Buying a Condo? …. Check HOA Fees
When purchasing a Condo as opposed to a free standing home, note that there are HOA fees… Homeowners Association Fees. These are monthly fees paid by the owner of the condo unit which will be in addition to your mortgage (PITI … principal, interest, taxes, insurance).
However, the monthly fee is paid to the Homeowners Association or Condo Management Company. It usually covers inside and outside maintenance for the building(s) and grounds (landscaping, snow removal) and electric and heat for the common areas of the building (hallways). Some will also cover water and heat. So before you sign on the dotted line, know what it covers, because what it doesn’t is yours to pay.
Usually, there will be an Annual Homeowners Meeting where the Management gets together with the unit owners and gives them a rundown of the past year costs and the outlook for the costs for the coming year…. it is also where they will let you know if there will be an adjustment of the cost of your HOA fees. Note: They never go down, so expect to pay a little more each year.
This is why it is imperative to realize that when you purchase your condo, the fees will go up and so keep this in mind to adjust your budget accordingly.
There should be a considerable amount of money set aside for larger emergency items (roof, parking lot paving etc), in a bank account for this purpose, but if there isn’t, there will be an assessment charge to each condo unit owner to pay for the needed expense….it will be split evenly or by the square footage of each unit. This cost can be several thousand, depending upon what is needed and its’ cost.
HOA fees for a condo takes the place of inside and outside maintenance costs for a free standing home. The difference between the two is that if you own a free standing home and want to save money, you will do the landscaping and snow removal yourself, as well as if your home needs a new roof or a new paint job. That will, of course, fall completely on you.
So, no matter whether you buy a condo or a home, there is upkeep and cost associated with it.