Condo unit listing price vs. HOA fee (sales, foreclosures)

[blisteringherb]

My realtor mentioned something interesting today, that I should be be wary of buying a $100k condo with $400 condo fees. I definitely understand that I should strive to live in a place where condo fees are as low as possible, but there's also a level at which they're too low for the community to have an appropriate reserve fund and to maintain the building properly. In theory the price to maintain the building would seem to be somewhat independent of the price of the condo, although nicer condos might be in nicer buildings with more expensive finishes/systems/amenities.

That being said, if you've shopped for condos, at what level did an HOA fee make you take a property off of your list? How much did that correspond with the price of the unit? e.g. a $500/mo HOA fee on a $100k unit is too much, but a $500/mo HOA fee on a $300k unit is fine. Also how much did you take the prevailing HOA fees for the area into account? If the condo you're looking at is priced far below most of the others in the area, would you compare the HOA fees of the cheaper unit to the fees for more expensive and more common units for the area (assuming amenities were similar)?

[SandyJet]

depends what are included in fee. If condos in my complex cost $50,000 or $500,0000 the cost to maintain common areas and pay insurance would be the same.

Generally it costs around 400 to 500 bucks a month mortgage on 100K. So if maint is 200 bucks higher I would want it 50K cheaper

[bUU]

Something to keep in mind around here... there are townhouse communities that have HOA fees that are not condominiums. If you want a condominium, be sure it is a condominium. Ask the association (not the buyer - and don't even trust the realtor to know for sure) whether the roof is the association's responsibility; ... whether the siding is the association's responsibility; etc.

[SandyJet]

Originally Posted by bUU

Something to keep in mind around here... there are townhouse communities that have HOA fees that are not condominiums. If you want a condominium, be sure it is a condominium. Ask the association (not the buyer - and don't even trust the realtor to know for sure) whether the roof is the association's responsibility; ... whether the siding is the association's responsibility; etc.

A true condo fees are a few hundred a month, a town house HOA community fee is a few hundred a year.

Ask for offering plan

[bUU]

Originally Posted by SandyJet

A true condo fees are a few hundred a month, a town house HOA community fee is a few hundred a year.

And everything in between. HOAs that include landscaping, and perhaps a pool or gated entry could run up to a few hundred a month.

Making assumptions based on dollar amounts is just asking for trouble. Like you said, ask for something definitive.

[SandyJet]

Originally Posted by bUU

And everything in between. HOAs that include landscaping, and perhaps a pool or gated entry could run up to a few hundred a month.

Making assumptions based on dollar amounts is just asking for trouble. Like you said, ask for something definitive.

It is the insurance, managing agent and legal fees plus possible loans in a condo that are a real killer. Actual maint of the grounds is peanuts.

My complex is a condo we have flood insurance, property insurance, liability insurance, thefts and omissions insurance and Directors and Officers Insurance. Plus we have a Condo lawyer on retainer and a CPA as well as a Managing Agent we have to pay. Now add in coverage for arrears. Finally, add in some condos like mine has a loan outstanding for capital improvements.

My maint it $500 a month on my unit. The actual cost to "maint" unit, common areas, landscaping, common area electric, water, heat etc is around $150 a month. The other $350 goes to the "invisible" things.

[midtown mile girl]

Some HOAs include utilities and salaries for doormen, etc.

[cully]

Yes, as Buu mentioned, what you don't mention is the condo fee for your condo. Perhaps you are including the HOA fee to upkeep the amenities...pool, gym, tennis courts, clubhouse, open grassy spaces, preserved woods, whatever you ALL have use rights to in common.

Condominium is a form of ownership, not a style of architecture. Condominium means everything from the outside wall on out within the boundaries of the condo complex property (which is another thing if the condo is in an HOA) is taken care of in some way and that can be an apt style, a townhouse, even a single family detached house.

The condo complex can include it's own small pool or small tennis court and it's own dedicated parking lot in what is often call within an HOA complex, the limited common elements. That is, they are common to all owners in that condo complex but not common to all HOA owners.

So you need to find out what is covered in a condo's condo fee. And also if they are in a HOA and what that HOA fee is.

Then you need to look at the financials on both and decide how well they are managed, how much money is in reserves for emergencies and for future repairs as well as how well they are supporting themselves on a month to month basis. How many rentals, how many foreclosures, how many units not paying monthly fees, etc.

You can look at a reserve study they may have done or just use a little common sense with things like how old is the roof and how soon will it likely need replacing; how bad is the siding; how pocked is the parking lot surface, etc.

[SandyJet]

BTW very few condos have a formal reserve study. And if they do they are for the Treasurer, Managing Agent or CPA and for budget planning purposes.

Also a good Lawyer will advise you to never circulate it. It is a Legal Issue.

For instance, our managing agent as well as a few of use did an informal reserve study a few weeks ago.

We found the steps leading to a utility room are cracked, a tree needs trimming, a sidewalk is cracked, the rails need painting, blacktop needs to be fixed in spots and re-tarred and someone should re-grout all the pavers at ground level so someone does not trip. We are getting some estimates to fix these things and plan on getting to them all in next 24 months.

Meanwhile my lawyer freak out if I distributed this info. Someone trips on cracked sidewalk or paver, someone's falls cause a rail is loose, a branch falls on someone. It is the same as giving the Lawyer about to sue you all the evidence he needs.

Plus Major Improvements, like Roofs, windows and pointing are on a set schedule.

Also bad looking condos are not always condos with poor financials. Two condos near me have very very low maint. They also have very very few sales of condos. It has a ton of old folks who just dont care about little things. They only do landscaping, painting, etc when they absolutely have to.

Or it could be how the offering plan was set up. One condo near me has plenty of cash, but is run down. They set it up so owners are responsible for their own Decks, Windows, HVAC, Water Heaters, Exterior doors, painting of exterior doors and windows. Condo basically, responsible for roof, gutters, grass and parking lot. Maint is low, they have plenty of cash in reserves, but building looks run down. They have a lot of old folk on fixed income, they are happy with their green astroturf carpeting on their deck and their cheap 1970s allumin windows and dated screen doors.

A good condo that is in really good shape, has a great board, is well run and have owners who treat their units with great pride and no foreclosures and arrears are rare. One way to tell is how frequently units sell. The really good one near me every unit is an estate sale. People only leave that place feet first.

Also condos and coops are like cars, they get to a certain age and boom things start to go. Windows, Roofs, Doors, Heating Systems pretty much when you get to 30 years of age everything goes at once. My realtor likes to say there are only two types of condos.

1) Condos that had an Assessment
2) Condos about to have an Assessment.


I would argue their is a third category, like my building. Condos with hardly any common areas or amenities and owners are responsible for stuff like windows, doors, HVAC, Decks etc which can chug along forever. Owners get lured in as cost is lower and maint is lower till they realize the new HVAC is 8K, and new windows are like 8K, and every few years you have to paint exterior decks, windows and doors. It is more of a house than a condo as you are doing home improvements. Heck I was out on my deck last summer, painting it, sanding it and then painting front door. Kind of annoying and the older folks in building cant do it themselves anymore and dont want to pay for it so it gets run down. One guy who just bought in building painted his whole deck and rails and then did his next door neighbors paint. He was like I can either look at it for next ten years till 80 year old women dies or goes to a home or paint it. Or be a real prick and start a beef with association to get the old lady fined.