Tremblant Lifestyle

I’ve been paying rent for over a decade now.  With my life in a constant flux I’ve been moving from apartment to apartment, dealing with the habits and emotions of a wide and bizarre range of roommates, arguing with uptight, lazy and sometimes violent landlords, and the section of my brain used to produce my current postal code on demand is now a scrambled mess of letters and numbers.  My closest friends have told me that if they have to help me move my cinder block bookcase one more time that our friendship is over. And after all this, what do I have to show for it?  Absolutely nothing.  Many of my friends are married, some have buns in the oven, some are raising their buns into walking talking dinner rolls, and all of them, own homes.  Without a wife, aka second income, in sight and having just started my professional career, buying a house is on par with concepts like “before time” and “infinity”: my brain cannot conceive it.

People keep telling me “You’re flushing your money down the toilet dude.  You should totally buy a condo.  Your monthly payments will be about the same and in the end you’ll actually own something.”  Even more frustrating than hearing this over and over, is having a friend who managed to succeed in life while still using words like dude and totally.  But it got me thinking, an exercise I will totally be feeling in the morning, is it really that easy?  Can I just go out there and buy a condo?  Isn’t there a process?  Don’t I need some form of money?  How does one make the transition from renting an apartment to owning one?  I mean, I’ve come to enjoy the idea of flushing my rent money down the toilet, because it conjures the image of my landlord having to sift through sewage to get it, but when I think of how much flushing I’ve done over the years, I may as well buy the toilet.  So if you’re like me, a young professional starting out, sick of paying into something which gives you nothing in return, feeling guilty for tacking Star Wars posters onto walls that aren’t yours, here are the first steps you need to take in order to make owning a condo a tangible possibility, as opposed to something only your “responsible” friends-who-stopped-pub-crawling-years-ago-when-they-met-miss-right can do.

Step 1 – Check your pockets

The very first thing you need to do is to answer two painfully obvious but important questions:  How much of a down payment can you slap down?  And what are the monthly payments you can afford?

Your down payment

To obtain a conventional mortgage you need to drop at least 20% of the total condo price as a down payment.  So unless you’re able to produce at least $50,000 (good luck finding a condo anywhere less than a quarter mil) up front you can do what many folks do which is to make a 15%, 10%, or even as low as a 5% down payment, and your mortgage will have to be insured, a fee which will be added to your monthly payments.

Monthly payments

The general rule of thumb to comfortably afford an apartment is to pay your rent with one week’s net income.  While many bank websites provide charts and calculators to help you determine what you can afford as a monthly payment, a general rule of thumb to live comfortably in a condo is to be able to cover your monthly living expenses (mortgage payment, taxes, heating, condo fees, etc…) with no more than 32% of your monthly gross income. This 32% is known as your Gross Dept Service Ratio (GDSR), and it is used by banks to screen loan applicants.  Subtract the taxes, heating, and condo fees from your GDSR and you’ll have the monthly mortgage payment you can afford.

Ex: $5000 (Gross monthly income) x 0.32 (GDSR) = $1,600 (Affordable monthly household costs)

$1,600 - $600(taxes, heating, condo fees) =  $1,000  (Maximum mortgage payment)

Again, feel free to visit any bank’s website, click on the Mortgage  tab and they will surely have a calculator to help you generate an accurate figure, including the total price of the mortgage you can afford.  But if you want a general idea right now, multiply your gross annual income by three, that will give a rough idea of what price range you’ll be checking out.

Step 2 – Get pre-approved for a mortgage

Once you’ve figured out whether or not you’ve got the cheese to buy a condo, the first person on your “Who the hell do I talk to?” list should be a mortgage broker.  If you’re like me and are clueless when it comes to dealing with banks, your broker will help find which bank offers the best interest rates and mortgage conditions according to your needs.  It’s like hanging with the friend who knows the bouncers and owners of all the right clubs, and the best part is that the bank will pay the broker on your behalf, so drinks are free!  Once you’ve visited the bank and have been pre-approved for a mortgage, condo shopping will be much easier because you’ll have an established price-range.  There’s no point checking out the panoramic suites when all you can afford is the basement.

Step 3 - Get yourself a real-estate agent

Assuming you’re busy and don’t know the first thing about condo shopping, a real estate agent does all the leg work for you to help find the perfect match for your budget, your size preferences, and your desired location.  It’s their job to be familiar with the neighborhoods, the market values, the reputation of the builders, and they are excellent shields between you and the developer’s sales team, who’ll use everything but lasers and spinning disco balls to try and lure you into buying a condo that you’ll one day wish you hadn’t.

Step 4 – Get yourself a lawyer

Once you’ve found the right place, a purchasing agreement will be negotiated and drawn up.  This is a lengthy contract filled with clauses and conditions covering every aspect of your new home, and is written in a language known as “Legalise.”  Make sure you bring this document to a lawyer, as they are the only ones who can decipher what the contract says versus what you’ve been sold to believe.  The legal fees will run you about $2000, but anyone who’s had a lawyer look over their purchasing agreement will tell you that it was worth every penny, and any condo owner who’s been royally screwed will tell you they wish they had.

Step 5 - Resale vs Pre-Construction

Another very important decision you’ll need to make along the way is whether you want to buy your condo resale or pre-construction.  For a newbie home buyer it’s much safer to go with resale.  There are very few surprises when choosing a condo that already exists.  You’ll be able to physically walk through it, touch it, smell it, and you can learn all you need to know about the unit, the building, and the neighborhood by chit chatting with the seller.  What you see will be what you get.

Or you can join the feeding frenzy of people who are snatching up condos that haven’t even been built yet.  New developments are popping up everywhere and everyone wants the new suite with a view of the park.  Model units, colorful brochures and aggressive sales people are all set up to get your signature at the bottom line, and unless you’re extremely careful, what you saw might not even be close to what you get!

There is an excellent 30 minute video which examines the dangers of buying pre-construction condos and what you should do to protect yourself as a consumer.  I’ll do my best to sum up the key points, but if you’re thinking of buying a home from the future you should definitely take the time to watch it.

• Bring your real estate agent. An ex-condo salesman mentions how whenever he saw a potential buyer without an agent, that person became what’s known in the biz as a “Dog Suite Target.”  An example of a dog suite is a condo with a front door leading directly to a garbage bin.

• Take your own measurements in the model suite and compare them with the floor plans in your purchasing contract.  They are often set up to look much larger than what will actually be built.

• When negotiating your purchasing contract, be sure to get EVERYTHING in writing.  From the stainless steel appliances, to the type of flooring you want, to the location of your parking space, make sure it’s in the contract or there’s a strong chance you won’t get it.

• For the love of baby Jesus, bring the contract to your lawyer.  Most contracts are designed to protect the developer and are filled with clauses like “The vendor may make changes to the plans and specifications at any time”;  “All specifications and materials are subject to change without notice”;  “The vendor, in its sole discretion shall have the right to relocate the parking unit to another location in the property.”  Thankfully most contracts have a 10 day “Cool off” period, so if you already made a down payment you’re not completely up the creek, you still have time to change you mind and get your money back.

I know this is a lot to absorb, but making the move from renting to owning will be one of the most significant transitions in your life, even if it seems like you’re just going from a crummy apartment to a fancy one.  Or at least that’s what I’ve heard, lord knows I’m nowhere near being in a position to buy a condo.  Unless I completely rearrange my Jager-Bomb buying habits, I’ll never make it past step 1!