Someone please explain condo association fees to me (Minneapolis, Eagan: real estate, rental)

[Cruz Azul Guy]

So, just out of curiosity the other day I looked at some available condos in Minneapolis. In particularly, I looked at several of them in highrise buildings in the downtown, uptown, Whittier and Midtown areas with 2-3 bedrooms and all were priced in the 120-200k range. Up to this point they all seemed very reasonably priced, until I saw the monthly association fees they were charging on them. Of the 8 or so I looked at, the association fee ranged from $300-850. To me this is way too much to make it worthwhile as an investment....especially when you consider that this fee is being charged on top of the mortgage, insurance and property tax. I mean, I could understand paying a couple hundred bucks a month but 500, 600, 700, 800+? Normally I prefer ownership to renting but in this case renting seems far more logical. Am I misunderstanding something here? If I decide to sell our house in favor of a condo should I come to accept this assocation fee as an inevitable reality?

[cielpur]

I've only ever looked at 1 bedroom condos though I'm sure the same principles apply...

I don't think you're missing anything. You need to look at what the fees include. Some will include all utilities, many all utilities except electric. Are there full time management/maintenance staff in the building - how many? 24 hour security staff? Indoor pool, gym? Are parking spots included in the sale? If so, fees will include garage heating, etc. How many units in the building? Buildings with less units will less efficiently be able to employ staff, usually. How extensive are the common grounds and how often do they require landscaping work, snow removal, etc.? The vast majority of condos also employ a management company to take care of these things which is another expense.

In some of the higher end buildings, it's interesting how the prices for the units are relatively low but the association fees are high. The loring green buildings are one example of this, and undoubtedly the monthly fees are factored into the price.

If you're only looking at high-rise buildings, then I don't think you have any way around the fees you've been seeing. It's really a lifestyle decision, and honestly I think renting makes more sense for many who would otherwise prefer owning a condo (I determined renting makes more sense for me though I'm still open to buying). For others it makes sense to buy as they strongly desire these amenities and services while maintaing the freedom of actually owning the unit they live in.

[uptown_urbanist]

Originally Posted by Cruz Azul Guy

So, just out of curiosity the other day I looked at some available condos in Minneapolis. In particularly, I looked at several of them in highrise buildings in the downtown, uptown, Whittier and Midtown areas with 2-3 bedrooms and all were priced in the 120-200k range. Up to this point they all seemed very reasonably priced, until I saw the monthly association fees they were charging on them. Of the 8 or so I looked at, the association fee ranged from $300-850. To me this is way too much to make it worthwhile as an investment....especially when you consider that this fee is being charged on top of the mortgage, insurance and property tax. I mean, I could understand paying a couple hundred bucks a month but 500, 600, 700, 800+? Normally I prefer ownership to renting but in this case renting seems far more logical. Am I misunderstanding something here? If I decide to sell our house in favor of a condo should I come to accept this assocation fee as an inevitable reality?

We casually looked at this awhile ago so my memory may be a little fuzzy, but I recall that most of the higher downtown condo fees included a lot, sometimes even most utilities (and even sometimes internet, cable, etc.). And those high-rises usually do have a lot of extras (fitness room, etc.) plus staff, and all that adds up. But you're right, they are REALLY high.

The Uptown places we looked at had more reasonable fees, presumably because they were older, smaller vintage buildings that didn't have all the bells and whistles, but they were still high enough to make renting the more reasonable choice for many people. When running the numbers on the NYT rent versus own calculator, I think that once you factored in condo fees it would take something like 10 or 11 years to make owning cheaper than renting in comparable buildings.

[Ghengis]

but if you get yourself elected to the board, they bring you to the secret club room where you can indulge in expensive cigars and fine brandies and whiskeys paid for by the other suck..., er I mean other residents' dues, while you contemplate how to make everything better for everyone else.

[golfgal]

Condos and townhomes, by law, have to have an association and that association has to at minimum maintain property insurance for the building/buildings. When you buy a condo or townhome you only only the inside of your condo or townhome, the association owns the outside. With that ownership comes maintenance costs and that is where the monthly fees come in. Sometimes that fee includes some utilities, trash, etc. You have too get a breakdown to see if it's worth the fee or not. Some downtown places that fee includes parking. On top of the association insurance policy, you need your own insurance policy to cover your stuff and for liability.

Are the fees worth it, it depends. If you don't want to have to do any outside work on your place, no lawn care or snow removal then it might be. You also have to live with the by-laws of the condo association and often that means not having any say to the color of your place, if you can have a grill or not, etc.

[1stpontiac]

Originally Posted by Ghengis

but if you get yourself elected to the board, they bring you to the secret club room where you can indulge in expensive cigars and fine brandies and whiskeys paid for by the other suck..., er I mean other residents' dues, while you contemplate how to make everything better for everyone else.

Oh my, yes, I was on my townhome association board once, and there were always a couple people who seemed to seriously believe this. 80% of our owners we never heard from (or couldn't get ahold of when we wanted to), 15% contacted us occasionally for problems and were totally reasonable. But then there was always one or two people who thought our entire lives existed to solve every minor inconvience or slight they could imagine, including:

-"There is condensation on the inside of my window."
-"[Other resident] is growing a tomato plant in a tin can on his deck, and it should be in a planter."
-"A neighbor 3 units down has a bird feeder and a bird might crap on my deck."
-"The wind blows leaves behind my garage."

None of those are exaggerated at all.

[1stpontiac]

Originally Posted by golfgal

Condos and townhomes, by law, have to have an association and that association has to at minimum maintain property insurance for the building/buildings. When you buy a condo or townhome you only only the inside of your condo or townhome, the association owns the outside. With that ownership comes maintenance costs and that is where the monthly fees come in. Sometimes that fee includes some utilities, trash, etc. You have too get a breakdown to see if it's worth the fee or not. Some downtown places that fee includes parking. On top of the association insurance policy, you need your own insurance policy to cover your stuff and for liability.

Are the fees worth it, it depends. If you don't want to have to do any outside work on your place, no lawn care or snow removal then it might be. You also have to live with the by-laws of the condo association and often that means not having any say to the color of your place, if you can have a grill or not, etc.

I think some people don't realize the cost difference of condo insurance versus normal homeowners. Condo will generally be must closer to rental insurance (maybe $25/mo) versus homeowners at $50-100/mo. Granted, that doesn't play into the rent vs. buy equation but it does affect the condo vs. stand-alone, at least a little.


Otherwise, an onsite gym, and covered parking downtown are probably worth, what, $100-150/mo, combined? Snow, lawn, and so on are probably worth some more, but, as others have said, its really a case-by-case evaulation of what you'd use and what you'd need.

If you do decide to buy a condo, though, my one recommendation is to definitely check what their cash reserves are, and review the last couple years worth of minutes to see if there are any major maintanence project simmering. A major repair when the association doesn't have the cash on hand to cover it will change your fees from $300/mo to $500+/mo in a hurry.

[QuietBlue]

To provide one data point, my association dues for my 2BR townhome in Eagan are $200/month. That includes all external maintenance and repairs, a few utilities (water, sewer, and trash/recycling), seasonal maintenance (plowing, mowing, etc.), landscaping, and general management services. Oh, and a chunk of that goes into reserves for things like major repairs, i.e. replacing siding or rain gutters. There aren't any common amenities like a pool or gazebo aside from some grassy areas with trees that serve as a buffer around the townhomes.

From what I've been able to determine from real estate listings, it's on the high end of the average range for this area and the age of the townhomes.

[QuietBlue]

Originally Posted by 1stpontiac

I think some people don't realize the cost difference of condo insurance versus normal homeowners. Condo will generally be must closer to rental insurance (maybe $25/mo) versus homeowners at $50-100/mo. Granted, that doesn't play into the rent vs. buy equation but it does affect the condo vs. stand-alone, at least a little.

This is true -- I pay about $250/year for my homeowner's insurance, which comes to $20.80 a month.

[golfgal]

Most condo policies are pretty cheep but it depends on how much stuff you have and how the master policy is written. If you are responsible for drywall in, your condo policy is going to run you $50/month or so, if it's "as built" you don't have to cover anything inside the structure other then any improvements you made and your stuff (if you swap out laminate countertops for granite--you now have to cover the granite). Those policies can run $10-20/month.

As far as renting--all those costs are rolled into your rent so it really doesn't make a difference one way or another...