Why do people want to raise HOA fees? (vent, outside, worth)
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I admire you are serving on your HOA board as it is a volunteer position and requires a lot of work besides just the monthly HOA board meetings. Sometimes you need to have specially called executive board meetings depending on the health of the HOA financials and the projects that need to be tackled. No one, I could imagine, wants to increase their monthly PITI plus HOA dues by adding more cost to the monthly HOA dues. I imagine your objections to the HOA monthly dues increase got heard by the rest of the board, right? Periodically, a condo complex, as it ages, may need to increase monthly dues to keep pace with increasing labor and construction costs. However, what is the reason or reasons the board decided on the increase of the HOA dues? If the board voted on the increase after studying the financials, past maintenance & repair costs, and anticipated future major project costs (i.e. new roofs, siding, etc) how did they determine the amount of the increase? The reason many aging condominium complexes end up having large assessments passed onto each member is because there was insufficient monthly HOA dues collected to maintain a sufficient operating budget for annual repair & maintenance needs...and maintain sufficient reserves to meet special periodic large projects (i.e new roofs, new siding, etc.) One complex in our geographical location (high priced area) recently voted on assessing themselves over $145,000 each to meet what they felt were immediate major project needs! They are only a 36 units complex but that had to be a shock for a number of unit owners! Someone did recommend a forensics architect, with no skin in the game, to give them an appraisal on needed repairs and total costs to see if they could not get that down. Personally, we have had an assessment of $10,000 each (110 units), increased monthly HOA dues substantially in the past 2 to 3 years because they never were properly increased in the past. We have replaced all roofs and are probably half way thru replacing siding and painting afterwards. I for one, want to see the monthly HOA dues come back down somewhat in the near future as I agree it can affect the sale of one's condo. It is probably better for homeowner's in the HOA to vote for a sufficient assessment to meet emergency needs, rather than increase HOA monthly dues higher than prevailing dues for similar aged condominium/townhome complexes in the area. On a different note, there is a condo complex I know of that assessed each individual unit owner $30,000 (over 300 units total) for the primary reason of having property management abscond with the HOA's money! However, in spite of reasons one might not want to be part of a condo complex there are good reasons for it. Less yard work is one and the monthly HOA dues and shared costs can end up being a substantial savings over the cost of maintenance and repair of a single family home. You just need good involved people on your HOA board every year.
OP - I know you’re opposed to a formal reserve study, but it might help you..
They are not particularly expensive. We have an HOA for a community of 25 custom homes. There is no clubhouse or amenities. There is a guard shack & gate, and the HOA also covers some common landscaping (not much) and street lights. And a perimeter fence.
They are not particularly expensive. We have an HOA for a community of 25 custom homes. There is no clubhouse or amenities. There is a guard shack & gate, and the HOA also covers some common landscaping (not much) and street lights. And a perimeter fence.
I think the reserve study was $400.
Ours was more at $2500, but we are a gated townhouse community. Our HOA is responsible for replacing a lot more infrastructure than yours is. But, regardless of price a reserve study is a necessary tool for any Board in order to make financially sound decisions.
For one of my vacation homes, the community is larger -- probably 150-ish single family homes -- and the HOA is $275 per year. <== That's right, $275 per year. As near as we can tell, it pays the back-office function to send out the next year's bill and that's about it.
And also to grade a dirt trail twice/year. In the winter, people x-country ski on it; the rest of the year people jog on it and dogs poop on it.
I actually do not recall ever seeing a reserve study, as there is no capital infrastructure to depreciate for a future replacement -- just operating budget to pay to grade the trail. And the back-office that sends out the bill. Oh, I'll bet it pays for some liability insurance as well.
As to your bolded--exactly. Our PM firm is not cheap, either, but in the end, it is worth the money.
On this note.. a few years back we did an extensive search. It was beyond depressing. First, for a small condo, you just aren't going to get a quality company that will do very much. The price would be prohibitive.
Several good companies wouldn't even respond to our requests because of our size. We looked at small condo companies and they were all poor and ethically challenged. Meaning that they promise the world and then do none of it. A simple look on google found plenty of complaints. In the end we chose a medium company that I want to keep because it has tech facilities which mean that the board doesn't have to wait for the property manager to do it. We don't have the property manager there for meetings -- they don't do the minutes. But I didn't mind that because the last property management company did minutes but they did them inaccurately that wasn't a help either. (and after tons of nagging)
But what really annoyed me what that when I got off the board there was NO continuity by the management company. They view themselves as our employee and they don't run or manage anything. They report. The board decides. So they aren't going to so much as mention anything to the new board without being specifically asked. They pay our bills and they produce financials and tend to maintenance requests but that is just about it. There will be no continuity with them.. or.. they aren't in charge of that. The give advice that will CYA them and that is all.
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the community is larger -- probably 150-ish single family homes -- and the HOA is $275 per year. <== That's right, $275 per year. As near as we can tell, it pays the back-office function to send out the next year's bill and that's about it.
Not sure where you are but snow removal expense is the big one for condos in the north. We pay about 10K per year for snow removal. There can also be expense for ice dams and removing snow off roofs. Knock on wood but this year it looks like we might luck out and get some money saved.
On this note.. a few years back we did an extensive search. It was beyond depressing. First, for a small condo, you just aren't going to get a quality company that will do very much. The price would be prohibitive.
Define small.
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But what really annoyed me what that when I got off the board there was NO continuity by the management company. They view themselves as our employee and they don't run or manage anything. They report. The board decides.
That is how it's supposed to be.
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But I didn't mind that because the last property management company did minutes but they did them inaccurately that wasn't a help either. (and after tons of nagging)
It's not their job. It's the job of a board member, usually the secretary.
A reserve study is imho not appropriate for a small condo. Which this is. Not to mention that I think it might be a flat out waste of money period. We know how much things cost and roughly when they will be required. 20 to 30 years for a roof / 10 - 15 for painting / carpentry. I would much prefer to guess myself than have some over paid home inspector come up with some -- very likely - overdone number.
A reserve study is a guideline essentially of assets and their depreciation. However, they are only as good as your records are. For example, say your condo has a heat pump has an average life expectancy of 15 years. If, for any reason there are major repairs done to it in the interim and they are not properly tracked, that stated life expectancy can't be relied upon as major repair would/could change that stated term.
The board needs to go over them with a fine tooth comb when done and correct the initial report for stated assumptions that are incorrect. Once again, it is an average and maybe your community does not have heavy traffic that will take its' toll on your roads, that for example must be taken into consideration. However, to suggest that a guess is a better approach, also suggests that you have the expertise to make a depreciation schedule across a variety of assets and that knowledge is pretty comprehensive and not something that a broad spectrum of folks would possess.
Not sure where you are but snow removal expense is the big one for condos in the north. We pay about 10K per year for snow removal. There can also be expense for ice dams and removing snow off roofs. Knock on wood but this year it looks like we might luck out and get some money saved.
My Vermont condo at the ski resort gets 200" of snow in the driveway most years. The property management company plows with pickup trucks and then comes back later with a bucket loader to move snow banks. They run a spreader all the time to put down sand so it's not slippery. During mud month, they usually have to spread around several truck loads of gravel every year. Once it all melts and dries out, they grade it all with a bulldozer. It's townhouse condos. They also have a crew to shovel all the walkways, decks, and roof rake sections of roof that have fire egress windows.
Snow removal, lawn, and driveway maintenance is about $1,000 of my $5,000/year condo fee. About $800 of it is capital reserve for a cycle of staining the buildings on a 5 year cycle, replacing the roof on a 15 year cycle, and similar long term upkeep.
I got hit with a $468.78 special assessment recently to replace the swimming pool. I've owned since 1993 and never used it since it's summer-only and I'm never there in the summer. It's how things go in condos.
My condo fees are cheap compared to what would cost me to operate my house hiring somebody to do everything that is bundled into the condo fee. Condos have all kinds of economies of scale that you don't get when you have a single family home. At my condo, I just pay for insurance on the contents and liability for anything inside the unit. My homeowners is $1,000 higher for the same square footage. My condo includes HD cable and two HD set-top boxes. That's $800/year ($69.99/month) for the same service at my house. My condo includes water. My condo mows the grass. My condo inspects my unit weekly. My condo replaces the smoke & CO detectors, swaps batteries, and keeps my fire extinguishers up to date. My condo provides all the firewood I can burn. My condo sweeps the chimney and shovels out the ash trap in the basement. My condo provides all the exterior lighting on the property. My condo provides a dumpster for trash removal.
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