Capital and maintenance reserves for condos

[Joe Steinheiser]

If buying a condo for rental, how much would you reduce, if at all, capital and maintenance expenditure reserve in you calculations? Anything else to consider when buying a condo to rent out?

[Chris McTyre]

@Steve Babiak exactly! Situations like these arise quite often in condos

Water penetration through failing stucco on several units necessitated a larger stucco and facade replacement in my case. My unit was a part of the low-rise buildings and the special assessment hit for $180/month for 11 months. Now the low-rise repair is complete and the work needs to be completed on the high-rise (which my unit is not a part of) we still have to pay the assessment which is a 24 month fee of $180/month. So I am looking at a $180/ month hit to my cash flow until the beginning of 2023. Also, if you wanted to sell, having a special assessment might mean you have to offer a lower price/give concessions to potential buyers. Not saying you can't cash flow a condo rental, but there are a lot of factors outside of your control and you need to be comfortable with that.