For Airbnb investors, overpaying on maintenance fees can quickly erode profit margins and make it harder to achieve a positive cash flow. That's not why you got into this game – it was to make cash, not make commitments to waste it.
Here's a masterclass on everything there is to know about condo maintenance fees in Toronto and how to make them work as an Airbnb host:
What Do Maintenance Fees Cover?
Maintenance fees are recurring charges that cover the ongoing costs of operating and maintaining a property or facility. In the context of condos, they're charged to unit owners as a shared responsibility for community spaces.
Amenities don't come free; with pools, gyms, saunas, and other perks come the costs of cleaning, heating, repairs, and staffing that keep them operational year-round.
There's also essential services no respectable building can survive without, such as repairs, landscaping, snow removal, and general upkeep of common areas like lobbies, hallways, and recreational facilities.
The specific allocation of maintenance fees varies depending on the type of property and the services provided, but their primary purpose is to ensure that the property remains safe, functional, and aesthetically appealing for all residents or users.
High Maintenance Fees Don't Mean High Value
Aside from being another financial obligation to worry about, maintenance fees can be frustrating because they're often exorbitant. Sometimes unfairly so. Toronto is full of examples of condos that charge premium maintenance fees without delivering proportional value. You might pay $800 per month for a building with aging amenities, poor management, or deferred maintenance issues that should have been addressed years ago.
Meanwhile, newer or better-managed buildings might offer comparable or superior amenities at a fraction of the cost. It's critical to look beyond the monthly fee and investigate what you're actually getting for your money.
A checklist for guidance:
- Review the condo's financial statements
- Ask about upcoming special assessments
- Tour the facilities in person
Do You Have to Pay Maintenance Fees?
In Toronto, maintenance fees are mandatory for condominium owners and are legally enforceable under the Condominium Act of Ontario. When you purchase a condo unit, you automatically become a member of the condominium corporation and are obligated to pay your share of the common expenses, which include maintenance fees.
Failure to pay can result in serious consequences, including interest charges, liens placed on your property, and potentially even legal action that could lead to the forced sale of your unit. The condominium corporation has the legal authority to collect these fees to ensure the building and its amenities remain properly maintained and operational for all residents.
How to Make Maintenance Fees Manageable
Maintenance fees are pretty much unavoidable if you're working with a condo. But that doesn't mean you have to pay them. We aren't advocating for defiance here - just recommending an alternative to paying out of pocket. Remember, as an Airbnb host, you have the capacity to offset costs with smart choices. Let's go over some math showing how selection can influence your bottom line.
Consider two comparable condos in Toronto:
Condo A has maintenance fees of $400/month, while Condo B charges $650/month.
Over a year, that's a $3,000 difference. If you're running an Airbnb with an average nightly rate of $150 and 70% occupancy, you're generating roughly $38,325 annually. The lower maintenance fee property saves you $3,000, which translates to 20 nights of revenue you don't have to earn just to break even on fees alone.
The key is to factor maintenance fees into your property selection from the start. Calculate your total monthly expenses – including mortgage, maintenance fees, utilities, and cleaning costs – then determine how many nights per month you need to book to cover them. Properties with lower maintenance fees require fewer bookings to become profitable, giving you more flexibility with pricing and occupancy.
How Much are Maintenance Fees In Toronto?
Just like other aspects of a real estate investment, the value of maintenance fees comes down to the buyer at hand. Maybe you don't want to spend more than a penny necessary - why pay for amenities when there's no guarantee guests will use them? On the other side of the coin, merely offering perks like access to a pool and gym might be the differentiating factor between your Airbnb listing and that of a competitor.
The decision is ultimately relative. We recommend starting by taking a look at local market averages. In Toronto, maintenance fees typically range from $0.50 to $1.00 per square foot per month. For a 600-square-foot condo, you might expect to pay anywhere from $300 to $600 monthly, while larger units or those in luxury buildings with extensive amenities could see fees exceeding $1,000 per month. It's safe to expect incremental increases; Ontario's Condominium Act currently allows condo corporations to increase maintenance fees by as much as 10% annually without approval from unit owners.
Financial strategy can make or break the viability of an Airbnb in multiple ways. As a potentially substantial portion of month to month costs, maintenance fees should be a top consideration in your own planning. The goal isn't to avoid them but rather make sure your Airbnb generates enough revenue while still delivering the returns you're after.
