Are the Radio City Condos Maintenance Fees High?
For a while now, there has been an ongoing discussion whether the maintenance fees at Radio City Condos are high.
To fairly quantify this question we first need to define what “High Condo Fees” are.
In a recent Condos.Ca post, it was declared that the average condo fees in Toronto are 59 cents/sqft. The survey was created out of scoping over 900 registered condo buildings in the city. The research also concluded that older builders are not necessarily more expensive to maintain, and that building with pools are on average, more costly.
Taking this information as a basis point for comparison, I set out to explore the relativity of our beloved Radio City Condos rate of Maintenance Fees on the Toronto scale. The results, were surprising.
Prior to delving into the actual research, I’d like to take a moment and explain how I conducted this search and provide a common-sense disclaimer.
Firstly, the goal of conducting and publishing this research is to make Radio City Condos a better community and a better investment for us owners. We all know that condo buildings with higher maintenance fees lag in value and appreciation after the market. At some point the stigma of “expensive condo fees” sets in and it is nearly impossible to remove a stigma.
The simple explanation of why condos with higher maintenance fees have lesser value is this:
Owners have a finite amount of money to spend on living expenses. If more of that set budget is spent on maintenance fees, less is left for mortgage. Since fees and taxes are fixed, the only parameter in the ownership equation that can be changed – downwards in this case – is the price.
The psychological explanation goes like this:
People see less long-term value in properties which are expensive to maintain, given the wide spread notion that high fees equate to lower values, thus will always prefer to invest in properties asking for lower fees first, and only invest in properties with higher maintenance fees as a secondary option. They will not be willing to spend as much money for “B” rated properties therefore valuate high maintenance fee properties at less, pushing values down.
Now this is not lets-bash-the-board article. On the contrary, being on the board – whomever they are (I have not met them nor do I know who is in charge at the moment) – is a thankless job. Nevertheless it is also a critical and important role, each board member together and separately is responsible to the values of the 420 or so units in the complex. With an estimated value of $360,000 average per unit, Radio City is at least a 150 million dollar monster. Whoa! That’s a huge amount of money.
Last, I would really appreciate if any comments (please keep them positive, polite and free of trolling) are posted here. If I get any relevant comments (cease and decease included) I will do my best to post them here, too. Sometimes discussing things in the open is the best way to keep everyone on topic.
Agreed? Read on. Don’t like it? Stop right now & go away.
So How are Maintenance Fees Calculated?
In short, the buildings entire budget is divided by the amount of sellable square footage (plus adjustments). That’s how you get Dollars per Square Foot.
To find out what was Radio City’s last budget, ask the Management to email you a copy of a recent Status Certificate. They will have one on file, and won’t need to produce one. Since there is no cost to them (besides a couple of minutes of forwarding an email), they should do it willingly and without any charge.
Ask the management to tell you what is the Total Sellable Square Footage in the building. It is stated in the Condo Docs and is something the Management should know how to find right away. It’s basic information.
Now divide the budget by the TSF (Total Square Footage) and if everything is correct you should get a number which is the Maintenance fees per Square Foot. Multiple that by your unit’s Square Footage and divide the result by 12 to get your net monthly amount. Parking and Locker fees will be calculated separately, at a fixed rate. Ask the Management what is the current charge for those.
Another way to calculate your Per Foot Maintenance Fees is to take your Monthly Maintenance Fees Amount, subtract the set fee for parking and /or locker, and divide the results by the square footage of your unit. In theory, you should get the same number. If it’s not the same (or not virtually the same), check your calculation or ask the Management for clarifications.
Note: The Management may or may not charge you a fee for various requests. Clarify with them first, or email the board and ask them to answer your questions, and don’t forget to ask what and if any fees are for getting your information out. I believe management is allowed o charge for “photocopying” however in the age of electronic communications this may be obsolete. I would hope so, however, check first.
OK, this is getting into a seriously long rant! bear with me my friends, it’s all coming together.
How I Estimated the Maintenance Fees at Radio City
After many successful years of investing in Toronto Real Estate and serving hundreds of happy clients as a Realtor, I’ve concluded that using the following method is a quick, easy and reasonably accurate way to deduce maintenance fees from any property:
- Find Recent MLS Listings for units with and w/out parking or lockers
- Find the Maintenance Fees for each property
- Find the Square Footage for each property
- Divide Fees by SQ. The result is the Dollar amount Per Square Foot.
Couple of notes: most of my findings had a very good correlations. Some units did not list the exact square footage, so a close estimate was used. Since MLS uses a tight spectrum of 100 sq ft increments, it is safe to assume that 50% of all units are within 25 sq ft of reported dimensions. That means that our average is very close to the mathematical average. A few cents here or there. Good enough for our purpose.
Remember, any potential buyer at Radio City will use the exact same method I used.
So for our intended goal of increasing property values, this is the one method to use.
This is the exact measuring stick you want!
Most of the properties I used were sold within 18 months or so. That means that with annual maintenance fees increase, the average is actually LESS that what it is now. The real amount for 2015 should be higher than what I came up with. The current results are likely worse than what I’m calculating. OK?
There is no difference between 281 and 285 Mutual, since they are both under the same Condo Corporation. I did not use any townhomes in my calculation, because there are only a handful of them and make only about 4.5% of the buildings makeup. So these were excluded.
Floor height, exposure, level of finishes, noisy neighbours, none of those matter. Maintenance Fees are in a direct relation to unit size. A small one bedroom will pay LESS condo fees than a larger one bedroom, and the largest unit in the building should be paying the highest amount. For example, you and your neighbours above and below you – given their units are stacked and identical to yours – all paying the same amount of net condos fees. Parking and Locker fees if you have them are additional.
Are you ready for the BIG REVEAL?
Radio City Maintenance Fees vs. City of Toronto Average
Radio City Building Average: 76 cents/ft.
Radio City Units Only: 68 cents/ft
Radio City Units with Parking/Locker: 82 Cents/ft.
Radio City Condos Maintenance Fees are in the 90th percentile.
RC fees are higher than 90% of all other Toronto Condo Buildings.
90% of all Toronto Condos have Cheaper Maintenance Fees than Radio City.
Explanation: Condos.Ca sets 73 Cents/ft as the 90% percentile. That means that in average, Radio City is more expensive to maintain than 90% of rest of condo building in the city. Units with parking/locker at 82 cents/ft. may be in the 95th percentile.
City of Toronto Average based on 59 cents/ft. as per Condos.ca article.
What have we learned from this?
- The Maintenance Fees at Radio City, on average, are exceptionally high
- Although I did not check correlation to value, I would assume that most buyers/investors will discount the price of units based on these findings. Why? Simply because they will look at similar buildings with lower fees and (1) prefer to buy there or (2) buy at RC at a lower price
- As more buildings come to the area – and many are – it is critically important for Radio City to stay competitive, offering investors best value for their money. The condo supply in Toronto is increasing to the point of severe competition, and I see it everyday with my clients while working as a Real Estate professional
- Radio City has NO POOL, which counts for high expenses. It has no fancy amenities, either. The gym is basic at best, it requires little maintenance, some basic cleaning ans vacuuming, not more. It is certainly not a point of expense.
- So where are the condo fees spent?
Show Me The Money!
This question needs to be addressed to the Board and Management. I have not conducted an analysis of the expenses. However I would encourage the Board to take a deep look into the common expenses and set realistic goals bringing our fees back to the City’s average. Possible? of course it is. Recently, the Board at Toy Factory Lofts at Liberty Village brought their condos fees to 31 cents/ft. How did they do it? common sense. I have clients already asking me to find them a loft there. Values up? right away. Here is the reference link: http://www.thestar.com/business/2015/02/13/the-real-costs-of-maintenance-fees.html
Here are the numbers I used for my findings. Yours may be different, however I doubt they will be much different. Click on the image top open it to a larger format. You may also download a PDF of the listings I used by clicking here.