North Natomas HOA fee justification (Sacramento, Davis: apartments, foreclose, renting)

[allamerican02]

Hey everybody,

I am currently renting in downtown Sacramento, but I am really looking for a property in North Natomas right now. That is the best area for me in terms of commuting, and it seems like a desirable place to live.

One thing that struck me, is how many HOAs there are in North Natomas. It seems like everywhere I look, yo have to pay HOAs that are in the 200-300 range.

I am trying to justify paying these HOA fees before I seriously decide to move there. I am looking for a place (house or condo) below 200k without a gym. Some of the complexes have maintenance of the structure, roof, pool, and insurance, water and garbage. Basically everything except electricity.

Are these HOA fees worth it? And maybe a better question would be, if I owned a single family house without the HOA, would I need to pay those amounts anyways, if not more? What are the costs of these expenses individually in Natomas?

Whew. Thanks for any advice. This has been on my mind.

[Malloric]

Sacramento has some pretty outrageously high water/sewer and garbage rates. Seems like Sacramento's utility page is down, but they were north of $100/month several years ago, figure $120 or so a month. If water and garbage are included, that's a big consideration. I suspect most new condos are NOT including water, or at least the condo turned apartments I lived in did not.

MLS is a good place to start. They'll usually say what the HOAs cover, but they're often wrong. You have to look at the CC&Rs and the financials for the HOA. North Natomas is going to be new enough there aren't a whole lot of big repair items yet, but take a look at what kind of emergency reserve the condos have. If it's nothing or very little, expect special assessments every year or two to cover all repairs and infrequent maintenance down the road.

Just in very general terms, the rule of thumb for house maintenance is 1% per year. If you're looking at a $200,000 house, expect about $2000 a year. Older houses may have been poorly maintained and can cost way more than that. Home owners insurance is, again very roughly, .35% per year, renters/condo insurance is much less. Flood insurance is $412 a year. Natomas really should have never had preferred risk rating in which case flood insurance would rise to $1,500 per year.

Maintenance: $166
Homeowners insurance: $60
Flood insurance: $35-$125
Gardener: $80? a month
Garbage: $30-40 month

That's very roughly and not apples to apples either. It also ignores that your water is going to be higher in a house with a yard that you water... but then you also have a yard.

[ryuns]

Agree with that. You really have to determine what a given HOA pays for. As a generalization, you're likely to get a lot less than you put in if you were paying for everything yourself and doing a few things yourself, but doing the math that Malloric suggest might make any fees easier to swallow.

There's also the fact that HOA's have a role in quality control of the neighborhood, which could be a good or a bad things depending on your perspective. I have people who visit my neighborhood and think we must have a HOA because the houses are generally well-kempt. I have a friend in a neighborhood who wishes he had an HOA because of the 10% of homeowners who insist on keeping cyclone fences and rusty window bars, even though it's a safe neighborhood. I also know people who hate the HOA fees they pay because they get nothing from it but a nanny state, and maybe a small park with worse amenities than the city park down the park.

[Aquaboy]

Most newer areas have HOA's. Ive lived in two HOA neighborhoods, and think they are a complete ripoff.
The HOA is owned by the developer, and serves the developer. They can levy fines, or even foreclose on a property even though you've paid your mortgage on time.
They promise upkeep but cant always deliver. It's an illusion, like a magic show.
I say avoid, if possible!

[allamerican02]

Originally Posted by Malloric

Sacramento has some pretty outrageously high water/sewer and garbage rates. Seems like Sacramento's utility page is down, but they were north of $100/month several years ago, figure $120 or so a month. If water and garbage are included, that's a big consideration. I suspect most new condos are NOT including water, or at least the condo turned apartments I lived in did not.

MLS is a good place to start. They'll usually say what the HOAs cover, but they're often wrong. You have to look at the CC&Rs and the financials for the HOA. North Natomas is going to be new enough there aren't a whole lot of big repair items yet, but take a look at what kind of emergency reserve the condos have. If it's nothing or very little, expect special assessments every year or two to cover all repairs and infrequent maintenance down the road.

Just in very general terms, the rule of thumb for house maintenance is 1% per year. If you're looking at a $200,000 house, expect about $2000 a year. Older houses may have been poorly maintained and can cost way more than that. Home owners insurance is, again very roughly, .35% per year, renters/condo insurance is much less. Flood insurance is $412 a year. Natomas really should have never had preferred risk rating in which case flood insurance would rise to $1,500 per year.

Maintenance: $166
Homeowners insurance: $60
Flood insurance: $35-$125
Gardener: $80? a month
Garbage: $30-40 month

That's very roughly and not apples to apples either. It also ignores that your water is going to be higher in a house with a yard that you water... but then you also have a yard.

Thank you Malloric for the extremely helpful post! I really appreciate how you broke the costs down. According to my arithmetic, the HOA fees seem like a bargain, because they are less than what you would probably pay on your own. Here are my calcs:

Condo Purchase Price: 160,000 170,000 180,000
Maintenance: 133.33 141.67 150.00
Homeowners insurance: 46.67 49.58 52.50
Flood insurance: 34.33 34.33 34.33
Gardener & pool: 40.00 40.00 40.00
Water/Sewer/Trash: 120.00 120.00 120.00
Total/month 374.33 385.58 396.83


The condos in Natomas that offer these things have HOAs in the low $300 range, so maybe it is a bargain, because you gain that efficiency with a condominium vs a single family home.

I am surprised that Water/Sewer/Trash costs $120 a month. Is that true? I thought it would be something like $120 every three months.

[Malloric]

Water, sewer, storm drain is over $100 a month, trash (smallest container) is another $30. That's before you actually use any water.

http://www.cityofsacramento.org/gene...Rate-Sheet.pdf

West Sacramento is quite a bit cheaper, but even there you aren't going to get down to $40 a month.

[cb73]

Originally Posted by allamerican02

I am surprised that Water/Sewer/Trash costs $120 a month. Is that true? I thought it would be something like $120 every three months.

I just got both my garbage and water bills today. Garbage (Sacto County) was $167.19 and water (Carmichael Water) was $92.50--and that's the winter rate. Don't get me started on summer water rates.

[allamerican02]

Originally Posted by cb73

I just got both my garbage and water bills today. Garbage (Sacto County) was $167.19 and water (Carmichael Water) was $92.50--and that's the winter rate. Don't get me started on summer water rates.

Are those monthly charges for single-family home?

[ryuns]

Honestly, I was never under the impression that these rates were particularly high. As cb73 points out, the city rates are relatively low compared to surrounding areas. I pay about the same now, in Sac, as I did in Davis a couple years ago for a larger house, and that was before the increases Davis will see to fund piping river water out there. Same with Woodland. But I've never lived anywhere else where I paid all those fees myself, so I'm a bit of a rube.

FYI, I pay about $124/mo for a 3/1 house, with a small trash can, unmetered. I'm not particularly worried about the meter coming in next year, because we don't use a ton of water.

[allamerican02]

Ok, so now I am looking at a condo that is asking for $165,000 with a $313 HOA fee. The fee covers: Common Areas, Garbage Pickup, Insurance on Strctr, Maint Grounds, Rec Facility, Roof, Sewer, Swimming Pool, Water. Not sure about flood insurance yet.

If I break it down, the HOA is cheaper than if I bought those things separately, correct?

Condo Purchase Price:
$165,000.00
Maintenance:
$137.50
Homeowners insurance:
$48.13
Flood insurance:
$34.33
Gardener & pool:
$100.00(?)
Water/Sewer/Trash:
$120.00
Total/month:
$439.96