Investing for Survival

 Investing for Survival from Pathfinder

If you're looking to buy a condo, it's often tough to decide if it's better to buy a brand-new unit or an older one. If you're on a tight budget you might think it makes more sense to buy an older condo with a lower price tag - but when you factor in the tax breaks on offer on some new condos, you might be better off buying a new unit after all.
Read on below for my top ten tips on what to look for when you're weighing up new condos versus older ones.

1. Price. You'll pay less per square foot for an older building. In fact, pricing per square foot can seem like a real bargain compared to newer buildings. But once you factor in any re-model or repair costs (for which you should always over-estimate your budget), is the price still good value compared to a new unit?
2. Size. Older condos are usually much larger than new ones. Many new condos average 1,000 square feet. Older ones are often 2,000 square feet plus, with only one or two units per floor. If you want more space for your budget, look for older units.
3. Location. Older buildings are often in the best locations - boardwalk, downtown, beachfront - particularly in places where developable land is scarce. Ask your real estate agent if this applies to the location you're interested in.
4. Amenities. This is where newer buildings usually win out. They come with all the bells and whistles: swimming pools, gyms, rooftop terraces and social areas. You usually won't find such nice amenities in older buildings. Those amenities can help attract a buyer when it comes to re-sale. But if you're never going to use them yourself, is it worth paying a premium price for them?
5. Condo Fees. Those amenities come with a downside, in the form of higher monthly condo fees. Check out exactly what you have to pay each month and what it covers, before you buy.
6. Condo Fees (part two). In older buildings, you'll normally pay lower condo fees. But sometimes owners in older buildings try to cut the monthly fees drastically, by not paying into a reserve fund. That's fine until a big-ticket cost pops up, like replacing an elevator or repairing the roof. Then it often proves impossible to get all the owners to pay the thousands of dollars needed to fix the problem. Look at the condo building's accounts before you buy and ask if there's a reserve fund. If there is, will it cover major repairs?
7. Maintenance/repairs. While we're on the topic of maintenance and repairs, you'll need to keep on top of these with an older condo. You're dealing with old wiring, old plumbing and old fixtures. A new unit may still have some warranty remaining on it. If you're not going to carry out a complete remodel, budget for on-going repairs and maintenance if you opt for an older condo.
8. Layout & Style. Newer condos usually come with an open-plan layout and nicer finishes in the kitchen and bathrooms. If you want to convert an older condo into an open-plan living space get an architect or engineer to see if it's possible and how much it will cost. Also check the condo regulations to see if you can make those changes.
9. Bank Financing. In some countries, banks place an age limit on financing for condos. You'll get financing if the unit is in a building that's up to 20-25 years old. If it's older than that, the bank may only lend a much lower percentage of the property price, or they may not lend at all. If you're getting bank financing, find out about their lending policies on older units before you start your property search.
10. Property Taxes. You might think that this one's a no-brainer - older condos with lower price tags equals lower property taxes, right? But some countries offer tax exemptions on new buildings. Panama, for example, offered 20-year tax exemptions. So check with your local attorney to see if you get any tax breaks on new units. Those property tax savings add up and can help offset the higher price you'll pay for a newer condo.