Self-managed condo buildings, where the strata council runs the building instead of a professional management company, can be attractive to buyers because they typically carry lower strata fees. Professionally managed strata buildings are more prevalent but older smaller buildings or new homes on a cul-de-sac may be self managed if they have common areas or gardens.
Hiring a professional management company with a 24/7 emergency hotline means an extra cost for owners to absorb. But a self-managed building can mean more time and effort for the strata council members because they don't have the support of a professional property manager.
If you're planning to get financing for the purchase, you may have even bigger problems getting a mortgage. Mortgage lenders are often sceptical of self-managed buildings, especially larger ones, because of the potential for mismanagement. Perhaps the council members are unsuccessful at collecting money for a special assessment or maybe they don't properly maintain the books, which can lead to big problems down the line.
In reality, many self-managed buildings are very well maintained, but not all lenders are willing to finance a purchase in a self-managed building because it presents a greater unknown than a professionally managed building would. So, if your heart is set on a unit in a self-managed building, your mortgage options may be more limited and you may not get as attractive an interest rate as you would otherwise.
Here's a rundown of how several lenders, including credit unions and mono lenders through your broker, handle self-managed buildings. All will request to see the Property Disclosure Statement (PDS) and often the strata form B, but some will require additional information as well.
- Coast Capital will lend on self-managed buildings in BC only and will request to see the last 12 months of strata minutes and most recent AGM.
- First National will lend to self-managed buildings with up to 12 units (and may consider larger buildings). It will also require a minimum of $1,000 per unit in reserve.
- Home Trust does not lend on self-managed buildings.
- Street Capital does not lend on self-managed buildings.
While self-managed condo buildings may have lower fees, they can mean bigger headaches when issues arise in the building or when trying to get a mortgage. Be sure to review the strata documents yourself and weigh these pros and cons before purchasing in a self-managed building.