Why do people pay so much in maintenance fees? (Ridge: for sale, real estate) - City-Data Forum

mc33433 · 08-03-2011, 09:56 PM

Sorry if this is a dumb question, but as my husband and I look more seriously at real estate and purchasing a home rather than renting, I am sometimes aghast at the maintenance fees, especially in co-ops. Some are more than the monthly mortgage payment. Does this include all utilities and other things to make it worthwhile? I can understand affording it, but it is the principle of it and what it covers that I am questioning. A $3,000/month mortgage payment looks great until you see that there is also a $3,000 maintenance fee as well.

Can someone educate me?

mathjak107 · 08-04-2011, 02:46 AM

thats because there are 2 mortgages involved in a co-op,the building mortgage and your own mortgage.

if you take 2 similiar buildings,one co-op and one condo and ask how much is it? the condo may be 400k and 300 a month common charges . the co-op may be 250k and 1500 a month maintaince.

the maintaince includes that mortgage ,real estate taxes,insurance,heat and expenses....

as the building side of the mortgage gets paid down over the years your personal side gains more equity.

comparing apples to apples the less the building owes the higher the selling price,the larger your mortgage and the lower the maintaince would be.

the more the building owes on their end the cheaper the purchase price, the smaller your mortgage and the more the maintaince will be.

when you rent out a co-op you own , your depreciation is actually based on what you paid plus the part of the apartments value held in the buildings mortgage. adding up both halves is what your apartment is actually costing you .

of course most buildings take interest only loans so nothing ever seems to get paid down on the building side.

thats why its important to really go over a buildings financials. an adjustable rate mortgage on the buildings side could mean a whopper of an increase in maintaince down the road.

barkomatic · 08-04-2011, 01:05 PM

Some buildings have much higher maintenance charges than others. I recently saw a 1 bedroom Chelsea co-op which later sold for $175,000, which seemed like a steal--until you took into account the $2700 maintenance charge. It turns out that co-op buildings are sometimes built on leased land--this one was. It's amazing what passes for "home ownership" in this city sometimes.

deevel79 · 08-04-2011, 03:29 PM

Quote:

Originally Posted by barkomatic

Some buildings have much higher maintenance charges than others. I recently saw a 1 bedroom Chelsea co-op which later sold for $175,000, which seemed like a steal--until you took into account the $2700 maintenance charge. It turns out that co-op buildings are sometimes built on leased land--this one was. It's amazing what passes for "home ownership" in this city sometimes.

Exactly! Even if you were to fully pay off your condo/co-op, you still have to dish out in upwards of $3k a month in maintenance fees. This is ridiculous. I'm staying put in my $1,000 a month rent controlled 1br apt. To me its just not worth it to buy into anything in NYC. For the money you pay here for a 1br you can buy a palace somewhere else.

LiveLoveLaugh · 08-04-2011, 04:34 PM

My Mom lived in a 1 bedroom co-op in NYC, paid cash and her maintenence was over $1700.00 per month.....imo...it's RIDICULOUS!!!!! Even outside NYC, if you live in a developement you pay association fees that can be the same cost as rent. I don't get it!!!! Buy a vacation home!!!!! SERIOUSLY!

mathjak107 · 08-04-2011, 06:01 PM

ooooh dont get me started on a vacation home ha ha ha.. we just put ours up for sale after 4 years.

we could have stayed at the swankiest place in the area everytime we came up for what that place runs us a year.

its very expensive to maintain when your not there . a guy to cut the grass, a guy to snow plow, the preventative bug man, the guy to clean the debris out of the gutters and leaders 2x a year. the list goes on and on.

our home is in the poconos. the winters can be brutal. wait until the ice takes down power lines and its getting colder and colder in the house and its a race against time getting heat back before the pipes freeze.

all in all it was one of the poorer decisions we made but non the less we still love it.

LiveLoveLaugh · 08-06-2011, 08:08 AM

I totally agree w/ you Mathjak that it is impossible to be in 2 places at 1 time, and it can cause alot of worry and expense. I guess I lucked out though...I was happily living in So Fl and bought a run down farmhouse in the Blue Ridge Mountains as a vacation home and thanks to BOA and them freezing my Home Equity Line I had no choice but to move to the mountains and rent Fl house...best thing that ever happened to me...I'm in HEAVEN!

I am originally from NYC and when I moved to Fl in my 30's I thought Fl was the country compared to NYC...now I am REALLY in the country and I love it!

wawaweewa · 08-07-2011, 08:48 AM

Not to mention that many Co-Op boards use the fees as their own personal slush funds.

I cannot comprehend why people buy into co-ops.

stencil · 08-07-2011, 09:26 AM

Quote:

Originally Posted by wawaweewa

Not to mention that many Co-Op boards use the fees as their own personal slush funds.

I cannot comprehend why people buy into co-ops.

LOL. Many? This has happened in a couple well-publicized cases. Any sources on this?

bluedog2 · 08-07-2011, 12:40 PM

Most co ops do not have high maintenance fees.The city wide average is about $1.00 per sq foot per month.That means that the average maintenance on a 900 sq ft 2 br apt is about 900/mo and usually 30% or 35% of that (300/mo) is tax deductible.

I live in a well run,very nice co op building and the maintenance on my slightly less than 1,000 sq ft apartment is 625/mo and 25% of that 625/mo is tax deductible.

Usually buildings with higher than average maintenances either have a lot of staff(doormen,porters,etc) or a lot of amenities( gyms,swimming pools,gardens,roof top common areas) or both.

It is totally ignorant to make blanket statements like "Co Ops have high maintenance fees " or "many co op boards use fees as their own personal slush funds".The reality is that most co ops are well run and provide a better daily quality of life to their owners than most rental apartments and at less cost per sq foot per month.

People in my neighborhood pay more in rent than I pay in maintenance and mortgage payments combined and I get to deduct most of my costs on top of that. On top of the tax deductions, which drastically lower your effective monthly housing costs,co ops generally appreciate in value over time.Better quality of life,lower housing costs and likelihood of increased value over time,that's why many people choose to buy co ops.