The reserves are actually a 25-year loan
An Interesting Budget
A reader sent me the current Budget for his condo tower in Peel Region. He explains:
There are no legal fees hidden in the reserve funding – just the loan and the interest costs. Owners have asked at every AGM why it is buried this way and are told this concept is from the loan company. Their sales pitch is that the loan becomes part of the Reserve Fund costs.
Most owners don’t know that the loans had five-year terms with 5-year amortization. By the time the windows are paid for, they will need to be replaced once again.
Items from the Budget
So the Reserves (including the loan principal and interest payments) eat up 39.16% of the annual expenses.
I am always amused by property management companies showing budget figures that pretend to be accurate to one-hundredth of a percentage point. In the above statement, wouldn’t the figures 18% and 39% be sufficient? Afterall, annual budgets are just estimates.
I don’t get it. I am not a math genius so I don’t understand how a surplus (positive) and a deficit (negative) become two positives.
Here is the first place in the Budget where they show the loan being paid out of the Reserves. By the way, the loan is not with a bank but with a finance company.
I understand that the loan was to pay for new windows. In 2022, the corporation paid $321,014 in loan payments and in 2023 it will pay $200,163 in interest for a total of $521,177. For the life of me, I don’t understand why these payments are split into two separate line items.
This $325,000 must be the $321,014 Reserve Loan payments. Drawing money from a loan really isn’t income; is it?
New condo floor plan
This is a layout for a new condo unit in Toronto. It is less than 500 square feet. Will these units sell? Sure they will.
The couch must be one of those condo-size ones. I keep looking at it and then looking across at the refrigerator. It will fit two people; maybe.
The patio door is the only source of sunlight. That is why there is a second patio door for the “sleeping alcove”. Toronto building codes insists that every bedroom has a window. This will do.