Strata vs freehold in BC: what every first-time investor needs to understand

I was underwriting a one-bedroom condo in Kamloops's downtown core. Asking price suggested a cap rate around 4.2%. I was close to writing an offer.

Then I read the depreciation report.

What is a depreciation report?

In BC, strata corporations with more than 4 units are required to get a depreciation report every 3 years. It covers every building component — roof, elevators, plumbing, electrical, windows — with remaining useful life and replacement cost estimates.

What I found

The building was 28 years old. The depreciation report showed: roof replacement within 2 years (~$12,000 per unit), elevator modernization within 4 years ($8,500 per unit), hot water system replacement within 3 years ($4,200 per unit).

The contingency reserve fund: $68,000 across 35 units = $1,943 per unit. Against a looming $12,000 roof assessment alone, the fund was nowhere near adequate.

My unit's share of the roof alone: approximately $10,057 out of pocket after the reserve fund contribution. That changes the deal math completely.

My rule on strata investment properties

Never buy a strata investment property without: (1) the current depreciation report, (2) the last two years of AGM minutes, (3) a lawyer's review of the bylaws for rental restrictions, and (4) a reserve fund adequacy calculation.

The $12,000 condo? I walked.