply economies of scale – that is, the buildings that have a lot of amenities tend to be the largest buildings and therefore have a huge number of suites to spread the cost over (400+ suites), whereas the buildings with no amenities tend to be smaller buildings with very few units (less than 200).
In summary, there are 2 things that probably influence maintenance fees the most
- Size of the building (more suites = lower maintenance fees for a given level of amenities)
- Age of the building (the older the building the higher the fees)
A third factor which I also refer to is how the building is managed, or more precisely, WHO is managing the building. This factor is far more subjective though and hard to directly correlate with the actual maintenance fee rate.
Questions or comments? Please contact me.
*calculations for all buildings mentioned here based on MLS listing data and for units with 1 parking spot