Tax Sale Condominiums

[Rob]

Has anyone ever purchased or placed a bid on a tax sale condominium? 

[-]

I'm telling my grandmother to do it.  She has a corporation for holding investments so it can do it.  I see one in Scarborough that would be good.

nr

[speedfreeksteve]

My first property that I ever owned was a "power of sale" on a condo in Toronto. Was basically buying it directly from the CMHC. Got it for about 10% below market value at the time and then sold it for 180% of what I paid for it 5 years later.

Condo's are dicey situations as an investment though unless it has a dual purpose of providing housing for yourself.  Maintenance fees can be pretty high. Even to the point that buying a condo to rent out is a money losing proposition more often than not in the current market.

[Jim]

The first bid I ever made was for a townhouse condominium in Orillia.  There were about 8-10 units available at the tax sale.  As an added bonus, there were another half-dozen selling on the open market at the time.  A quick tour of these units with the listing agent provided a wealth of information:  apparently the reserve fund had "disappeared" during the last board's tenure, lawsuits were in progress, no maintenance was being done due to the lack of funds, and in all likelihood the unit owners would eventually be on the hook to replenish the reserve fund.  The condition of the units that I saw was a mix:  one unit was fine (but in dire need of some fresh paint), while another one had been vandalized (bathroom fixtures smashed, holes kicked in walls, interior doors torn off the hinges).

The minimum bids were around $15-20k, and the units on the market were listed between $80-90k.  As nervous first-timers, my partner and I only bid around $25k for one.  The bidding turned out to have some drama of its own:  all the units were snapped up by the same company for $101k, which we thought was absurd given the known market value (the next-highest bid was around $60k).  A couple of years later we found out that the winning bidder was actually the current owner of the units!  Apparently the treasurer had decided to go ahead with the tax sale even though the owner had offered to pay the taxes in arrears, so he entered a bid to avoid losing his properties.  The whole thing ended up in court, of course, with the city and treasurer getting spanked for not cancelling the sale.