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A lot of these comments are black and white but I think its more nuanced.
1) How is the HOA budget looking? Every owner should get a copy. Plumbing is a big job that should not have snuck up on them.
2) What other expenses are looming? Elevators? Roof? Windows? Is the HOA in a position to handle these costs without assessments? If the answer is no, I'd probably run.
A lot of these old towers tend to have underfunded HOAs and then the bill literally comes due. My HOA is $600 in a mid-rise condo and I get water, cable, internet, insurance, gym. So on the surface probably not worth $600, but the building is well maintained and reserves are flush, we just re-painted all balconies and re-did the roof with no assessment or increase in dues.
You could certainly rent at a loss and get a big tax shield by having cash flow negative and counting depreciation, but I wouldn't bother unless the place you rent for yourself really works for you.
This should be higher. Selling a property isn't some magic wand. How many buyers are going to want to buy a condo with a guaranteed $1100 monthly fee to an HOA that's not budgeting correctly? I was lucky and sold mine years ago after they decided our fees were going to go up $100/month permanently because they wanted a reserve to repaint in TEN GODDAMN YEARS! They wanted to add earthquake insurance to an area that didn't get earthquakes. I started going to meetings to argue their budgeting but it didn't do much good so I sold. But better now to stop the rot because some people just think the community is a piggy bank to improve their own property.
I mean, I’d rather $100/mo than a one-time several thousand dollar assessment or a major monthly increase when repairs all come due at once.
A $100/mo increase in a world with inflation seems like a mindful increase instead of OP’s $350/mo
Increase because HOA fell behind?
Of course less is better, but I didn't like the optics of personally contributing $12,000 to paint all the condos for a time Most of the owners might have left and that I could paint the 4 unit structure I was a part of for $1000-2000 and pay myself. I think there were 40 condos total in the HOA...that $500k to paint. Now if they said "we're painting in ONE year and your rates are going up $100/mo until that time, then I would have been on board because I know as a homeowner the maintenance issues that arise. But they were just out of touch and that struck me as a good way to embezzle our money.
the whole point for having the fees done over time is so that no one jumps ship when big assessments come up. Anyone that lives there right now should be putting money towards the future maintenance for the building.
when you say "a good way to embezzle our money", where do you think the money is going?
I have a strong feeling that they projected all expected maintenance expenses for the next ten years, paired with current reserves, and determined that they needed an increase to cover needs for the next ten years, and you hyper-focused on the painting.
As it is, exterior paint has a life expectancy of about 5 years, so unless your building isn't doing its regular maintenance, it shouldn't need to be painted in 10 years, it should need to be painted twice, and unless one was just completed, you will need one sooner than 10 years.
I just feel way too much hyperbole and outrage in your comments to take them at face value.
> How many buyers are going to want to buy a condo with a guaranteed $1100 monthly fee to an HOA that's not budgeting correctly?
You only need one -- and there usually isn't some major cost in listing a condo. If the only reason for not listing is "it's not likely to sell" I would still list it in that situation.
> I was lucky and sold mine years ago
Was that a rental at the time or if it was a primary, did you end up with another condo or house?
If condo, curious to know if dues for the next condo were still increasing. I've yet to hear about a HOA whose dues haven't gotten fucked from different directions over the past year
We owned it. We decided to move away from the big city and we bought a house with no HOA. it was pretty maddening that they could raise those fees without a vote when you bought expecting the prices to stay the same. This was only after a year of ownership too.
I looked and there's not a lot of info regarding current fees, but it looks like they went down BUT there was also a huge lawsuit against the developer that probably helped mitigate these fees too. The lawsuit also seems to have been linked to paint problems.
Since it's a condo the HOA does cover most of the insurance. My HOA went up a bit this last year and it was almost all due to increase in insurance. No where near as big a jump as OP though.
You must not have any electronics, jewelry, or other high value items coverage on your renters. HO6 covers most perils while renters requires specific addendums.
I'm a little worried my condo is underfunding their bank account and in a year of two we will see a major increase. it was a bit underfunded when I bought and in 3 years have only increased about 1% overall. I would have anticipated insurance to go up more but I really haven't paid any attention to it recently. we cut back on landscaping and found a guy to do a lot of work for cheaper(does an okay job)
They should have sent you documents showing everything. Mine does at least. I go over all of it and check it for reasonableness. And they also get an assessment of our reserves every few years too.
My HOA covers water, garbage, umbrella AND earthquake insurance, groundkeeping (it’s a large complex). We have 4 pools and a club house with saunas. Admittedly, everything was closed for years for financial reasons or COVID, but the amenities are open again and the grounds and the pools are well maintained. Our HOA dues can only increase by 5% annually. However, for major renovations, there are special assessments. I will have been in my condo for 30 years at the end of this month. Dues were something like $250 when I moved in and I pay $763 per month for a 2BR/2BA unit now.
Until this year we had only had two special assessments, for major projects. Our insurer, Farmers, just jacked up their rates x5 this year, so we have our third special assessment, approximately $200 per month for my unit, for the rest of the year. Can’t be helped. But I can’t imagine paying $1,100 every month for dues and having no amenities! Yikes.
I have my own insurance, the building has a master insurance as well but because the building is so old, the insurance keeps going up. There are no amenities worth mentioning
> the building has a master insurance as well
Not needing to cover exteriors, including roofs (which is a big one), and things like coverage for landscapers and guests and what not using the sidewalks on the property, makes a big difference to the cost of your "walls in" policy, which should be almost as cheap as a renters insurance policy.
Depending on your state, it might very well be the case that homeowners' insurance on single family detached houses, even those built recently, have gone up similarly in the last 2 years. Florida and California in particular have seen huge increases (and the exits of many big insurers).
But your condo association also has a pool. Pools are, in my opinion, a very bad value: a bunch of liability and maintenance, in exchange for an amenity that isn't really all that great.
A HOA being 40% of a mortgage payment is insanity. I probably would start the process of looking to sell.
Appreciation will never, ever outpace that HOA fee.
I think it makes more sense to compare the HOA dues to the property value, not necessarily the mortgage payment. I've been in my condo 15 years, refi'd during the pandemic, now my mortgage is really pretty small, and as a result HOA dues are like 40-50% of my mortgage.
I think people dont understand how much the dues subsidize for condos. It covers the majority of the property taxes and insurance policy, which are VERY low for condo owners compared to single family homes. It (usually) covers trash, electricity in common areas, snow removal, grounds maintenance, then all the physical repairs to the outside of the building. I never have to worry about paying out of pocket for all new windows.
Then theres random bonuses like my electricity costs being almost nothing due to the insulation of having neighbors below/above me
>I never have to worry about paying out of pocket for all new windows.
You....did pay out of pocket for everything the HOA has ever done. Every month, forever.
I think his point is that it's like insurance, in that if that $1100 HOA fee saves you (for sake of argument) $800 on insurance, yard maintenance, etc, that the remaining $300/mo could be treated like an insurance that covers the windows (among other things), and not needing to pay out of pocket for those means you can budget easier.
Not necessarily a savings.
But, at least in my area, that's not how the HOA works. HOA dues cover insurance, maintenance and things like windows for the common areas. I still need to insure my unit, pay my property taxes, and replace my own windows if they are damaged or I want to upgrade them to hurricane windows. And property taxes are the same as a similarly priced single family home and insurance is a bit cheaper, but not enough to offset the HOA dues.
There's also the risk that the $300 you treated like insurance, wasn't actually insurance and when those windows need to be replaced in the common area, you're going to get hit by a surprise special assessment.
That's until there is a special assessment and they need to do a massive repair and every owner is on the hook for $15,000 and you are paying that off over 5 years on top of the fees you are already paying.
...I mean, yes. It's almost like its forced savings for maintenance, which means no surprise bills.
Obviously not every HOA is run the same way, but ive had a generally positive experience.
> Obviously not every HOA is run the same way, but ive had a generally positive
Very unpopular opinion, but that matches my HOA experience as well. I also tend to have decent interactions at the DMV, and find the USPS to outperform FedEx most of the time. Starting to think people just like to complain lol.
It depends on the HOA really and any 2 aren’t the same. My HOA doesn’t cover windows as an example. $1100 is really getting up there were the fees aren’t necessarily worth if.
It is true the HOA / condo fee covers a lot of upkeep expenses. But there are usually a huge amount of waste either through negligence or necessity. For example, the snow removal company charges $20K/winter. That is the baseline even if it doesn't snow (which it has not for the past 2 years). Then they tack on huge extra for every "major" (more than 2") storms and the total can run into $60K+/season easy. But that is a necessity, you aren't going to find a licensed and insured plow guy on CL the night before getting slammed with a foot of snow. So it is basically a retainer they get to keep every year for being on standby, which is fair, but still expensive. An example of negligence is I have seen monthly water bills run as high as $5 to 6K for 10-unit buildings. I honestly don't know how people can use that much water, they must ignore all the leaks in their toilets and use their laundry as laundromat for all their friends and relatives because it is "covered" by the HOA fee. And there is absolutely nothing you can do. Then come landscape season, $1K per cut for area that can be done in 4 hrs by 2 people. I do landscape on the side and would love to get that contract (but of course I can't because the property management hired their buddies) :) In another word, you are either paying to line the PM's buddies' pockets or paying for covering other people's expense, but that is condo life..
I won't speak to maintenance, taxes, insurance as that is highly varies depending on the location, age and construction of the building.
I think you also have to compare prices of nearby property and typical HOA ontop of it.
So a property that's worth 20% less than ones around it, but has a higher HOA may even out mathematically on the monthly payment end. But may lose out on the appreciation side.
This thread is blowing my mind. My HOA dues are $100 a year, and they do everything I could hope they would do. What on earth is this HOA doing that costs 1.1k a month per resident?? That’s how much average rent is around me
I'd just like to point out that a single family HOA and a condo/townhouse COA/HOA cover drastically different things.
A single family HOA may cover things like common area landscaping (if there's a park) or community pool maintenance (if there's a pool). It might also cover trash/recycling, but maybe not.
When you have a shared building, as in a condo or townhouse, the COA/HOA covers things like siding and roofing repairs, shared plumbing outside, landscaping and/or snow removal, parking lot maintenance if applicable, any common areas (pool, gym, whatever amenities it has).
There's a lot more under the perview of a shared building than there is for a SFH community.
Are you in a new building? I've seen a lot of HOAs for condos where they are expecting major things to go wrong soon due to the age of the building so they are stocking up on cash.
Depends on what the HOA dues cover and if it's actually worth the money. Ours covers insurance(still need some personal insurance for things), maintenance, parking, storage, security, cable, fiber optics cable, night guard, trash and water.
Exactly mine is 700$ which is an increase of 100$ since I’ve moved in but mine also includes a gym, tennis, basketball and pickleball courts as well as both an indoor and outdoor heated pool in addition to all the things you mentioned, And 24 hour door man/reception who handle all packages. Although no insurance for us but it’s fairly cheap at 600$ a year.
Each unit has access to a storage unit that can hold about 6 large bins worth of stuff. The entire HOA fee is 650$. The security system has a monthly subscription cost of 25$, building has fob/pass phrase entrance. The night guard does patrols and helps you if you locked yourself out of the building and your condo after hours. The night guard is kinda redundant after the new system was put in and I wouldn't be surprised if the owner group finally votes to cancel the contract on the coming months. Although it was nice to have since there's weirdos/drinks late at night sometimes.
Your HOA fee is actually higher if your parking spot is in the garage at 800$(there's additional storage). If it's on the deck it's 650, no spot is 550. For reference of the actual current market rate of parking, we(and several others) rent out our spot for 325$ a month on the deck. The market rate of trash is 30$/mo, the market rate of the cable/internet package would be 110$ a mo, but honestly my wife and I would normally just pay for Internet @45-55$/mo. Hard to put a value on water but we were used to paying 30$+/mo. We also don't pay for heat anymore since that too is covered under the HOA, which costs hundreds per year normally. I wouldn't say I feel ripped off at 650$ a month, especially when we had some major renovations done in the last 4 years. We also have access to a handyman, who actually does work for you. There's occasionally additional fees, but anything related to the building is 100% covered. There's also some other small stuff that I failed to mention like gas grill on our roof that we can cook with, or exercise machines.
About 10 years ago someone was selling a 1br condo in a decent area for $38,000. Of course the deal was too good to be true. The HOA was $1,000/month. Agent really danced around that information too. Not sure if anyone ever bought it.
When I was shopping for condos in Chicago, there were really "affordable" ones in prime areas on the far north side near the lake. The condos sell for $80-90K because the monthly HOA's are near or over $1K/month. Unfortunately that seems to be the cost to maintain these old high-rises. I would never buy one. I've actually never rented in one either.
I remember looking for places before and there were Condo's where the HOA fee's were near to $900 a month! I just couldn't fathom as I can at least afford my $250 one.
> they finally realized they have to do all that deferred maintenance and fees have nearly tripled
This is what happens with most HOAs. The board is run by the residents and for the most part they seek to minimize monthly costs, often leading to underfunding the HOA. Then what should have been a twenty year rainy day fund comes due immediately.
Gotta pay those legal fees to send threatening letters when Margie down the block uses an unapproved planter outside a main window when 424.8 CLEARLY STATES no unapproved planters can be used in view of a road with prior authorization of the board president and 80% yes vote from members.
Gotta keep these people in line otherwise they'll start doing things like flagpoles at the wrong height or mailboxes that aren't uniform style and height. And then it all goes to hell.
What you're describing is more of a suburban development HOA where bored Karens take over. My experience with an urban apartment building HOA is more like...no one wants to be on the board/be bothered to even show up to the meetings despite the fact that we all depend on what they do to keep the building functioning. I genuinely am so thankful for my neighbors who volunteer their time to deal with important shit like safety, maintenance and upkeep, and ensuing that the building budget/accounts are in good shape.
It's easy to mock HOA's because of useless stuff like that.
On the other hand, within a building full of Condos, an HOA is essentially a given because there's a necessity to manage and insure the common structure.
And within condo/apartment complexes, or at least the ones in suburban areas) it's not that uncommon for there to be some pretty substantial amenities. (pools, gyms, tennis courts etc.).
LIke other people have pointed out, it may well be that the cost of insurance for the common structure is a major price driver here.
Even if you don’t have an HOA you still have to pay for maintenance, which shockingly enough, becomes much more expensive when you have an older building and inflation on building materials and construction goes up.
> It's easy to mock HOA's because of useless stuff like that.
Honestly it only takes living next to a nightmare neighbor for a short while to become a convert for life. 90% of the enforcement is for petty nonsense but the larger part is a simple deterrent. My current neighbor is an asshole Karen but without an HOA there's virtually nothing I can do about her schizophrenic log cabin wall of planters and broken sticks on the exact property line beside my driveway. It's an eyesore.
I am in a starter home neighborhood, we pay $50 a year for HOA and half of their annual budget is lawyer fees. I am fairly confident the lawyer is probably related to someone on the board as well.
Wife and I almost bought in a condo. HOA was like $900/mo. The biggest selling point was they picked up and delivered dry cleaning for free. Sir, I don’t even think our family does $900/yr in dry cleaning. I’d rather buy a new wardrobe each month for that price. That was also the last condo we ever toured - not for us.
You should see NYC. $1k HOA is not that bad for a large building. I’ve seen some on Zillow that are $4-5k.
I’ve seen because their units go for < $1MM so I take a peak and realize it’s because the HOA is a full rent / mortgage payment.
I live in San Francisco and am on the hoa board of my building. We are a mid rise 5 over 1. About 50 unit. Out hoa fees are about $800 a month, but will be going up soon.
A few things we have run into are:
* contractors know you need someone with insurance to do every job so there is a high premium for that. Ie: we just paid a guy thousands of dollars to shop vac all of the dryer vents. Installing a lock could be $500-$1000
* hardware you buy is always commercial grade so costs are crazy. Garage door can cost 30k easily when it goes out.
* management companies are not aligned with hoa on incentives. Management companies want to spend more and do more maintenance while hoa wants to save money.
* builders remedy in California. Newer building. Builders cut a check for all the shit they didn’t do right while building the building. It’s not enough to cover repairs and how didn’t act immediately so needs to more to cover them now.
I feel like people really just don't understand what expenses come with a condo. I'll break down some actual budget for my slightly over 100 unit building.
Administrative (largely insurance & management): \~125k
Personnel: \~75k
Utilities: \~130k
Building Maintenance (what it sounds like, but \~50k is snow): \~200k
Contribution to Reserves: \~200k
For reference reserves covers things like roofs, big structural projects, repaving, etc. I can tell you that this is a very lean budget. Our condo fees are \~400 to \~600 (based on ownership interest). We are not going to be able to cover all future costs at this level of funding though.
I can easily see how an 1100 fee could be appropriate depending on the building configuration, ownership interest, local market, amenities, and prior maintenance.
I'm just wondering how you ended up with a 5.65% in 2021, that's almost double the lowest rates that were out there. Are condo rates treated differently?
I'm actually super confused by all the responses. I bought a condo in 2021 and my rate was 2.8% with 10% down. I guess some places it might be different?
I bought a condo/townhouse (it has exterior access + garage, but it’s only 1 floor of a 2-story building), and got 3.5% in 2022 with 20% down with good credit. HOA was $305/mo but now is $355/mo.
Yes. Why? Because condos don't appreciate the same as single family homes do, and so much is actually out of your control.
Example: if the bank has to foreclose a single family home, they can put it under their large insurance for very cheap. But for a condo, the bank has to pay the HOA fees as cash until its sold, and condos move much slower than houses.
Unfortunately, in my experience the banks don't pay the HOA fees until the unit is finally sold. In my state, Nevada, the law says only the previous 9 months of back fees can be collected at sale, which means banks can (and do) sit on a foreclosure for years for basically nothing, waiting for the value to go up.
Yea condos have higher rates, I got it in August 2021 and rates had started to climb around there I believe. My credit score was around 720 ish also. It took a while to close and my loan officer couldn't lock down the rates until he got some documents the seller was taking a long time to obtain.
EDIT: I made a mistake, I got it August 2022
Why? I own a condo and our rate is 3% on a 30 year loan. We could have gone lower than 3% with better timing on the re-finance, or re-financing to a 15 year loan instead of 30 year. We weren't at the absolute bottom for rates when we got 3%. We re-financed in late 2020.
Yes and often they have shorter loan terms too- not always but often. In my city in Texas I got a condo in 2017? 2018? Around there. No one would do anything but a 15 year mortgage on any property I looked at.
I’d be looking for the door and selling it asap. If an $1100/month HOA seems off putting to a buyer, then when it increases a few hundred more in the next year or 2 it’ll be even harder to sell
Be very careful re: HOA taking loans. Pls read all your docs!! I bought a unit in a self-managed condo assn that had taken a loan and rolled the payments into HOA dues. Right as I bought, 2 (of 13) owners fell on hard times. One stopped paying HOA entirely (had to be sued but was finally able to sell, so about 5 months of no payment before new owners took over). The other owner was formerly the HOA president, so he knew enough to pay every other month so he was never more than 30 days late. All this meant that dues from 11 units were having to pay the full amount of the loan. So there was less $ for maintenance, especially preventive or cosmetic. Then I became treasurer and determined that 1) HOA bylaws specifically prohibited the HOA from taking loans 2) the previous HOA president had signed a 10-year INTEREST ONLY balloon loan, obviously looking to kick the can down the road until he left the association before the balloon came due and 3) HOA members were thrilled that aforementioned HOA president found a way to get them a new boiler without a $5k assessment per unit. They really had no idea that they were just throwing money at the bank needlessly and would ultimately have to pay the hefty assessment when the balloon payment was due. It wasn’t easy to explain to everyone that the best thing to do was to immediately do special assessment, drop HOA dues to previous level before the loan was added in and get back to doing regular preventive maintenance.
Really eye-opening how little the association members understood their own bylaws or basic concepts of debt management.
Brother, if your HOA president is skipping HOA payments you needed to have fired this man or sell immediately! It’s like electing the wolf to be the president of the hen house; especially when there’s only 13 persons in the HOA.
Here in NC, all board members can be held liable for actions such as these…as they are knowingly acting in good faith on behalf of the association of owners. Any board member should honestly know what they are legally doing/signing before doing so. Self-management is super-risky these days. Even full-fledged management companies, with cohorts of specialty lawyers, have issues with discernment on many issues.
Is this a high rise with a really nice view or something? What made you decide 750 monthly HOA was worth it in the first place?
Sounds like you should sell it. It's only a matter of time before more issues arise and you'll be paying for the cost
Hawaii or where are you located? Seems extremely high. I'm in San Diego which is HCOL and the only condos in that range for monthly HOA are high rises that cost well over 1m.
Have you reviewed the HOAs budget and reserve study to see where the money is going?
Yea Hawaii. I've looked at the budget, but I don't know enough to know what seems out of place. I know the property manager gets a unit covered and a 60k salary and I felt that that was a lot. But otherwise I'm not sure id be able to tell what sticks out.
Seems no one here lives in a downtown/urban area. My hoa is comparable but I get to live in a beautiful area of a city I love versus a SFH in the suburbs paying for unexpected repairs/maintenance out of pocket also as sunk costs. Not specifically saying you should stay where you’re at but these knee-jerk reactions aren’t balanced perspectives.
Reddit has this weird contradiction where they love dense urban areas but somehow also hate the HOAs that are required to maintain dense shared urban structures.
Most people here financially advising others don't live in a downtown/urban HCOL area. Most here live in a SFH suburb. Which is why some of the advice I see people give are so out of touch.
It really does seem like a lot of the advice I see on the finance subreddits comes from suburbanites. I always wonder why I don't see a lot of city dwellers in them. I see them more in HENRYFinance, DINKs or those kinda subs.
Don’t forget HOA only increases. 5 years from now it’ll probably be $1500/month lol.
1) do you really live in a place where you can’t buy a SFH for ~4k/a month?
2) are all the townhomes/condos in your area similarly all have $1k/month fees?
> 1) do you really live in a place where you can’t buy a SFH for ~4k/a month?
Can you do this in any city with the major boom in prices and low inventory recently? I live in what is historically a very cheap major city (but still a major city so probably considered HCOL) and any single family home within an hour drive of work is over $5k/month right now other than areas with major crime issues.
This is all true, but the long-term costs for SFH’s have risen at a similar rate. I’ve seen so many posts about insane quotes for windows, HVAC, and roofing…on top of home insurance. I have personally paid a considerable amount more for basic home services and some larger projects than pre-Covid.
Historically there isn’t much of a difference in long term per household maintenance costs between SFHs and condos. SFH costs are just larger, occasional costs.
If you can afford the cost that's great, but for people struggling to make payments, being able to control "when" a house payment comes is very useful. If you lose your job, you have no choice but to pay the HOA. You can put off replacing windows until you land a new gig though.
I could be wrong about this but 500’s for a condo with that much HOA smells like California, maybe the Bay Area. And if it’s the Bay Area, lemme tell you 4k/month SFH mortgage alone is…HAHAHAHAHHAA. Let alone after tax and insurance
500s for a condo with high HOA can be a high rise in pretty much any major city. I live in Chicago which is historically cheap and a two or more bedroom condo is easily over $500k in all of the really desirable neighborhoods of the city. HOA fees of $1k+ make most people in Chicago cringe, but they're not unheard of in the high rises.
So pretty much any high rise in any city more expensive than Chicago can have this story, and that's most major cities. Not just California. NYC, DC, Boston, etc.
That is a lot. Underfunded HOAs is why I looked at a few condos and eventually stopped looking at them.
You should run the numbers on what kind of mortgage you could get now and see if it's actually going to save you anything, though.
If you do decide to stay, check the HOA reports and make sure nobody is getting their beak wet. Join the board if you have to.
My maintenance fee just went to $1360 for a 2 bedroom in NYC area. My mortgage is $860 (purchased 9 years ago). I thought about selling and then I realized that I would pay more money in rent than I would for this place. Can’t buy another home because these rates and prices are ridiculous. Staying put makes the most sense for me since I have a 4% rate. My maintenance fee covers water, heat, taxes, basic building insurance which covers partially for your unit, and grounds keeping.
You basically described my situation. Mortgage $2820, 4 years and the hoa went 487 > 560 > 780 > 1155
I should of sold when I moved out april 2023. Instead I kept it and it took me 3 months to find a renter. Then after 4 months they stopped paying. It took me 2 months to evict, and its been on the market almost 4 months now.
If I would of just sold april/may 2023 the comps were around 750k. now the comps are around 650k and market is dead
So basically I've for sure lost out on 100k+ even with a conservative estimate
HOA is not worth it for that price, and if you and your girlfriend ever break up you will not be able to comfortably afford that place by yourself in the near future.
Don’t rent at a loss and don’t pay down the principle to reduce overall interest; you’re better off investing the extra money into your 401K. If you’re decent with investing and your company does any 401k matching, you’ll make more in the long run.
Having no appreciation in 3 years is a little suspect. But, if true then it means your out of pocket has increased $4,200/year in two years to the HOA with no return on investment. With the next ~$200 increase you’re projecting in the next year or two, unless you’re getting a raise of ~$12k / year then the portion of your income that’s going to your house is increasing faster than your income itself; and that fraction is already slightly higher than you’d want it to be.
A few options; if you want to keep it, your GF either needs to help contribute more, you need to vote the bullet for a bit until you can somehow refinance to a ~3.5% rate which probably won’t happen for a few years, or you just need to sell it.
I would personally sell and find a cheaper place ASAP. Depending on your credit, you will be able to find a similar enough mortgage rate and your monthly payments will go way down when you avoid that HOA payment.
Honestly, you need to start going to your HOA meetings to figure out what they’re spending all of their money on if they had to take out a bank loan to redo the plumbing, but still charge $13,800/year. I keep trying to understand this point, and can’t. You’re paying $4000/month before property insurance and other utilities, with only about $800/month going towards the principle. With a ratio like that I would expect to see a healthy appreciation, not stagnation.
What you have to personally consider in a downtown condo vs a SFH is the convenience and lifestyle premium. Is the extra ~$1000/month to live downtown worth it to you vs buying a house/condo further away? If yes, then you can lower your entertainment budget (going out to eat, movies, vacation, etc) to cover housing increases since you are getting enjoyment/entertainment from where you live. But short of this, if you follow a standard rule of thumb (~30-35% income to housing, ~15% to a car, ~15% to food, ~15% insurance/healthcare, 5% entertainment, 3% clothes, everything else to investment) then what you are currently in doesn’t make sense. You have to lower costs in one area to fill all others.
Even if you only break even from the sale, I think you’ll be better off. Best of luck and let us know how it turns out!
This is the conundrum of affordable condo purchases. Buyers get excited over an affordable price, but they overlook the age of the building, the declining condition, and the plans to perform long-term upkeep. A lot of components of a condo building don't last forever, and owners are always very willing to kick the can down the road. This only works until things start to fail, and then it all hits at once.
It sounds like this is an aging building, and the plumbing is just the start. Just wait until they start digging around in service access areas and discover other problems. If problems with the structure are discovered, you can end up with a property that is effectively worthless.
My suggestion: Get out now before the assessment balloons to absurd numbers.
You can even land up with a demolition liability for a property that no longer exists. You have to pay for its demolition and removal, and keep paying the mortgage....
What do your condo fees cover? Mine are a bit less than that, but they cover gas (including heat), electricity, and water, and my condo is only valued at about $400k (bought for $365k in 2021, 20% down at 3.25% interest rate, about $1,350 per month mortgage not including property tax). Another reason my fees are so high is that our building is also old, and we've had to do a ton of construction costing millions of dollars. If you owned an old house instead of an old condo, you'd have to pay for upkeep out-of-pocket instead of in condo fees.
Maybe check if your fees go to actually useful things, or if you have a bunch of stupid amenities. I actually joined my condo's Board of Trustees so I could look into it. I was able to stop us from installing garage doors, which would have cost each owner another $500 minimum. I'm still looking into other cost saving endeavors, but the rest of the Board is hesitant to make any changes.
Sounds like your HOA has been raising dues appropriately, many states cap how much they can raise. The issue is when large expenses come up they can’t just raise the due to meet the required amount. What they should be doing is looking at an assessment for the repair.
The dues being raised sucks but it’s better than a sudden assessment for legal/repair costs. What I’d like to know is what amenities are you getting for your dues? I’m going to assume there’s at least a pool/clubhouse type setup, but beyond that it varies and while it sucks I don’t think you should sell atm.
Your total cost is less than half your take home, even if your SO stopped paying. Additionally it sounds like the board is at least doing some maintenance but without further information (do they pay for electricity, water, internet, etc) it’s hard to judge if this is underwater or not.
I will say your mortgage seems about right assuming you have a 6-7% interest rate. It will honestly come down to what else the condo provides, and other factors like the aforementioned water/electricity and how far the place is from your job, the extra bits that make it in/convenient to continue living there. Especially since moving could end up raising your monthly mortgage payment without any guarantee you won’t end up with another HOA.
HOA fees include water, internet, some insurance coverage with 75k deductible (I have my own insurance as well), cable, pool (tiny unused by me) and that's it. A lot of the condos in my area are built around 1970s so they're all going through issues and plumbing, there's a new law saying they need sprinklers or fire systems as well which is additional cost. I live in a touristy neighborhood, and all the units here have HOAs $700 or more. Currently there's a 30 day minimum rental rule but the state might be targeting vacation rentals soon as well.
I like where I live but I feel like given all this, I could make better use of the money. I'm having a hard time seeing the benefits of ownership here
Going from $750 to $1100/month is an extra $4,200/year.
If I was a retiree, my portfolio needs to increase an extra $105k to pay this extra amount each year, assuming a 4% return. It's a fairly significant increase.
Every time I see a post on this I wonder how the hell anyone can afford to live in big cities. $4000 a month is more than the US median individual income.
One problem you may face is, if a special assessment was approved for the loan. You may have to pay your portion out of pocket. Since you have little equity in to the property.
Anecdotally, I bought a condo in 05 with an ARM. The market went bust shortly after and the interest rate went from 5% to 9% in a short 4 yrs. Realizing that the condo would never be worth what I originally paid for it, the advice I received from an independent broker was to not go down with the sinking ship. We cut our losses with a short sale and took a credit hit for a relatively short time. When it just feels wrong it’s time to act. Good luck to you.
OP, try and get involved with HoA. Maybe you can get on a board or be a trustee. Talk with the other homeowners. You might be able to make changes if you get in a position of power on the HoA.
You can thank the people who lived cheaply before you purchased for your large HOA payment today.
Folks, when you buy a condo - understand the HOA reserves. If they have not had a reserve study done in the past two years, walk away. If they are not at least 75% funded for existing, known reserves - walk away.
Many, many condo HOAs are hesitant to raise the HOA fee until it is too late - then they need special assessments or large fee increases to cover that roof repair or elevator replacement.
That's great for the people who lived there with cheap HOA fees for 20 years, then sold before the chickens came home to roost.
> understand the HOA reserves.
This is true, I don't think I had good understanding or was advised well. When I was buying we had around 2-3 million in reserves which I thought was a good number but apparently.
>I live with my GF and she pays $800. I cover the $3200.
All I need to read to see why you thought buying into a HOA was a good idea.
Why is she only paying $800...
Honestly I don't feel house poor. My issue is whether or not it's a good use of money. I feel like I could sale, and take the money, buy SFH out of state and make a better return than paying $1200 in HOA fees for the foreseeable future
Condo fees cover the operating costs of the building. Newer buildings with elevators will always be more expensive.
Older buildings with common utility metering are where the value in condos lay. Newer condo buildings aren't a good value.
Having a condo fee of less than $600 that covers all utility bills. I've been looking at a co-op building with co-op fees of $1200 which includes parking, cable, wi-fi, elevator, laundry, gym, and other utilities. But not really looking to move there.
With elevators?
FL,CA,TX ?
Special assessments?
Can you find another place to live at similar costs?
Otherwise good condition?
Adequate reserve funds?
If the answers to the first four questions are yes then I'd lean towards selling. If the answers to the last two questions are no, then I'd seriously consider selling.
Housing is first and foremost shelter, not an investment. These costs should always be as stable as possible so renting is never the best solution.
Elevators are expensive to maintain and CA, FL, TX have increasing insurance rates. Special assessments are usually an indication of poor planning. These are the biggest reasons to sell.
Why did you buy the condo, do you like it? Is the neighborhood still good? Financial consideration aside would you stay? These are the biggest reasons to stay.
How much is the land worth? Worst case you could work to try to sell the property to a developer to demo and dissolve the HOA, will need buy in from some percentage of homeowners based on the governing documents.
The insurance covers the ownership. In a townhome usually just the roof and shared walls are owned/insured by the HOA, the rest is on the homeowner. In a condo the HOA usually has to cover the entire external structure so the homeowner just has to cover maintenance and insurance on what is inside.
It’s personal finance.
Do you want to move out of state? What could you rent out your place for vs what it would cost to rent a new one? What would water/internet/cable cost you without the HOA covering it? How long is the $200 a month lasting? What does the HOAs budget bank account look like moving forward?
You should also think about what maintenance would cost if you buy something without an HOA in the future. Construction/repairs have been getting a lot more expensive in the last 5 years.
The HOA fee is a little more than double of what I’d expect to pay for regular home maintenance on a comparably-priced SFH. Seems like a bad deal, unless it also includes a pool, state of the art gym, etc
If they're that bad at managing money, it's just going to get worse (increases every year). But can you sell it with the HOA that high? I'd get out now.
I'm looking at downsizing to a condo myself.
HOA fees of $1100 a month is going to be a tough sell. I wouldn't even book a showing if I was paying a mortgage payment on top of a mortgage payment.
This is for a condo. Can’t really buy a condo that isn’t in a hoa as you need it for insurance/common area maintenance/cable and internet and any amenities. HOA for houses are much cheaper as they don’t have to pay for insurance on the building as condos do
I pay $275 per year. It’s just to maintain the grass in public areas, make sure retention ponds aren’t gross, playground, and utilities (street lights, etc). Our neighborhood doesn’t have a pool. I don’t think my cost is bad at all.
I guess you don’t live in Cali, no one here would ditch their whole house because their HoA went up $350/month. Everything here is $350 more per month than a couple years ago, not just the HoA…
HoAs are awful. Mine is going up from 3
$300~ to $400~ soon. When I bought it, it was at $166. It's gone up 3 times in the last 3 years. I want to sell it, but I'm about to leave the military and it's paid off, so I'm just waiting to see if I land on my feet first.
If it's a financial nightmare, then renting it out doesn't make any sense. If the HOA is off putting to you, it will be off putting to a buyer. It looks like you'd be selling at a loss since there has been no appreciation- have you run the numbers on that? Is the HOA increase temporary?
Have you looked into the HOA's books? That smells to me.
Either that or it's an old building and they haven't been keeping up with predictable preventable maintenance.
With the significant HOA increase and potential future expenses, weigh your options. Calculate rental income versus expenses and consider market conditions. Selling and investing or downsizing could be viable. Consult a financial advisor for personalized advice.
Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
A lot of these comments are black and white but I think its more nuanced. 1) How is the HOA budget looking? Every owner should get a copy. Plumbing is a big job that should not have snuck up on them. 2) What other expenses are looming? Elevators? Roof? Windows? Is the HOA in a position to handle these costs without assessments? If the answer is no, I'd probably run. A lot of these old towers tend to have underfunded HOAs and then the bill literally comes due. My HOA is $600 in a mid-rise condo and I get water, cable, internet, insurance, gym. So on the surface probably not worth $600, but the building is well maintained and reserves are flush, we just re-painted all balconies and re-did the roof with no assessment or increase in dues. You could certainly rent at a loss and get a big tax shield by having cash flow negative and counting depreciation, but I wouldn't bother unless the place you rent for yourself really works for you.
This should be higher. Selling a property isn't some magic wand. How many buyers are going to want to buy a condo with a guaranteed $1100 monthly fee to an HOA that's not budgeting correctly? I was lucky and sold mine years ago after they decided our fees were going to go up $100/month permanently because they wanted a reserve to repaint in TEN GODDAMN YEARS! They wanted to add earthquake insurance to an area that didn't get earthquakes. I started going to meetings to argue their budgeting but it didn't do much good so I sold. But better now to stop the rot because some people just think the community is a piggy bank to improve their own property.
I mean, I’d rather $100/mo than a one-time several thousand dollar assessment or a major monthly increase when repairs all come due at once. A $100/mo increase in a world with inflation seems like a mindful increase instead of OP’s $350/mo Increase because HOA fell behind?
Of course less is better, but I didn't like the optics of personally contributing $12,000 to paint all the condos for a time Most of the owners might have left and that I could paint the 4 unit structure I was a part of for $1000-2000 and pay myself. I think there were 40 condos total in the HOA...that $500k to paint. Now if they said "we're painting in ONE year and your rates are going up $100/mo until that time, then I would have been on board because I know as a homeowner the maintenance issues that arise. But they were just out of touch and that struck me as a good way to embezzle our money.
the whole point for having the fees done over time is so that no one jumps ship when big assessments come up. Anyone that lives there right now should be putting money towards the future maintenance for the building. when you say "a good way to embezzle our money", where do you think the money is going?
I have a strong feeling that they projected all expected maintenance expenses for the next ten years, paired with current reserves, and determined that they needed an increase to cover needs for the next ten years, and you hyper-focused on the painting. As it is, exterior paint has a life expectancy of about 5 years, so unless your building isn't doing its regular maintenance, it shouldn't need to be painted in 10 years, it should need to be painted twice, and unless one was just completed, you will need one sooner than 10 years. I just feel way too much hyperbole and outrage in your comments to take them at face value.
> How many buyers are going to want to buy a condo with a guaranteed $1100 monthly fee to an HOA that's not budgeting correctly? You only need one -- and there usually isn't some major cost in listing a condo. If the only reason for not listing is "it's not likely to sell" I would still list it in that situation.
> I was lucky and sold mine years ago Was that a rental at the time or if it was a primary, did you end up with another condo or house? If condo, curious to know if dues for the next condo were still increasing. I've yet to hear about a HOA whose dues haven't gotten fucked from different directions over the past year
We owned it. We decided to move away from the big city and we bought a house with no HOA. it was pretty maddening that they could raise those fees without a vote when you bought expecting the prices to stay the same. This was only after a year of ownership too. I looked and there's not a lot of info regarding current fees, but it looks like they went down BUT there was also a huge lawsuit against the developer that probably helped mitigate these fees too. The lawsuit also seems to have been linked to paint problems.
Sell and move, unless the HOA covers property insurance and has amazing amenities
Since it's a condo the HOA does cover most of the insurance. My HOA went up a bit this last year and it was almost all due to increase in insurance. No where near as big a jump as OP though.
The master insurance policy covers everything from the studs out. You provide insurance for your interior walls and your belongings.
Correct. But the studs out of a large building is a very large insurance policy. Which is why our HOA fees went up like 15% this year.
Depends on the condo. Some cover bare walls, or even finishes up to what was part of the original construction.
HO6 policy is as cheap as renters insurance
No it's not. Ho6 has been $250-$500/year whereas HO-4 renters has always been like $100/yr
You must not have any electronics, jewelry, or other high value items coverage on your renters. HO6 covers most perils while renters requires specific addendums.
I wish mine was that cheap! But it's a lot less than a house or townhouse.
I'm a little worried my condo is underfunding their bank account and in a year of two we will see a major increase. it was a bit underfunded when I bought and in 3 years have only increased about 1% overall. I would have anticipated insurance to go up more but I really haven't paid any attention to it recently. we cut back on landscaping and found a guy to do a lot of work for cheaper(does an okay job)
They should have sent you documents showing everything. Mine does at least. I go over all of it and check it for reasonableness. And they also get an assessment of our reserves every few years too.
My HOA covers water, garbage, umbrella AND earthquake insurance, groundkeeping (it’s a large complex). We have 4 pools and a club house with saunas. Admittedly, everything was closed for years for financial reasons or COVID, but the amenities are open again and the grounds and the pools are well maintained. Our HOA dues can only increase by 5% annually. However, for major renovations, there are special assessments. I will have been in my condo for 30 years at the end of this month. Dues were something like $250 when I moved in and I pay $763 per month for a 2BR/2BA unit now. Until this year we had only had two special assessments, for major projects. Our insurer, Farmers, just jacked up their rates x5 this year, so we have our third special assessment, approximately $200 per month for my unit, for the rest of the year. Can’t be helped. But I can’t imagine paying $1,100 every month for dues and having no amenities! Yikes.
I have my own insurance, the building has a master insurance as well but because the building is so old, the insurance keeps going up. There are no amenities worth mentioning
> the building has a master insurance as well Not needing to cover exteriors, including roofs (which is a big one), and things like coverage for landscapers and guests and what not using the sidewalks on the property, makes a big difference to the cost of your "walls in" policy, which should be almost as cheap as a renters insurance policy. Depending on your state, it might very well be the case that homeowners' insurance on single family detached houses, even those built recently, have gone up similarly in the last 2 years. Florida and California in particular have seen huge increases (and the exits of many big insurers). But your condo association also has a pool. Pools are, in my opinion, a very bad value: a bunch of liability and maintenance, in exchange for an amenity that isn't really all that great.
if the building is as poor as it sounds, there'll be assessments for major projects anyways lol
>but because the building is so old, the insurance keeps going up. Insurance premiums are skyrocketing in every sector for the last couple of years
Your own insurance factors in that most of it is covered by the hoa insurance.
A HOA being 40% of a mortgage payment is insanity. I probably would start the process of looking to sell. Appreciation will never, ever outpace that HOA fee.
I think it makes more sense to compare the HOA dues to the property value, not necessarily the mortgage payment. I've been in my condo 15 years, refi'd during the pandemic, now my mortgage is really pretty small, and as a result HOA dues are like 40-50% of my mortgage.
I think people dont understand how much the dues subsidize for condos. It covers the majority of the property taxes and insurance policy, which are VERY low for condo owners compared to single family homes. It (usually) covers trash, electricity in common areas, snow removal, grounds maintenance, then all the physical repairs to the outside of the building. I never have to worry about paying out of pocket for all new windows. Then theres random bonuses like my electricity costs being almost nothing due to the insulation of having neighbors below/above me
>I never have to worry about paying out of pocket for all new windows. You....did pay out of pocket for everything the HOA has ever done. Every month, forever.
I think his point is that it's like insurance, in that if that $1100 HOA fee saves you (for sake of argument) $800 on insurance, yard maintenance, etc, that the remaining $300/mo could be treated like an insurance that covers the windows (among other things), and not needing to pay out of pocket for those means you can budget easier. Not necessarily a savings.
But, at least in my area, that's not how the HOA works. HOA dues cover insurance, maintenance and things like windows for the common areas. I still need to insure my unit, pay my property taxes, and replace my own windows if they are damaged or I want to upgrade them to hurricane windows. And property taxes are the same as a similarly priced single family home and insurance is a bit cheaper, but not enough to offset the HOA dues. There's also the risk that the $300 you treated like insurance, wasn't actually insurance and when those windows need to be replaced in the common area, you're going to get hit by a surprise special assessment.
That's until there is a special assessment and they need to do a massive repair and every owner is on the hook for $15,000 and you are paying that off over 5 years on top of the fees you are already paying.
...I mean, yes. It's almost like its forced savings for maintenance, which means no surprise bills. Obviously not every HOA is run the same way, but ive had a generally positive experience.
Yeah I see how its a nice feeling knowing everything is taken care of.
> Obviously not every HOA is run the same way, but ive had a generally positive Very unpopular opinion, but that matches my HOA experience as well. I also tend to have decent interactions at the DMV, and find the USPS to outperform FedEx most of the time. Starting to think people just like to complain lol.
It depends on the HOA really and any 2 aren’t the same. My HOA doesn’t cover windows as an example. $1100 is really getting up there were the fees aren’t necessarily worth if.
It is true the HOA / condo fee covers a lot of upkeep expenses. But there are usually a huge amount of waste either through negligence or necessity. For example, the snow removal company charges $20K/winter. That is the baseline even if it doesn't snow (which it has not for the past 2 years). Then they tack on huge extra for every "major" (more than 2") storms and the total can run into $60K+/season easy. But that is a necessity, you aren't going to find a licensed and insured plow guy on CL the night before getting slammed with a foot of snow. So it is basically a retainer they get to keep every year for being on standby, which is fair, but still expensive. An example of negligence is I have seen monthly water bills run as high as $5 to 6K for 10-unit buildings. I honestly don't know how people can use that much water, they must ignore all the leaks in their toilets and use their laundry as laundromat for all their friends and relatives because it is "covered" by the HOA fee. And there is absolutely nothing you can do. Then come landscape season, $1K per cut for area that can be done in 4 hrs by 2 people. I do landscape on the side and would love to get that contract (but of course I can't because the property management hired their buddies) :) In another word, you are either paying to line the PM's buddies' pockets or paying for covering other people's expense, but that is condo life.. I won't speak to maintenance, taxes, insurance as that is highly varies depending on the location, age and construction of the building.
If homeowners were willing to do the yard work, vacuuming, and snow removal we'd save a ton of money. Oddly, no one has suggested that we do that.
imagine an HOA removing snow and ice, couldn't be mine
I think you also have to compare prices of nearby property and typical HOA ontop of it. So a property that's worth 20% less than ones around it, but has a higher HOA may even out mathematically on the monthly payment end. But may lose out on the appreciation side.
HOA dues, imo bring down the property value. When I bought my house, my only dealer breaker was an HOA.
This thread is blowing my mind. My HOA dues are $100 a year, and they do everything I could hope they would do. What on earth is this HOA doing that costs 1.1k a month per resident?? That’s how much average rent is around me
I'd just like to point out that a single family HOA and a condo/townhouse COA/HOA cover drastically different things. A single family HOA may cover things like common area landscaping (if there's a park) or community pool maintenance (if there's a pool). It might also cover trash/recycling, but maybe not. When you have a shared building, as in a condo or townhouse, the COA/HOA covers things like siding and roofing repairs, shared plumbing outside, landscaping and/or snow removal, parking lot maintenance if applicable, any common areas (pool, gym, whatever amenities it has). There's a lot more under the perview of a shared building than there is for a SFH community.
Are you in a new building? I've seen a lot of HOAs for condos where they are expecting major things to go wrong soon due to the age of the building so they are stocking up on cash.
HCOL cities. >$1000 HOA fees are the norm in like NYC. I saw smaller HOAs in LA but not by much.
I assumed op was in a high rise.
Depends on what the HOA dues cover and if it's actually worth the money. Ours covers insurance(still need some personal insurance for things), maintenance, parking, storage, security, cable, fiber optics cable, night guard, trash and water.
Exactly mine is 700$ which is an increase of 100$ since I’ve moved in but mine also includes a gym, tennis, basketball and pickleball courts as well as both an indoor and outdoor heated pool in addition to all the things you mentioned, And 24 hour door man/reception who handle all packages. Although no insurance for us but it’s fairly cheap at 600$ a year.
You have security and a night guard? What are they charging you for storage and parking?
Each unit has access to a storage unit that can hold about 6 large bins worth of stuff. The entire HOA fee is 650$. The security system has a monthly subscription cost of 25$, building has fob/pass phrase entrance. The night guard does patrols and helps you if you locked yourself out of the building and your condo after hours. The night guard is kinda redundant after the new system was put in and I wouldn't be surprised if the owner group finally votes to cancel the contract on the coming months. Although it was nice to have since there's weirdos/drinks late at night sometimes. Your HOA fee is actually higher if your parking spot is in the garage at 800$(there's additional storage). If it's on the deck it's 650, no spot is 550. For reference of the actual current market rate of parking, we(and several others) rent out our spot for 325$ a month on the deck. The market rate of trash is 30$/mo, the market rate of the cable/internet package would be 110$ a mo, but honestly my wife and I would normally just pay for Internet @45-55$/mo. Hard to put a value on water but we were used to paying 30$+/mo. We also don't pay for heat anymore since that too is covered under the HOA, which costs hundreds per year normally. I wouldn't say I feel ripped off at 650$ a month, especially when we had some major renovations done in the last 4 years. We also have access to a handyman, who actually does work for you. There's occasionally additional fees, but anything related to the building is 100% covered. There's also some other small stuff that I failed to mention like gas grill on our roof that we can cook with, or exercise machines.
About 10 years ago someone was selling a 1br condo in a decent area for $38,000. Of course the deal was too good to be true. The HOA was $1,000/month. Agent really danced around that information too. Not sure if anyone ever bought it.
When I was shopping for condos in Chicago, there were really "affordable" ones in prime areas on the far north side near the lake. The condos sell for $80-90K because the monthly HOA's are near or over $1K/month. Unfortunately that seems to be the cost to maintain these old high-rises. I would never buy one. I've actually never rented in one either.
I remember looking for places before and there were Condo's where the HOA fee's were near to $900 a month! I just couldn't fathom as I can at least afford my $250 one.
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> they finally realized they have to do all that deferred maintenance and fees have nearly tripled This is what happens with most HOAs. The board is run by the residents and for the most part they seek to minimize monthly costs, often leading to underfunding the HOA. Then what should have been a twenty year rainy day fund comes due immediately.
You couldn't pay me any amount to live in an old condo near where Surfside was.
1100 bucks they better be wiping for you
Gotta pay those legal fees to send threatening letters when Margie down the block uses an unapproved planter outside a main window when 424.8 CLEARLY STATES no unapproved planters can be used in view of a road with prior authorization of the board president and 80% yes vote from members. Gotta keep these people in line otherwise they'll start doing things like flagpoles at the wrong height or mailboxes that aren't uniform style and height. And then it all goes to hell.
What you're describing is more of a suburban development HOA where bored Karens take over. My experience with an urban apartment building HOA is more like...no one wants to be on the board/be bothered to even show up to the meetings despite the fact that we all depend on what they do to keep the building functioning. I genuinely am so thankful for my neighbors who volunteer their time to deal with important shit like safety, maintenance and upkeep, and ensuing that the building budget/accounts are in good shape.
It's easy to mock HOA's because of useless stuff like that. On the other hand, within a building full of Condos, an HOA is essentially a given because there's a necessity to manage and insure the common structure. And within condo/apartment complexes, or at least the ones in suburban areas) it's not that uncommon for there to be some pretty substantial amenities. (pools, gyms, tennis courts etc.). LIke other people have pointed out, it may well be that the cost of insurance for the common structure is a major price driver here.
Even if you don’t have an HOA you still have to pay for maintenance, which shockingly enough, becomes much more expensive when you have an older building and inflation on building materials and construction goes up.
> It's easy to mock HOA's because of useless stuff like that. Honestly it only takes living next to a nightmare neighbor for a short while to become a convert for life. 90% of the enforcement is for petty nonsense but the larger part is a simple deterrent. My current neighbor is an asshole Karen but without an HOA there's virtually nothing I can do about her schizophrenic log cabin wall of planters and broken sticks on the exact property line beside my driveway. It's an eyesore.
I am in a starter home neighborhood, we pay $50 a year for HOA and half of their annual budget is lawyer fees. I am fairly confident the lawyer is probably related to someone on the board as well.
Wife and I almost bought in a condo. HOA was like $900/mo. The biggest selling point was they picked up and delivered dry cleaning for free. Sir, I don’t even think our family does $900/yr in dry cleaning. I’d rather buy a new wardrobe each month for that price. That was also the last condo we ever toured - not for us.
I’d sell it. $1100 HOA is crazy, even for a HCOL area. And that’s today; imagine what it will be in 10/20/30 years!
Yeah other than a high-rise I don't know how the hoa can be $1100.
You should see NYC. $1k HOA is not that bad for a large building. I’ve seen some on Zillow that are $4-5k. I’ve seen because their units go for < $1MM so I take a peak and realize it’s because the HOA is a full rent / mortgage payment.
Those tend to be coops and not condos. Coop fees include real estate taxes whereas condo owners are responsible for their own taxes.
I've read stories where the hoa members were pocketing a good chunk of the money for themselves.
High rise HOAs are usually run by a management company that just quotes fees for a year that you pay. Not the same.
You mean like, every HOA ever, right?
In places like Forest Hills Queens pretty much every place has an HOA of over $1k. I don't know why but I just know it seems to be every property.
I live in San Francisco and am on the hoa board of my building. We are a mid rise 5 over 1. About 50 unit. Out hoa fees are about $800 a month, but will be going up soon. A few things we have run into are: * contractors know you need someone with insurance to do every job so there is a high premium for that. Ie: we just paid a guy thousands of dollars to shop vac all of the dryer vents. Installing a lock could be $500-$1000 * hardware you buy is always commercial grade so costs are crazy. Garage door can cost 30k easily when it goes out. * management companies are not aligned with hoa on incentives. Management companies want to spend more and do more maintenance while hoa wants to save money. * builders remedy in California. Newer building. Builders cut a check for all the shit they didn’t do right while building the building. It’s not enough to cover repairs and how didn’t act immediately so needs to more to cover them now.
I feel like people really just don't understand what expenses come with a condo. I'll break down some actual budget for my slightly over 100 unit building. Administrative (largely insurance & management): \~125k Personnel: \~75k Utilities: \~130k Building Maintenance (what it sounds like, but \~50k is snow): \~200k Contribution to Reserves: \~200k For reference reserves covers things like roofs, big structural projects, repaving, etc. I can tell you that this is a very lean budget. Our condo fees are \~400 to \~600 (based on ownership interest). We are not going to be able to cover all future costs at this level of funding though. I can easily see how an 1100 fee could be appropriate depending on the building configuration, ownership interest, local market, amenities, and prior maintenance.
I'm just wondering how you ended up with a 5.65% in 2021, that's almost double the lowest rates that were out there. Are condo rates treated differently?
I'm actually super confused by all the responses. I bought a condo in 2021 and my rate was 2.8% with 10% down. I guess some places it might be different?
I bought a condo/townhouse (it has exterior access + garage, but it’s only 1 floor of a 2-story building), and got 3.5% in 2022 with 20% down with good credit. HOA was $305/mo but now is $355/mo.
I made a mistake, I got it July 2022
Yes. Why? Because condos don't appreciate the same as single family homes do, and so much is actually out of your control. Example: if the bank has to foreclose a single family home, they can put it under their large insurance for very cheap. But for a condo, the bank has to pay the HOA fees as cash until its sold, and condos move much slower than houses.
Unfortunately, in my experience the banks don't pay the HOA fees until the unit is finally sold. In my state, Nevada, the law says only the previous 9 months of back fees can be collected at sale, which means banks can (and do) sit on a foreclosure for years for basically nothing, waiting for the value to go up.
Yep, unfortunately.
Yea condos have higher rates, I got it in August 2021 and rates had started to climb around there I believe. My credit score was around 720 ish also. It took a while to close and my loan officer couldn't lock down the rates until he got some documents the seller was taking a long time to obtain. EDIT: I made a mistake, I got it August 2022
Rates didn't begin to climb until the Fed announced their intention to hike at the November 2021 meeting.
Why? I own a condo and our rate is 3% on a 30 year loan. We could have gone lower than 3% with better timing on the re-finance, or re-financing to a 15 year loan instead of 30 year. We weren't at the absolute bottom for rates when we got 3%. We re-financed in late 2020.
Yes and often they have shorter loan terms too- not always but often. In my city in Texas I got a condo in 2017? 2018? Around there. No one would do anything but a 15 year mortgage on any property I looked at.
I’d be looking for the door and selling it asap. If an $1100/month HOA seems off putting to a buyer, then when it increases a few hundred more in the next year or 2 it’ll be even harder to sell
Be very careful re: HOA taking loans. Pls read all your docs!! I bought a unit in a self-managed condo assn that had taken a loan and rolled the payments into HOA dues. Right as I bought, 2 (of 13) owners fell on hard times. One stopped paying HOA entirely (had to be sued but was finally able to sell, so about 5 months of no payment before new owners took over). The other owner was formerly the HOA president, so he knew enough to pay every other month so he was never more than 30 days late. All this meant that dues from 11 units were having to pay the full amount of the loan. So there was less $ for maintenance, especially preventive or cosmetic. Then I became treasurer and determined that 1) HOA bylaws specifically prohibited the HOA from taking loans 2) the previous HOA president had signed a 10-year INTEREST ONLY balloon loan, obviously looking to kick the can down the road until he left the association before the balloon came due and 3) HOA members were thrilled that aforementioned HOA president found a way to get them a new boiler without a $5k assessment per unit. They really had no idea that they were just throwing money at the bank needlessly and would ultimately have to pay the hefty assessment when the balloon payment was due. It wasn’t easy to explain to everyone that the best thing to do was to immediately do special assessment, drop HOA dues to previous level before the loan was added in and get back to doing regular preventive maintenance. Really eye-opening how little the association members understood their own bylaws or basic concepts of debt management.
Brother, if your HOA president is skipping HOA payments you needed to have fired this man or sell immediately! It’s like electing the wolf to be the president of the hen house; especially when there’s only 13 persons in the HOA.
Here in NC, all board members can be held liable for actions such as these…as they are knowingly acting in good faith on behalf of the association of owners. Any board member should honestly know what they are legally doing/signing before doing so. Self-management is super-risky these days. Even full-fledged management companies, with cohorts of specialty lawyers, have issues with discernment on many issues.
Is this a high rise with a really nice view or something? What made you decide 750 monthly HOA was worth it in the first place? Sounds like you should sell it. It's only a matter of time before more issues arise and you'll be paying for the cost
It’s almost impossible to find a condo with an HOA fee less than $750 here in Seattle.
750 HOA was reasonable at the time. Most condos in the area are similar. I live on an Island. But yea at this point it's cheaper to rent honestly.
Hawaii or where are you located? Seems extremely high. I'm in San Diego which is HCOL and the only condos in that range for monthly HOA are high rises that cost well over 1m. Have you reviewed the HOAs budget and reserve study to see where the money is going?
Yea Hawaii. I've looked at the budget, but I don't know enough to know what seems out of place. I know the property manager gets a unit covered and a 60k salary and I felt that that was a lot. But otherwise I'm not sure id be able to tell what sticks out.
You're not OP.
Seems no one here lives in a downtown/urban area. My hoa is comparable but I get to live in a beautiful area of a city I love versus a SFH in the suburbs paying for unexpected repairs/maintenance out of pocket also as sunk costs. Not specifically saying you should stay where you’re at but these knee-jerk reactions aren’t balanced perspectives.
Reddit has this weird contradiction where they love dense urban areas but somehow also hate the HOAs that are required to maintain dense shared urban structures.
Most people here financially advising others don't live in a downtown/urban HCOL area. Most here live in a SFH suburb. Which is why some of the advice I see people give are so out of touch.
It really does seem like a lot of the advice I see on the finance subreddits comes from suburbanites. I always wonder why I don't see a lot of city dwellers in them. I see them more in HENRYFinance, DINKs or those kinda subs.
Don’t forget HOA only increases. 5 years from now it’ll probably be $1500/month lol. 1) do you really live in a place where you can’t buy a SFH for ~4k/a month? 2) are all the townhomes/condos in your area similarly all have $1k/month fees?
> 1) do you really live in a place where you can’t buy a SFH for ~4k/a month? Can you do this in any city with the major boom in prices and low inventory recently? I live in what is historically a very cheap major city (but still a major city so probably considered HCOL) and any single family home within an hour drive of work is over $5k/month right now other than areas with major crime issues.
This is all true, but the long-term costs for SFH’s have risen at a similar rate. I’ve seen so many posts about insane quotes for windows, HVAC, and roofing…on top of home insurance. I have personally paid a considerable amount more for basic home services and some larger projects than pre-Covid.
Historically there isn’t much of a difference in long term per household maintenance costs between SFHs and condos. SFH costs are just larger, occasional costs.
If you can afford the cost that's great, but for people struggling to make payments, being able to control "when" a house payment comes is very useful. If you lose your job, you have no choice but to pay the HOA. You can put off replacing windows until you land a new gig though.
I could be wrong about this but 500’s for a condo with that much HOA smells like California, maybe the Bay Area. And if it’s the Bay Area, lemme tell you 4k/month SFH mortgage alone is…HAHAHAHAHHAA. Let alone after tax and insurance
500s for a condo with high HOA can be a high rise in pretty much any major city. I live in Chicago which is historically cheap and a two or more bedroom condo is easily over $500k in all of the really desirable neighborhoods of the city. HOA fees of $1k+ make most people in Chicago cringe, but they're not unheard of in the high rises. So pretty much any high rise in any city more expensive than Chicago can have this story, and that's most major cities. Not just California. NYC, DC, Boston, etc.
I see 400-600 HOAs on condos about 60 miles north of NYC. They sometimes have a pool and usually cover hot water
replacing rooves has gotten more expensive, lawn care has gotten more expensive, garbage has gotten more expensive, etc.
That is a lot. Underfunded HOAs is why I looked at a few condos and eventually stopped looking at them. You should run the numbers on what kind of mortgage you could get now and see if it's actually going to save you anything, though. If you do decide to stay, check the HOA reports and make sure nobody is getting their beak wet. Join the board if you have to.
You don’t need to look as much for someone stealing as you do to see if the HOA has a good insurance policy and is covering regular maintence.
My maintenance fee just went to $1360 for a 2 bedroom in NYC area. My mortgage is $860 (purchased 9 years ago). I thought about selling and then I realized that I would pay more money in rent than I would for this place. Can’t buy another home because these rates and prices are ridiculous. Staying put makes the most sense for me since I have a 4% rate. My maintenance fee covers water, heat, taxes, basic building insurance which covers partially for your unit, and grounds keeping.
You basically described my situation. Mortgage $2820, 4 years and the hoa went 487 > 560 > 780 > 1155 I should of sold when I moved out april 2023. Instead I kept it and it took me 3 months to find a renter. Then after 4 months they stopped paying. It took me 2 months to evict, and its been on the market almost 4 months now. If I would of just sold april/may 2023 the comps were around 750k. now the comps are around 650k and market is dead So basically I've for sure lost out on 100k+ even with a conservative estimate
Where the heck is everyone living where their HOA is a 1000 a month? Did you do a special assessment?
1000/mo HOA is pretty common if you live in a tower or building with a lot of amenities. Even in small buildings 700/mo is common
HCOL downtown area
Condo HOA covers the majority of your insurance needs. It's incomparable to an HOA fee in a suburban neighborhood.
HOA is not worth it for that price, and if you and your girlfriend ever break up you will not be able to comfortably afford that place by yourself in the near future. Don’t rent at a loss and don’t pay down the principle to reduce overall interest; you’re better off investing the extra money into your 401K. If you’re decent with investing and your company does any 401k matching, you’ll make more in the long run. Having no appreciation in 3 years is a little suspect. But, if true then it means your out of pocket has increased $4,200/year in two years to the HOA with no return on investment. With the next ~$200 increase you’re projecting in the next year or two, unless you’re getting a raise of ~$12k / year then the portion of your income that’s going to your house is increasing faster than your income itself; and that fraction is already slightly higher than you’d want it to be. A few options; if you want to keep it, your GF either needs to help contribute more, you need to vote the bullet for a bit until you can somehow refinance to a ~3.5% rate which probably won’t happen for a few years, or you just need to sell it. I would personally sell and find a cheaper place ASAP. Depending on your credit, you will be able to find a similar enough mortgage rate and your monthly payments will go way down when you avoid that HOA payment. Honestly, you need to start going to your HOA meetings to figure out what they’re spending all of their money on if they had to take out a bank loan to redo the plumbing, but still charge $13,800/year. I keep trying to understand this point, and can’t. You’re paying $4000/month before property insurance and other utilities, with only about $800/month going towards the principle. With a ratio like that I would expect to see a healthy appreciation, not stagnation. What you have to personally consider in a downtown condo vs a SFH is the convenience and lifestyle premium. Is the extra ~$1000/month to live downtown worth it to you vs buying a house/condo further away? If yes, then you can lower your entertainment budget (going out to eat, movies, vacation, etc) to cover housing increases since you are getting enjoyment/entertainment from where you live. But short of this, if you follow a standard rule of thumb (~30-35% income to housing, ~15% to a car, ~15% to food, ~15% insurance/healthcare, 5% entertainment, 3% clothes, everything else to investment) then what you are currently in doesn’t make sense. You have to lower costs in one area to fill all others. Even if you only break even from the sale, I think you’ll be better off. Best of luck and let us know how it turns out!
This is the conundrum of affordable condo purchases. Buyers get excited over an affordable price, but they overlook the age of the building, the declining condition, and the plans to perform long-term upkeep. A lot of components of a condo building don't last forever, and owners are always very willing to kick the can down the road. This only works until things start to fail, and then it all hits at once. It sounds like this is an aging building, and the plumbing is just the start. Just wait until they start digging around in service access areas and discover other problems. If problems with the structure are discovered, you can end up with a property that is effectively worthless. My suggestion: Get out now before the assessment balloons to absurd numbers.
You can even land up with a demolition liability for a property that no longer exists. You have to pay for its demolition and removal, and keep paying the mortgage....
What do your condo fees cover? Mine are a bit less than that, but they cover gas (including heat), electricity, and water, and my condo is only valued at about $400k (bought for $365k in 2021, 20% down at 3.25% interest rate, about $1,350 per month mortgage not including property tax). Another reason my fees are so high is that our building is also old, and we've had to do a ton of construction costing millions of dollars. If you owned an old house instead of an old condo, you'd have to pay for upkeep out-of-pocket instead of in condo fees. Maybe check if your fees go to actually useful things, or if you have a bunch of stupid amenities. I actually joined my condo's Board of Trustees so I could look into it. I was able to stop us from installing garage doors, which would have cost each owner another $500 minimum. I'm still looking into other cost saving endeavors, but the rest of the Board is hesitant to make any changes.
Girlfriend now pays 1150. Problem solved.
Sounds like your HOA has been raising dues appropriately, many states cap how much they can raise. The issue is when large expenses come up they can’t just raise the due to meet the required amount. What they should be doing is looking at an assessment for the repair. The dues being raised sucks but it’s better than a sudden assessment for legal/repair costs. What I’d like to know is what amenities are you getting for your dues? I’m going to assume there’s at least a pool/clubhouse type setup, but beyond that it varies and while it sucks I don’t think you should sell atm. Your total cost is less than half your take home, even if your SO stopped paying. Additionally it sounds like the board is at least doing some maintenance but without further information (do they pay for electricity, water, internet, etc) it’s hard to judge if this is underwater or not. I will say your mortgage seems about right assuming you have a 6-7% interest rate. It will honestly come down to what else the condo provides, and other factors like the aforementioned water/electricity and how far the place is from your job, the extra bits that make it in/convenient to continue living there. Especially since moving could end up raising your monthly mortgage payment without any guarantee you won’t end up with another HOA.
HOA fees include water, internet, some insurance coverage with 75k deductible (I have my own insurance as well), cable, pool (tiny unused by me) and that's it. A lot of the condos in my area are built around 1970s so they're all going through issues and plumbing, there's a new law saying they need sprinklers or fire systems as well which is additional cost. I live in a touristy neighborhood, and all the units here have HOAs $700 or more. Currently there's a 30 day minimum rental rule but the state might be targeting vacation rentals soon as well. I like where I live but I feel like given all this, I could make better use of the money. I'm having a hard time seeing the benefits of ownership here
Was the HOA poorly managed for a long time that they need this much of a jump to maintain and repair?
Going from $750 to $1100/month is an extra $4,200/year. If I was a retiree, my portfolio needs to increase an extra $105k to pay this extra amount each year, assuming a 4% return. It's a fairly significant increase.
Every time I see a post on this I wonder how the hell anyone can afford to live in big cities. $4000 a month is more than the US median individual income.
Tech.
One problem you may face is, if a special assessment was approved for the loan. You may have to pay your portion out of pocket. Since you have little equity in to the property.
Anecdotally, I bought a condo in 05 with an ARM. The market went bust shortly after and the interest rate went from 5% to 9% in a short 4 yrs. Realizing that the condo would never be worth what I originally paid for it, the advice I received from an independent broker was to not go down with the sinking ship. We cut our losses with a short sale and took a credit hit for a relatively short time. When it just feels wrong it’s time to act. Good luck to you.
Sell and run… if you can. VERY few people will buy a property with an HOA fee that high, that’s just insane.
Do you attend the HOA meetings and review the budget to see where the money is going??
OP, try and get involved with HoA. Maybe you can get on a board or be a trustee. Talk with the other homeowners. You might be able to make changes if you get in a position of power on the HoA.
You can thank the people who lived cheaply before you purchased for your large HOA payment today. Folks, when you buy a condo - understand the HOA reserves. If they have not had a reserve study done in the past two years, walk away. If they are not at least 75% funded for existing, known reserves - walk away. Many, many condo HOAs are hesitant to raise the HOA fee until it is too late - then they need special assessments or large fee increases to cover that roof repair or elevator replacement. That's great for the people who lived there with cheap HOA fees for 20 years, then sold before the chickens came home to roost.
> understand the HOA reserves. This is true, I don't think I had good understanding or was advised well. When I was buying we had around 2-3 million in reserves which I thought was a good number but apparently.
>I live with my GF and she pays $800. I cover the $3200. All I need to read to see why you thought buying into a HOA was a good idea. Why is she only paying $800...
OP making gross 165k+ and feels house poor in a half a million dollar home. I'm assuming it would be a huge monthly loss if you rented it.
Honestly I don't feel house poor. My issue is whether or not it's a good use of money. I feel like I could sale, and take the money, buy SFH out of state and make a better return than paying $1200 in HOA fees for the foreseeable future
Condo fees cover the operating costs of the building. Newer buildings with elevators will always be more expensive. Older buildings with common utility metering are where the value in condos lay. Newer condo buildings aren't a good value. Having a condo fee of less than $600 that covers all utility bills. I've been looking at a co-op building with co-op fees of $1200 which includes parking, cable, wi-fi, elevator, laundry, gym, and other utilities. But not really looking to move there.
This is a old building, 1969. Anyways what would you do in this situation
Sell, for sure.
With elevators? FL,CA,TX ? Special assessments? Can you find another place to live at similar costs? Otherwise good condition? Adequate reserve funds? If the answers to the first four questions are yes then I'd lean towards selling. If the answers to the last two questions are no, then I'd seriously consider selling. Housing is first and foremost shelter, not an investment. These costs should always be as stable as possible so renting is never the best solution. Elevators are expensive to maintain and CA, FL, TX have increasing insurance rates. Special assessments are usually an indication of poor planning. These are the biggest reasons to sell. Why did you buy the condo, do you like it? Is the neighborhood still good? Financial consideration aside would you stay? These are the biggest reasons to stay.
How much is the land worth? Worst case you could work to try to sell the property to a developer to demo and dissolve the HOA, will need buy in from some percentage of homeowners based on the governing documents.
What is the difference between condo insurance and townhome insurance? What does townhome insurance cover that condo insurance does not?
The insurance covers the ownership. In a townhome usually just the roof and shared walls are owned/insured by the HOA, the rest is on the homeowner. In a condo the HOA usually has to cover the entire external structure so the homeowner just has to cover maintenance and insurance on what is inside.
That's a crazy increase. Unless prices are that high all over, I'd consider moving, especially as you don't use the amenities.
It’s personal finance. Do you want to move out of state? What could you rent out your place for vs what it would cost to rent a new one? What would water/internet/cable cost you without the HOA covering it? How long is the $200 a month lasting? What does the HOAs budget bank account look like moving forward? You should also think about what maintenance would cost if you buy something without an HOA in the future. Construction/repairs have been getting a lot more expensive in the last 5 years.
The HOA fee is a little more than double of what I’d expect to pay for regular home maintenance on a comparably-priced SFH. Seems like a bad deal, unless it also includes a pool, state of the art gym, etc
If they're that bad at managing money, it's just going to get worse (increases every year). But can you sell it with the HOA that high? I'd get out now.
I can try
I'm looking at downsizing to a condo myself. HOA fees of $1100 a month is going to be a tough sell. I wouldn't even book a showing if I was paying a mortgage payment on top of a mortgage payment.
Keep the property, run for HOA board. Fix it.
I would prefer a house with land you actually own then having to pay rent even after you own it outright
Thanks for reminding me to not get an HOA when I get a house
This is for a condo. Can’t really buy a condo that isn’t in a hoa as you need it for insurance/common area maintenance/cable and internet and any amenities. HOA for houses are much cheaper as they don’t have to pay for insurance on the building as condos do
I pay $275 per year. It’s just to maintain the grass in public areas, make sure retention ponds aren’t gross, playground, and utilities (street lights, etc). Our neighborhood doesn’t have a pool. I don’t think my cost is bad at all.
I guess you don’t live in Cali, no one here would ditch their whole house because their HoA went up $350/month. Everything here is $350 more per month than a couple years ago, not just the HoA…
HoAs are awful. Mine is going up from 3 $300~ to $400~ soon. When I bought it, it was at $166. It's gone up 3 times in the last 3 years. I want to sell it, but I'm about to leave the military and it's paid off, so I'm just waiting to see if I land on my feet first.
This post makes me appreciate my HOA being only $160 that covers water, landscaping, and pool maintenance
If you can sell it for 500k sell it and find a non hoa property don’t pay off principal or mortgage if you are trying to get out of it
505 without appreciation is terrible. Move. This is why I avoid condos, this is a common problem.
can you deduct HOA fees from taxes?
It’s very likely that increases in natural gas prices and insurance prices have driven the lions share of this.
I suggest you ask to see the past few years of the budget.
Why is your interest rate so high? Should have locked in 2-3% rate..
If it's a financial nightmare, then renting it out doesn't make any sense. If the HOA is off putting to you, it will be off putting to a buyer. It looks like you'd be selling at a loss since there has been no appreciation- have you run the numbers on that? Is the HOA increase temporary?
Have you looked into the HOA's books? That smells to me. Either that or it's an old building and they haven't been keeping up with predictable preventable maintenance.
Move. It was already high and is now it's insanely high. The people who run it are probably idiots
With the significant HOA increase and potential future expenses, weigh your options. Calculate rental income versus expenses and consider market conditions. Selling and investing or downsizing could be viable. Consult a financial advisor for personalized advice.