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Join former CBC radio host Mark Connolly as he sits down with real estate insiders to bring you behind-the-scenes perspectives that answer your questions about home ownership.
With topics that matter whether you’re buying, selling, or staying put, this is the place to get the latest market updates for the Edmonton housing market, hear conversations about housing affordability, learn about mortgage options, and so much more.
Join us twice a month for episodes that cover local trends with context you won’t find in the national news, and get actionable insights that give you confidence for your next move.
The RAEdio podcast is presented by the REALTORS® Association of Edmonton.
Welcome to the RAEdio Podcast brought to you by RAE, the Realtors Association of Edmonton. So that's the RAE in our radio. We deliver easy to understand market insights, some homeownerships, perspectives from industry experts so that you can feel informed and empowered wherever you are in your home ownership journey because better decisions start with better information. Our guest today is Robert McLeod, a real estate and condominium broker and president of McLeod Realty and Management. Welcome Robert, and thanks for joining us.
Robert:Thanks for having me, Mark.
Mark:We're gonna chat about how buying and selling a condominium differs from other types of real estate and the role of realtors in the transaction. So Robert, can you give listeners a quick snapshot of what the condo market looks like in the Edmonton region right now?
Robert:Sure. Well, remember the condo market is made up of multiple different assets, right? You'll have low rise condominiums, you'll have row, you'll have town homes. It's like when someone says, How's the real estate market? I'll say, Well, you know what, the real estate market is complex and made up of a lot of different things.
Robert:So generally, you know, when you look at the condominium market, I would say it's reacting and moving basically the same as you would just expect the Edmonton real estate market is in just different pockets.
Mark:So depending on the kind of condo you might want to buy, an apartment condo, a townhouse, those could be completely different. They might be moving maybe in the same direction, but at a different level.
Robert:Yeah, definitely at a different level. You know, we've seen a lot of changes in the kinds of demand for low rise and high rise condominiums in the last two years driven heavily by migration and investor demand and appetite for both lower end for investors and higher end for end users.
Mark:How do market conditions for that segment differ from single family homes? Are they moving in the same way, or could they be really disconnected?
Robert:They're disconnected because there's so many different factors that affect. For example, if you look at entry level, more affordable, low rise apartment product, that would be affected more significantly by demographic shifts and trends and the effect of carrying and borrowing costs, mainly as it's driven towards an investor seeking higher return or obviously a first time home buyer trying to get into the market.
Mark:So when someone is comparing, you know, and choosing between a condominium and a freehold property, what are some of the biggest differences that they should understand from the very beginning?
Robert:Well, fortunately, get to see the whole life cycle of the condominium, both from development and then turn over to a board and then the ongoing operations. I think what a lot of people need to understand is when you're buying a condominium, they think they're buying four walls. When you're actually buying a share in a business. And I think that's a really important thing for people to understand is if you're buying a house, you're buying the land, you're buying the building, you're not inheriting partners. If you're buying a condominium, you're inheriting partners.
Robert:And partners can either make or break a very good deal. So it's very important to understand exactly what you are buying. You're buying a share in common property. You're buying a share in the financial obligations, a share in decision making, and then ultimately a relationship with all of your neighbors.
Mark:It's interesting the way you put that, that you're buying into a business. It's not like a club or a co op. This condominium is a business and there's business decisions to be made by all the people who are members of it, right?
Robert:Yeah. And you want to buy into a winning business. Want to buy into a business that's profitable and some aren't profitable. And, you know, There's a lot more due diligence. I think that's really the key piece is that there's a lot more questions and a lot more people to talk to when you're buying that condominium.
Mark:When you're representing, a buyer in the case, do you examine all those condo documents to give the kind of feedback to your client that is necessary to make that decision?
Robert:Well, you know, when I started selling real estate a little over, you know, twenty one, twenty two years ago when we were representing a buyer or seller, know, the realtor was reading and trying to understand a lot of that on their own. Nowadays there's professional condominium document reviewers that the realtor can turn that over to that can help. But I will always say that doesn't remove the obligation or should diminish the level of interest that a purchaser should have to peek under the hood. The documents are only one thing. Strongest advice and I'm actually amazed.
Robert:You know what? Manage thousands of condominium units. The lack of calls. I do get them. They're usually from the same realtors, but the lack of calls from either buyers or realtors just calling the condominium manager and saying, look, we got the condominium documents, but before I get into it, you know, we're not going to offer an opinion one way or another, but we will tell the truth.
Robert:This is what's going on. Look for this document and, and, you know, we can get to those more salient facts a lot quicker.
Mark:Right. I mean, yeah, that makes sense. I mean, you're, even though you're, you know, making maybe a smaller investment in a condominium that you might be in a, a detached house, it still might be the biggest investment of your life. And certainly due diligence is something you should be on top of.
Robert:Yeah. You know what? Ask lots, lots and lots of questions, and not every condominium package that you'll get from the manager is complete because ultimately at the end of the day, the corporation is being managed by a volunteer board of directors. And there are some buildings where there's very, very strong governance and the documentation is plentiful. And there's some corporations where it's ran a little more Mickey Mouse.
Robert:It doesn't necessarily mean the work's not being done, but maybe it's not being reported. And so you need to ask more questions. Always ask more questions.
Mark:You touched on this a little bit at the beginning, but let's compare the type of condos people might buy a high rise condo compared to a low rise condo compared to say a townhouse. What are some of the key differences that people should understand?
Robert:Well, maybe start with, maybe the easier one, we'll talk with a townhouse. Ultimately are responsible for the financial obligations of that corporation. In a townhouse, you won't have elevators, for example, you won't have an underground parkade. You're going to be looking more at the build quality, landscaping conditions of roadways, and just exactly what is the corporation paying for and what are owners responsible for? Read your bylaws, look at your condominium survey because every building is different.
Robert:Once you get into low rise condominiums, things start to get a little bit more complicated. You're maybe looking at slightly higher insurance, you're looking at more common area costs associated with cleaning, things like that. And then ultimately when you're getting into the prestige and the high rise property, you'll be looking at costs associated with maintaining amenities. Newer buildings are having multiple elevators, take that into consideration, and amenity spaces and gyms and all sorts of other costs you might have with concierge services and staffing. So each building is different and ultimately start first by reading the bylaws and knowing what you're buying and getting into, and then look at that budget and try and figure out exactly what you're going to be contributing to every month.
Mark:So what type of buyers are usually looking into the condo market? And you know, what do condos bring to the table sort of that other properties might not? And I'm betting this has changed over your career.
Robert:Yeah. You know what? It seems to change yearly. You know, I ran a project marketing company that specialized in positioning and selling multifamily projects. And we shifted that business model significantly in 2016 to turn those buildings all into rental.
Robert:You know, when the demand for purchasing collapsed, the demand for renting took off. So that's why you've seen so few new condominium buildings even brought to market in the last few years, because the inherent pre sale risk was just not there for the developers, but there was absolute certainty that the tenants and the renters would want the building. What I think is interesting is in the last two years, and I'd worked for many years in the mid to late two thousand, twenty ten in converting a lot of older 1960s, 1970s apartment product into condominiums for primarily first time buyers and investors. And in the last couple of years, I've worked on several projects, both as an owner of buildings and as, as just a condominium owner out there, like everyone else that got into that market because they were plentiful and inexpensive and the market was going to double every few years. What could possibly go wrong?
Robert:We've been converting those buildings back into what they originally were. You know, the economics of those buildings no longer worked as they were at that fifty year plus. And so there was a lot of investors from Toronto that were coming in that were buying up that lower end product that previously wasn't being bought. And then ultimately there's several groups that have come together and formed these new companies to come in and buy these buildings, unit by building and de convert them back. So that's actually in some cases driven up the value of some of these units in some of these markets where sellers have been able to actually get over market because ultimately the buildings have been worth more as apartment buildings and they've been worth as condominiums.
Robert:It's been an interesting couple of years to see that full cycle of those buildings go back from apartment to condo, now back to apartments.
Mark:What are some of the common misconceptions that maybe condo buyers might have when they're entering the market? Have those changed? You've covered a little bit of that, I think.
Robert:I think it's important that people recognize that low condo fees is not a good thing. Maybe it's not a bad thing. High condo fees is not a bad thing. Maybe it's not a good thing. It's really understanding just what that actually means for the property and why.
Robert:Misconceptions frequently are I buy a condominium and I don't have to lift a finger and everything is done for me. And I would say, you know, it's done by a volunteer board giving instructions to a professional manager, but it's just like owning a home. You know, you should still want to be involved. So nothing gets done in a vacuum. Number one, there's a lot of decision making that takes place behind the scenes.
Robert:And number two, that condo fees are going to continue to go up. And you have to look at it, you have to say, well, yes, they are. But what else is going up and why? And so really trying to make sure that you're seeing that things are going up. You're continuing to realise good value for what you're paying into.
Robert:Recognise ultimately there are so many different types of condominiums that are out there that, you know, to take a broad statement on it and say, well, what's the common misconception on it? I would just say, there's so many, but I'll tell you one truth. When it comes to condominiums, everyone's an expert, so ask lots of questions.
Mark:That's a good one. It can be a little complicated, right? You got your condo fees. You got to know what they cover. Then there's reserve funds, which you may never have heard about.
Mark:There's special assessments, which you should be scared of maybe, and then insurance. How do all those things sort of factor into a decision making process? And it and you really probably should consider all of them. Right?
Robert:Well, you should. Like I was saying earlier with low condo fees versus high condo fees, I'll also say things like special assessments aren't automatically bad and a large reserve fund isn't automatically good. Every corporation manages their affairs differently. You know, when you're looking at the reserve fund study, it's not abnormal to see a lot of corporations that are operating in a deficit. But what you want to look at is the reserve fund plan.
Robert:How are they planning to deal with it? What we've done in some of our corporations is we may know we have an expense looming, but we might be a few years away from it. Rather than waiting until the eleventh hour and then doing a big punitive special assessment where you may not be able to collect it from the owners. We've done things like suggesting an annual double up condo fee payment. Yes, it is a special assessment, but it's a lot easier to do that 300 or $400 charge every year versus all of a sudden asking for that $10,000 charge.
Robert:When we talk about looking at the reserve fund, the reserve fund is supposed to be there to prevent that. But ultimately life happens, right? Technology changes, energy requirements change. There's an opportunity to get ahead of replacing a boiler now because they're going to be more expensive in the future. So looking at the budget, then looking at the reserve fund and then ultimately reading the meeting minutes, I consider that almost like passing the note in the class.
Robert:You know, if you wanted to read someone's diary and you wanted to know what was going on, the meeting minutes are the diary. That's how the board is responding to maintenance issues and operational issues all comes out in the meeting minutes. That's what you really want to start with first.
Mark:What kind of advice would you give to people about joining boards? Is that something that maybe, I mean, you get a very clear indication of what's going on in your condo if you're on the board, would think.
Robert:Well, joining it for the right reason is really important. We work with lots of different boards, which means we deal with lots of different personalities. And there's always kind of that reputation of that board member that gets on because they just want that new fence in their backyard. When they get the backyard, they're off the board and it exists. But you know what?
Robert:Checking your ego at the door and recognising that if I'll say to my boards, if your conversations are constantly starting with my unit or me, you're probably not the right person for it. But ultimately, over time, it's a great opportunity to learn and you learn a lot about governance. You learn a lot about running a business. You learn a lot about repairs and maintenance in the building. There are supports that are out there.
Robert:You know, the Canadian Condominium Institute, Edmonton Chapter, they put on training for owners. They put on an annual trade show for owners and board members to come and get out. So there are a lot of supports that are there. So I would say, you know, what I think you're actually going to see happen, which is already taking place in Ontario in the next few years in Alberta, is probably mandatory board training. Because you know what, there's a lot of consequences and a lot of
Mark:responsibility
Robert:to the board of directors. So getting involved, volunteering. And you know what, There's even things that you can do with your corporation if you reach out to your manager and you say, look, I'm not interested in being on a board, but I want to be on a committee. I want to be part of the landscape committee. I don't want the obligations of going to a condo board meeting every month, but I want to roll up my sleeves.
Robert:Very few boards and very few managers are going to turn away people that actually want to roll up the sleeves and help.
Mark:What types of restrictions should buyers ask about before moving forward with a purchase? Are certain condos, you have to understand how different it might be from a different condo?
Robert:Common restrictions people would look at would be things like age restrictions, pet restrictions. And there are people that buy condos and then find out after the fact that it's £40 for the dog or it's only one cat and one dog when it says two pets. So again, it's really asking the manager in advance. I would say don't rely on what's on MLS if it just says no restrictions. Read the bylaws and get into it.
Robert:Bylaws aren't supposed to be interesting. They're dry, they're boring, but you need cover to cover. You need to go through it. So an age restriction is an important one. The legislation has changed on that in 2033.
Robert:Believe that's when age restricted buildings will be lifted in Alberta for any building under 55 plus. So that's right now, if it's an 18 plus building, you still have to wait a few more years. So if you buy it and you have a child, that's a concern. Looking at smoking policies, that's another important one where people don't realise what they can and can't do within their unit as well. So understanding what's in the bylaws, but also asking what's in the rules.
Robert:Corporations can pass rules as well and they're not in the bylaws. And while they're not designed to override a bylaw, they provide a little more structure to how owners are supposed to live and operate in their buildings.
Mark:Are there other professional services that can provide additional benefits when it comes to condo transactions. I think you mentioned the document reviewer, which is something that kind of surprised me that there would be a person who's an expert at that, but it sounds like it's a great idea.
Robert:Yeah. There's multiple firms that are out there and you know, that's what they do and that's what they specialize in. And it's, it's a niche business, but you know, should have been around a lot sooner than all of a sudden now where we are today. So definitely important there. Talking to your realtor as well, asking more questions, looking at sales history within the building, talking to other realtors that have bought and sold within the same building before, maybe they had a different experience or after closing uncovered something that maybe was good, bad or indifferent.
Robert:So that information is out there as well. Talking to your lawyer as well, you know, will be loose on anything beyond just obviously what is in the purchase contract. So I would say, you know, conversation keep with the manager alive, engage your realtor in it, but don't be afraid to call the condominium manager as well or anyone at the management company and start to ask some questions about the building.
Mark:Okay. From a seller's perspective, what kind of advice would you give to condo owners to prepare for before listing their unit?
Robert:Almost the same thing as the buyer. A lot of sellers don't actually, and if the less they're actively participating in their condo corporation, may not know some things that are going on behind the scenes. So understanding at first, there would be nothing worse than spending the money to do a little bit of a rental on a unit or maybe getting a tenant out of the unit for a few months, getting it ready, listing it, getting an offer and then finding out there's a surprise in your condominium documents that you didn't know about. So talking to your manager first as well, if you're not participating, hey, what's the status? Is our reserve fund study completed yet?
Robert:Are there any new recommendations from the engineer? I saw some trades coming around the building looking at windows. What is that all about? Do we have any upcoming work that's taking place? How's our new bylaws that we're waiting to get registered?
Robert:Are those coming out? Is there going be anything that's put in there that might be a surprise? Again, asking those questions. Once you're satisfied that you know and can be comfortable that there's going to be no surprise scaring off a buyer, then it's recognising it's a competitive market. It's a very competitive market.
Robert:How does your unit show? If there's three in the same building that are for sale, does yours show the best? Right now, the best price and best condition is going to win.
Mark:Yeah. And I mean, are pretty direct comparisons when you're in the same building too, right? So it can be tough if you're not number one.
Robert:Yeah, absolutely. And you can find ways to make yours shine. But you know, when a buyer is looking at 203 and 303, and they're the same unit and there's a significant price spread there, you have to figure out and maybe the timing is just not right. Maybe we wait for that other unit to sell and then you make sure that you're the next one on the market.
Mark:Right. Yeah. That could make a big issue. I think you've touched on this a lot, but are there certain issues from a seller's perspective that could really complicate the condo sale if they're not addressed early? Maybe you covered that in the last answer.
Mark:I'm not sure if there's anything else there.
Robert:No, I think the one that I might throw out there is more corporations are taking on condominium loans to finance special projects. And so in some of our corporations, we'll allow owners to opt in or opt out of the loan. So you have a choice when it comes out, you can pay it out now, or you can make it in payments over the next couple of years. And there's some confusion. Does the buyer have to assume the loan?
Robert:And again, it's depending on each corporation is different, but there might be some corporations where there's no mechanism to pay out the loan. And so then the seller has to factor in that they'll have to pay that out to the corporation to hold on to it. So again, building is different, but have the conversation with the condominium manager first. You should be in regular contact with them anyways as they've been your manager for either a short or a long period of time, but ask them as well. And then make sure that you're going through your unit with an eagle eye.
Robert:There's lots of competition that's out there right now. The market is still nervous about condominiums when the markets neither going up nor it's going down. Know, sometimes it can become difficult to convince a buyer to buy a condominium unit where you might be in a market where renting that unit is several $100 less per month. And so there's gotta be a good motivation for that buyer to pull the trigger.
Mark:Well, you mentioned that a lot of these units are bought by investors, and they use them as rental properties. So what do sellers, you know, with current tenants, and you might have a tenant who's really, really good, and you want to keep that person in your unit, and you can say to the person who's buying, well, you've got a great tenant here, and this is a good reason why you might buy. So when you have these things going on, what should you be aware of and how do you handle all that?
Robert:Understanding the Residential Tenancies Act first. If you have a unit and you have a tenant, there's differences. If it's a month to month lease or it's a fixed term lease and what the consequences may be of trying to sell that unit with a long fixed term lease. So making sure that you understand that, discussing it with the tenant first. We've seen some cases where the tenant ends up, they like the unit enough to rent it.
Robert:Sometimes they might like it enough to actually own it as well. So you don't want to pull a surprise on the tenant the eleventh hour on it. Ultimately, if they have a fixed term lease, they're going to stay there anyways and fulfil the term of their lease. But it does become a nuisance for that tenant, right? Showing that tenant twenty four hour notice as well.
Robert:Typically, what I would say is wait until close to the end of that tenancy and then try and sell it with the tenant not in it. It just becomes problematic. It never shows as well as it does cleaned up and refreshed.
Mark:My last question is kind of about when have a buyer who's looking and saying, I wanna buy a condo, and here's the reasons, and their reasons might be that they're looking for a long term place to settle in, that they're in a transition phase, that they enjoy having their backyard, so they want a townhouse. How do you go through all, They might say, Well, I want to get a low rise apartment because I'm doing this. When they tell you the reasons, you might say, Well, actually, that doesn't really fit for you. Do you give that kind of feedback to people sometimes?
Robert:Always have. What I find is over the years we take what the client wants. We prepare the search and we show it, but every now and then you want to throw in a few alternate properties. That just helps broaden the perspective and ultimately someone looks at it and says, I hadn't considered this before. Again, it's a broad market.
Robert:There's no shortage of inventory, there's no reason why you shouldn't take the time and go and look at a little bit of everything.
Mark:Are are condos more or less difficult to sell now than they were, say, when you first got into the market?
Robert:I would say they've become harder to sell, and there's a lot of reasons why. I think the market was saturated for a long time. There's been a lot of choice and there just hasn't been enough upward market movement that's just created that excitement or that fear of loss that I need to get into it. Ultimately, that's what drove the market twenty years ago. If I don't buy one now, I'll never be able to afford it.
Robert:That has significantly changed. But it's also changing now because, you know, condominium ownership is very common in other parts of Canada that are more expensive. And as we continue to have more net migration, yes, the numbers are changing and it's high and it's low and there's cycles that we go through. It's just a much more common kind of property that those from Ontario or Vancouver are willing to look at first. And ultimately, that's a demographic that's significantly changing the demand and landscape in Edmonton where we always had to own home, we had to have the land and the fence.
Robert:And now all of a sudden, you know, with a sprawling city and commutes that are taking, you know, that are longer, people are still considering the, you know, the net effect of that and affordability, which is ultimately going to be driven long term and solved by multifamily.
Mark:Right. One thing we have in Edmonton that's happening is infill, and a lot of the infill, which is very controversial in a lot of areas, is six and eight units, places you might have four units up and four units down on one lot. Are those generally not condos or is it How do they work? I'm always curious when I see one being built.
Robert:For the most part, not. We manage a lot of those. CMHC has a program out there to provide higher leverage financing for that kind of property. And so for the most part, they're being billed purely as rental and performing very well because they're acting as a bit of that bridge where someone says, well, you know, I want to get into a really, I want to get into a good area. And ultimately there may be not, you know, a 100 or 200 unit new apartment building like you would get on the outskirts, but getting into a better area, but not living with as many neighbors as you may have at a lower or high rise building.
Robert:So yeah, you can bet most of those are all rental.
Mark:I was curious because I thought, well, maybe someone's buying the unit and it comes with the basement suite, but are those considered two different units?
Robert:Two different municipal units. Exactly. Okay.
Mark:There you go. You walk around, you see a lot of them being built. It's just the new reality. Robert, is there anything about condos we haven't gone through? I think we've done a pretty good coverage of it, but is there anything that I haven't mentioned that you did want
Robert:No. You know what? I'd say the same thing that I went back to earlier on it is just understanding that you are buying in a business and to take it seriously. If you know, you can't buy shares in GE and GE goes down and one day you go into the head office and decide to roll up your sleeves and paint the lobby and the stock value goes up. But in a condo, you kind of can.
Robert:So you might be able to impact and actually change and transform a community that you're already living in. If you simply show up and take an interest in it, because at the end of the day, you're an investor and you're a shareholder. So you should want to try to drive the value of your property by getting involved.
Mark:Yeah, that's a really good perspective for a condo owner to take, rather than thinking, well, that board, they're running things and they work for me. No, you're all in this together. That's a good perspective, I would think.
Robert:Yeah. And I'd say as a reminder for everyone that condominium managers are a little like referees in the NHL. Know, if we do our job perfectly, no one notices us, but if we miss one thing, suddenly everyone knows our name. Be nice to your condominium manager. Some days it's a pretty difficult and thankless job.
Mark:Oh, I'm sure. Well, we like to wrap up our podcast with this question for all of our guests. A little bit off topic, on Realty though. To you personally, what makes a house, or in this case a condo, a home?
Robert:To me, it always comes back to community. I've never looked at my house or my condo any differently. It's the relationships that I have with my neighbors. In a condominium building, remember there's a lot more of them. They're next to you.
Robert:They're above you. They're behind you. They're underneath you. So be a good neighbor.
Mark:Good advice. Robert McLeod is the president and real estate broker and condominium broker with McLeod Realty and Management. Thanks so much for joining us on the podcast.
Robert:Thanks, Mark.