Condo costs

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jefmafnl
Posts: 445
Joined: Sun Mar 25, 2007 7:11 am

Condo costs

Post by jefmafnl » Sat Apr 27, 2019 8:38 am

My wife and I will probably relocate to the U.S. in 2021 after living in Europe for more than 26 years.
We are trying to estimate the monthly costs of owning a condominium. We have thought of

Mortgage payment
Property insurance (including umbrella liability policy)
Property taxes
Monthly maintenance fee
Other maintenance and repairs

What are we forgetting?

Are garbage pickup, water, and sewer service usually included in the monthly maintenance fee, so that the owner only pays gas and electric?

Thanks!

JK

Jack FFR1846
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Re: Condo costs

Post by Jack FFR1846 » Sat Apr 27, 2019 8:42 am

Water, sewer, gas, electric, cable TV/internet, heating oil
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nick evets
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Re: Condo costs

Post by nick evets » Sat Apr 27, 2019 8:48 am

jefmafnl wrote:
Sat Apr 27, 2019 8:38 am
My wife and I will probably relocate to the U.S. in 2021 after living in Europe for more than 26 years.
We are trying to estimate the monthly costs of owning a condominium....
JK
It depends! You've left 'internet' off your list. And maybe there's an additional charge for parking, if it's available.

My wife and I own a condo in the District of Columbia, and only the electrical bill isn't included in the monthly condo fee, which covers water, sewer, trash, heating, internet and -- oddly -- property tax (but perhaps because it's a co-op).

But it will vary: check listings for the area you're interested in.

stan1
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Re: Condo costs

Post by stan1 » Sat Apr 27, 2019 8:50 am

jefmafnl wrote:
Sat Apr 27, 2019 8:38 am


Are garbage pickup, water, and sewer service usually included in the monthly maintenance fee, so that the owner only pays gas and electric?
It depends entirely upon the complex and city. Many condos now have water metered for each unit but older or high rise condos might not have that. In my city sewage fees are calculated based on water usage. Many condo units are individually connected to landline telephone and cable TV services but there may still be a few where the building has a contract and resells to condo owners. In my city residential trash pickup is funded by property taxes but because we live on a private street the condo association pays for pickup.

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ResearchMed
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Re: Condo costs

Post by ResearchMed » Sat Apr 27, 2019 8:55 am

Check the reserve fund balance, and history of major repairs and possible special assessments.
That is, are they budgeting correctly? And do they seem to be doing maintenance properly, vs. lots of higher cost emergency "fixes".

RM
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DonIce
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Re: Condo costs

Post by DonIce » Sat Apr 27, 2019 9:17 am

jefmafnl wrote:
Sat Apr 27, 2019 8:38 am
My wife and I will probably relocate to the U.S. in 2021 after living in Europe for more than 26 years.
We are trying to estimate the monthly costs of owning a condominium. We have thought of

Mortgage payment
Property insurance (including umbrella liability policy)
Property taxes
Monthly maintenance fee
Other maintenance and repairs

What are we forgetting?

Are garbage pickup, water, and sewer service usually included in the monthly maintenance fee, so that the owner only pays gas and electric?
By monthly maintenance fee do you mean the home owners associated (HOA) fee? The HOA fee can be big chunk of money, depending on the city. What's included in it can vary from condo to condo. Some include utilities, others don't. Some include most utilities but exclude electricity. Some include insurance or certain types of insurance. It is not uncommon for HOA fees to be quite high, but cover very little, and for the finances of the HOA to be in disarray and sometimes even subject to blatant corruption. Review the finances of the HOA carefully for any condo you are considering buying.

3feetpete
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Re: Condo costs

Post by 3feetpete » Sat Apr 27, 2019 9:19 am

ResearchMed wrote:
Sat Apr 27, 2019 8:55 am
Check the reserve fund balance, and history of major repairs and possible special assessments.
That is, are they budgeting correctly? And do they seem to be doing maintenance properly, vs. lots of higher cost emergency "fixes".

RM
+1 on checking the reserve fund. My condo association ignored that for years resulting in large special assessments to do things like new roof, new elevator etc.

Dottie57
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Re: Condo costs

Post by Dottie57 » Sat Apr 27, 2019 9:23 am

nick evets wrote:
Sat Apr 27, 2019 8:48 am
jefmafnl wrote:
Sat Apr 27, 2019 8:38 am
My wife and I will probably relocate to the U.S. in 2021 after living in Europe for more than 26 years.
We are trying to estimate the monthly costs of owning a condominium....
JK
It depends! You've left 'internet' off your list. And maybe there's an additional charge for parking, if it's available.

My wife and I own a condo in the District of Columbia, and only the electrical bill isn't included in the monthly condo fee, which covers water, sewer, trash, heating, internet and -- oddly -- property tax (but perhaps because it's a co-op).

But it will vary: check listings for the area you're interested in.
This. I pay for electric, property tax and land line ( yeah I know). Internet, cable and other stuff is in the mgmt fee. The fee is large (almost 400) but includes heating for northern winters, Large fund for things like roofs. But what is included is variable.

Look for a condo association which produces a yearly budget. I get a copy of it every year and can compare to the previous year.

sport
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Re: Condo costs

Post by sport » Sat Apr 27, 2019 10:05 am

There is also an alternative to a condo. We live in a development of cluster homes. They look like condos, but each homeowner owns his own unit and the lot it sits on. The HO association pays for landscaping, snow removal, and trash pickup. Since we are responsible for everything else, our monthly fee is much lower than what you find in a condo. It is less than $200/month. With this arrangement, we get most of the benefit of condo living without the high condo fees.

Stormbringer
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Re: Condo costs

Post by Stormbringer » Sat Apr 27, 2019 10:24 am

ResearchMed wrote:
Sat Apr 27, 2019 8:55 am
Check the reserve fund balance, and history of major repairs and possible special assessments.
That is, are they budgeting correctly? And do they seem to be doing maintenance properly, vs. lots of higher cost emergency "fixes".

RM
This.

Many condo associations have dreadful finances, which eventually show up as increased assessments or declining property values due to deferred maintenance.

Also be wary of new developments, because the developer has an incentive to set the initial fee very low in order to attract buyers. In addition, you want to look for unresolved construction or legal matters. Sometimes there are lawsuits between the homeowner's association and the developer over defects in the property, which can be particularly problematic when the developer loses money or goes bankrupt.
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vested1
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Re: Condo costs

Post by vested1 » Sun Apr 28, 2019 6:56 am

We were shown a 2 bed 2 bath 350k lakefront condo this week that had two HOA's, one for the condo and one for the community, adding up to over 7k for the year. The realtor said, "Don't worry, the $40,000 special assessment for this unit has just been paid by the seller". Utilities, insurance, and property taxes would have to be added to that total.

Kinda steep for the convenience of not having to cut your own grass.

csm
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Re: Condo costs

Post by csm » Sun Apr 28, 2019 8:15 am

sport wrote:
Sat Apr 27, 2019 10:05 am
There is also an alternative to a condo. We live in a development of cluster homes. They look like condos, but each homeowner owns his own unit and the lot it sits on. The HO association pays for landscaping, snow removal, and trash pickup. Since we are responsible for everything else, our monthly fee is much lower than what you find in a condo. It is less than $200/month. With this arrangement, we get most of the benefit of condo living without the high condo fees.
How does one find such a development? Is there a special name or search term, e.g. when looking on Zillow?

retired early&luv it
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Re: Condo costs

Post by retired early&luv it » Sun Apr 28, 2019 8:41 am

Ask for a copy of the condo association annual budget and ask the status of their reserve fund. And ask for the definition of the unit.

The annual budget would tell you what your condo dues cover. If water, garbage disposal, etc., not in the budget then you may have to pay for it. One exception is that sometimes the community will pick up garbage and recycling if left on the curb, that is easy to find out.

Many if not most associations have put together a reserve budget plan that looks at life span of roofs, sidewalks, driveways, building siding, etc. And from that they can assess how much they need to build up in reserve so that when those expenditures occur they can be paid out of the reserve. That is a report that may be hard to obtain because it is typically not handed out to each unit owner, but you could ask the manager what the status is on reserve funding and whether or not major association expenditures will be covered by a reserve or not.

You are buying a "unit" and you are buying a share of the common property. My condo "unit" essentially includes the sheetrock inwards, the carpeting, the windows and doors, the plumbing, electrical system, the HVAC system and the kitchen appliances. Thus, I am responsible for maintaining that. In my case, the association is responsible for the "common property" which essentially includes building foundation, the wood structure, the roof, the siding, etc. If you show a copy of the unit definition to an insurance agent, they can usually tell you what you would need to pay for insurance, in my case my insurance policy is very similar to a renters insurance policy because the association has an insurance policy for the common property.

Condo developers always try to keep monthly dues very low as a selling point. Soon after I bought my unit I learned the hard way that the developer had not created a reserve fund, I was hit with a special assessment almost every year for new roofs, replacing pavement, etc. The complex had been an apartment complex for years, so a lot of the infrastructure was already old and at the end of the life span even though the condo complex was pretty new.

Some condo associations have rules that may be important to you, such as can you rent out your unit or not, can you store your RV in the parking lot or not, pet rules, etc. A copy of the rules should be available too.

Dottie57
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Re: Condo costs

Post by Dottie57 » Sun Apr 28, 2019 8:49 am

retired early&luv it wrote:
Sun Apr 28, 2019 8:41 am
Ask for a copy of the condo association annual budget and ask the status of their reserve fund. And ask for the definition of the unit.

The annual budget would tell you what your condo dues cover. If water, garbage disposal, etc., not in the budget then you may have to pay for it. One exception is that sometimes the community will pick up garbage and recycling if left on the curb, that is easy to find out.

Many if not most associations have put together a reserve budget plan that looks at life span of roofs, sidewalks, driveways, building siding, etc. And from that they can assess how much they need to build up in reserve so that when those expenditures occur they can be paid out of the reserve. That is a report that may be hard to obtain because it is typically not handed out to each unit owner, but you could ask the manager what the status is on reserve funding and whether or not major association expenditures will be covered by a reserve or not.

You are buying a "unit" and you are buying a share of the common property. My condo "unit" essentially includes the sheetrock inwards, the carpeting, the windows and doors, the plumbing, electrical system, the HVAC system and the kitchen appliances. Thus, I am responsible for maintaining that. In my case, the association is responsible for the "common property" which essentially includes building foundation, the wood structure, the roof, the siding, etc. If you show a copy of the unit definition to an insurance agent, they can usually tell you what you would need to pay for insurance, in my case my insurance policy is very similar to a renters insurance policy because the association has an insurance policy for the common property.

Condo developers always try to keep monthly dues very low as a selling point. Soon after I bought my unit I learned the hard way that the developer had not created a reserve fund, I was hit with a special assessment almost every year for new roofs, replacing pavement, etc. The complex had been an apartment complex for years, so a lot of the infrastructure was already old and at the end of the life span even though the condo complex was pretty new.

Some condo associations have rules that may be important to you, such as can you rent out your unit or not, can you store your RV in the parking lot or not, pet rules, etc. A copy of the rules should be available too.
Absolutely spot on info. Every point including dues and reserve. Op needs to learn as much as possible about association, dues etc.

P.S. realize costs like party rooms, swimming pools and exercise rooms all cost A LOT in dues.

sport
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Re: Condo costs

Post by sport » Sun Apr 28, 2019 11:21 am

csm wrote:
Sun Apr 28, 2019 8:15 am
sport wrote:
Sat Apr 27, 2019 10:05 am
There is also an alternative to a condo. We live in a development of cluster homes. They look like condos, but each homeowner owns his own unit and the lot it sits on. The HO association pays for landscaping, snow removal, and trash pickup. Since we are responsible for everything else, our monthly fee is much lower than what you find in a condo. It is less than $200/month. With this arrangement, we get most of the benefit of condo living without the high condo fees.
How does one find such a development? Is there a special name or search term, e.g. when looking on Zillow?
The best search term would be "cluster home". However, our development is often described as "condos" even though that is incorrect. The best way to find such developments is probably to ask an experienced real estate agent in the area.

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RickBoglehead
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Re: Condo costs

Post by RickBoglehead » Sun Apr 28, 2019 11:28 am

retired early&luv it wrote:
Sun Apr 28, 2019 8:41 am
Ask for a copy of the condo association annual budget and ask the status of their reserve fund. And ask for the definition of the unit.

The annual budget would tell you what your condo dues cover. If water, garbage disposal, etc., not in the budget then you may have to pay for it. One exception is that sometimes the community will pick up garbage and recycling if left on the curb, that is easy to find out.

Many if not most associations have put together a reserve budget plan that looks at life span of roofs, sidewalks, driveways, building siding, etc. And from that they can assess how much they need to build up in reserve so that when those expenditures occur they can be paid out of the reserve. That is a report that may be hard to obtain because it is typically not handed out to each unit owner, but you could ask the manager what the status is on reserve funding and whether or not major association expenditures will be covered by a reserve or not.

You are buying a "unit" and you are buying a share of the common property. My condo "unit" essentially includes the sheetrock inwards, the carpeting, the windows and doors, the plumbing, electrical system, the HVAC system and the kitchen appliances. Thus, I am responsible for maintaining that. In my case, the association is responsible for the "common property" which essentially includes building foundation, the wood structure, the roof, the siding, etc. If you show a copy of the unit definition to an insurance agent, they can usually tell you what you would need to pay for insurance, in my case my insurance policy is very similar to a renters insurance policy because the association has an insurance policy for the common property.

Condo developers always try to keep monthly dues very low as a selling point. Soon after I bought my unit I learned the hard way that the developer had not created a reserve fund, I was hit with a special assessment almost every year for new roofs, replacing pavement, etc. The complex had been an apartment complex for years, so a lot of the infrastructure was already old and at the end of the life span even though the condo complex was pretty new.

Some condo associations have rules that may be important to you, such as can you rent out your unit or not, can you store your RV in the parking lot or not, pet rules, etc. A copy of the rules should be available too.
I'd reword that paragraph to say that the association is responsible for the infrastructure, roofs, etc. However, whether or not they actually plan for replacement and budget for it, even if the HOA rules require it, is up to each community.

My neighborhood has an HOA. Developer put in substandard roads that we have to repair/replace. Dues were $500 a year when we moved in. They've been 3 times that for a decade to pay for road replacement, and NO reserve is in place.
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Topic Author
jefmafnl
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Joined: Sun Mar 25, 2007 7:11 am

Re: Condo costs

Post by jefmafnl » Sun Apr 28, 2019 12:01 pm

Thanks to all who replied.

Dottie57, could you please give me an idea of what the annual assessments were?

RickBoglehead, did the HOA fee start at 500 per year or per month?

Everyone, how much should one budget for (indoor) maintenance (plumbing, electric, appliances, etc.), including building up a reserve for major expenses?

I've read that a rule of thumb for houses is 1 to 3 percent of the purchase price.
Since we're talking about condos, not free-standing single family homes, I would guess that one could plan toward the lower end of that range. However, the condos we are considering are quite inexpensive, while labor in that area
is not necessarily inexpensive, so one shouldn't allot too little.

Most of these units were built in the early 1980's. Would the following be a reasonable rule of thumb?

1% of purchase price if renovated in the last 5 years.
1.25% of purchase price if renovated in the last 10 years.
Otherwise 1.5% of purchase price.

Thanks!

J

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