scared of hoa fees (real estate market, oceanfront, homeowners insurance)

[sunny60]

looking into purchasing a condo in jupiter,leaning towards botanica,A little concerned about hoa fees.They are currently 340 a month.How can i find out how finacially stable this community is and how much these fees can increase each year.

[BVG_Steve]

ask the hoa for a copy of the past 2 years financials, if you are not skilled in accounting have a CPA review them for you

[gailmarcarelli]

Remember that the HOA fees for condos most likely include the cost of insuring the building meaning you only need to purchase a condominium unit owner’s policy referred to a HO-6 policy form for the interior walls inward including your personal belongings.

Condo unit owner's insurance rates are typically much lower than rates for homeowners insurance for single family dwellings. This is because the condo association’s master policy usually covers damages to the building itself, including outdoor and common areas and any wind damage that my result from a named storm.

Check the documents to see what the fee covers. Many of the HOA fees include basic cable and some even include internet access. Ask about any special assessments.

[City Guy997S]

If you are tight on finances.......DON'T BUY THERE!

The HOA fees have no limits and depending on the board they can get out of hand quickly. Want to repave the parking lot, re-landscape the entrance, add new fountains........the HOA can put it on the agenda and vote it through then pay for it with your assessments.

I bought an oceanfront villa years ago. HOA fee was $240 a month (not terrible). The builder lost money on the project (while he finished it but ended up finishing the last few units with his own money) meanwhile every homeowner almost doubled their investment as the real estate market exploded. The board decided to sue the builder for construction issues (mostly cosmetic, punchlist type nonsense and the fact the HOA had almost no reserves). The HOA lost, builder showed up with his tax returns and said he actually lost money on the project and that the HOA fee was too low which is why they had tiny reserves. Now in addition to tiny reserves, they wound up with a 100K in legal fees! With 23 units in the complex you can see how this cost everyone a lot of money! Now fast forward a couple years, the HOA still has minimal reserves, HOA fee is up to $620 a month and the roofs were failing (10 years old but builder hired a bad roofing contractor, guy switched the metal roof material for something not made for oceanfront areas, roof rotted). Now the HOA took a loan for the common areas so they could immediately replace the roofs......HOA fee is now even higher but the villas are now 15 years old and property is looking rough......units are now selling for 75% of what they sold for brand new and the HOA fee is the deal breaker for buyers.

The only ones that made any money sold in 2005-07.......everybody else went down with the ship!

[hun]

That's a really interesting point about how they can go up! So even starting low, can end up being much higher... We've just started exploring condos for either a second home or only home, moving from CT after retiring within the next 6 months. We're not at all accustomed to the concept of having to pay HOA fees but realize they're everywhere in FL. It's amazing how much they can add to the yearly cost but it seems there's no way around them.

[BVG_Steve]

in an oceanfront property for hoa fees to be $240 a month should have been a red flag or early warning sign to run not walk away from this project. All one has to do is see that even for 1000 sq foot condos ocean front hoa fees will be $500 plus a month and that is with no amenities in complex. The real reason vales of property dropped is because the hoa is not run properly. had the hoa been run properly and well financed, property values would have held better.

a good run HOA will have budgeted for improvements and repairs 10 plus years in advance, this will be shown on the financials. examples as follows

new roof every 20 years. roof cost $300,000, units = 100 = cost pear year per owner budgeted within current hoa fees = $1500 per year.

if you do not see these type of things on the financials, it means any improvement will need a special assessment


so a good run hoa the fees will not go up out of control, but the contrary.

[City Guy997S]

Originally Posted by BVG_Steve

in an oceanfront property for hoa fees to be $240 a month should have been a red flag or early warning sign to run not walk away from this project. All one has to do is see that even for 1000 sq foot condos ocean front hoa fees will be $500 plus a month and that is with no amenities in complex. The real reason vales of property dropped is because the hoa is not run properly. had the hoa been run properly and well financed, property values would have held better.

a good run HOA will have budgeted for improvements and repairs 10 plus years in advance, this will be shown on the financials. examples as follows

new roof every 20 years. roof cost $300,000, units = 100 = cost pear year per owner budgeted within current hoa fees = $1500 per year.

if you do not see these type of things on the financials, it means any improvement will need a special assessment


so a good run hoa the fees will not go up out of control, but the contrary.

A. Townhouse was in northern FL.....not S. FL
B. The whole zip code is still depressed 20-30% of what it was in the boom (condo, SFR, land etc)
C. HOA was under the belief roof had a 50 year warranty......it did, as long as the roof was over 50 miles from the coastline as that material wasn't up to spec for salty environments......so for a barn roof in Kansas it would be great, oceanfront project ummm no.
D. This story started/happened 10 years ago.

[BVG_Steve]

ahh, okay. around here HOA fees for oceanfront are very high but that is because of the high maintenance. we pay almost $600 for a 1000 SF AC place

[City Guy997S]

Originally Posted by BVG_Steve

ahh, okay. around here HOA fees for oceanfront are very high but that is because of the high maintenance. we pay almost $600 for a 1000 SF AC place

S. Florida oceanfront condos get killed by 3 things:
1. Older building conditions (rotted balconies come to mind)
2. High Insurance in the Tri County area and few options
3. Shore Erosion

[imagardener]

Condo associations are now required by law to have Reserves put aside every year for expenses that exceed $10,000 such as painting, roofing, etc. This is not true for single family homes in an HOA, just condos. However condo owners can get around that requirement by voting not to fund the reserves (every year), it requires a simple majority.

In the past many condo owners never wanted to put extra money aside, thinking at their age they'd never get any use out of that money. This results in large special assessments when repairs are not optional because they are absolutely necessary (failing roofs, balconies falling off). Some owners cannot afford the special assessment (of thousands of dollars) and then they get sued by the HOA to collect or a lien is placed on their property. This is not the kind of place I'd want to live. When a lawyer gets hired by an HOA who pays that expense? Answer: the HOA owners (you, in other words).

If a condo association does not have reasonable reserves put aside (50% of maintenance costs) you are playing high risk poker with your ownership because you know repairs will need to be done, the question is how much will you have to pay and when. Not having Reserves is the sign of a badly run condo association with cheap, greedy owners who want other people to pay, not them.

I don't live in a condo or HOA home anymore. I served on the board and could not stand watching how other board members wasted money on "extras" that benefitted them and their friends but never wanted to put money in Reserves for basic maintenance.