What’s covered by condo HOA fees?

[Anonymous]

Thinking about downsizing, in a few years, from a SFH in Loudoun County to a condo near Reston Town Center. A typical HOA fee I’m seeing is in the $1200 - $1400/month range. We currently pay about $100/month. What is typically covered by the condo HOA fee? I assume trash and general maintenance, but what about utilities (water, gas, internet/cable)?

[Anonymous]

Depends on the condo - each listing will have the details.

[Anonymous]

It varies by condo. Read the HOA documents before purchase.

Ours covers trash and water.

[Anonymous]

Maintenance of common areas, hallways, exterior, roof, landscaping, swimming pool, gym, parking lot, etc. They might keep full or parttime staff for maintenance and security.

[Anonymous]

Why would you do this? Retiring in a condo that already has $1,400/month HOA fees is very risky. HOA fees tend to increase faster than inflation and they will only get worse. These high fee condos are a very bad financial deal. Home maintenance, utilities, property taxes and HOA fees combined are probably less than $2,000 a month on your SFH house if it is paid off. Moving to this condo won’t necessarily save you money and it might cost the same as living in your SFH now.

[Anonymous]

Our condo fee of $400 pays for: trash/recycling, water, building insurance and maintenance, security system, landscaping, gas, and building electric.

Owners pay for in-unit electricity, cable/internet, insurance on their individual unit, and maintenance on their individual unit.

If a condo has a fee of over $800/mo and there are not obvious amenities that explain that amount (daily staff, pool and/or gym, etc.) then I would assume the building is mismanaged. I'd also want to look at the general fund and find out what special assessments they'd issued recently -- aging buildings that have not been properly maintained can become a money pit where they are constantly assessing owners for expensive repairs that should have been undertaken years prior.

Also keep in mind that HOA fees always go up, they never go down. When we moved into our building 15 years ago, the fee was just $250. It will likely go up again this year. However, this reflects rising costs for everything, which would also affect me as an owner of a SFH -- our monthly water and gas costs have more than doubled, our insurance rates have gone up, maintenance and landscaping services are more expensive as well. My building has never raised fees without clearly explaining to owners why they are going up and linking it to explicit costs, mostly driven by inflation. It's still cheaper than SFH ownership because the costs are spread among 20 owners so it's much more incremental.

[Anonymous]

You should do the math. Buying versus renting the same condo and you overall NW and needs.
In my building, if I were to buy a 2- bedroom condo now versus renting the same or similar one, I'd be out ca 4 million after 30 years. I can even do it tax free or very low tax.
The condos have been the same price the last 20 year, which is $480k-$510k. Even if they go to a million, I'd be out 3 million. I didn't even add any upkeep costs or being able to move to a 1-bedroom if times get tough.
I'm so glad there are owners who rent to me and don't know or care that the money stuck in a condo would do better in the market.
I'm about to move to top floor as I want nobody walking above me. I asked them to change out several appliances and they are working on it.
Right now, renting is absolutely the way to go. The rentals have been sitting 120+ days as few people have $5k cash for first months rent plus security deposit.
Don't kill your cash in the condo. Learn to invest and your returns will be much higher than 10%.

[Anonymous]

Ours paid for maintenance of the grounds, building exterior, roofs, golf club, pool, landscaping, trash, sprinkler systems and fire alarms/smoke detectors, external structural issues, driveways and that sort of thing.

Thing is if there was an u expected expense they can do special assessments. Shortly after we moved there was a $65k per unit assessment for two bedroom units - more for larger ones. Make sure you’re aware of this possibility and that You have a good board that does regular maintenance so that you don’t find yourself in this situation.

[Anonymous]

Anonymous wrote:You should do the math. Buying versus renting the same condo and you overall NW and needs.
In my building, if I were to buy a 2- bedroom condo now versus renting the same or similar one, I'd be out ca 4 million after 30 years. I can even do it tax free or very low tax.
The condos have been the same price the last 20 year, which is $480k-$510k. Even if they go to a million, I'd be out 3 million. I didn't even add any upkeep costs or being able to move to a 1-bedroom if times get tough.
I'm so glad there are owners who rent to me and don't know or care that the money stuck in a condo would do better in the market.
I'm about to move to top floor as I want nobody walking above me. I asked them to change out several appliances and they are working on it.
Right now, renting is absolutely the way to go. The rentals have been sitting 120+ days as few people have $5k cash for first months rent plus security deposit.
Don't kill your cash in the condo. Learn to invest and your returns will be much higher than 10%.

OP here, thanks for that POV. Right now, the PITI on out home is $2450 + $100 HOA. If we purchase a condo, outright, our HOA + Prop. tax + insurance would be around $2400, with $1300 of that being HOA. That number is hard to fathom, so I was wondering what typically is covered by that, not having lived in a condo before.

[Anonymous]

Anonymous wrote:Why would you do this? Retiring in a condo that already has $1,400/month HOA fees is very risky. HOA fees tend to increase faster than inflation and they will only get worse. These high fee condos are a very bad financial deal. Home maintenance, utilities, property taxes and HOA fees combined are probably less than $2,000 a month on your SFH house if it is paid off. Moving to this condo won’t necessarily save you money and it might cost the same as living in your SFH now.

OP here, and, as you can see from my comment above, I'm starting to come to the same conclusion.

[Anonymous]

Anonymous wrote:Ours paid for maintenance of the grounds, building exterior, roofs, golf club, pool, landscaping, trash, sprinkler systems and fire alarms/smoke detectors, external structural issues, driveways and that sort of thing.

Thing is if there was an u expected expense they can do special assessments. Shortly after we moved there was a $65k per unit assessment for two bedroom units - more for larger ones. Make sure you’re aware of this possibility and that You have a good board that does regular maintenance so that you don’t find yourself in this situation.

I’m guessing you’re talking about Florida? (since golf course condos aren’t really a thing you’d find in DC, Clarendon, Bethesda, etc.)

Florida condos are a totally different ballgame — that’s a wild special assessment.

[Anonymous]

Anonymous wrote:
If a condo has a fee of over $800/mo and there are not obvious amenities that explain that amount (daily staff, pool and/or gym, etc.) then I would assume the building is mismanaged.

This is oversimplified. Monthly fees are usually proportional to the unit's square footage. The same fee that's high for a 700 square foot unit could be low for a unit twice the size.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ours paid for maintenance of the grounds, building exterior, roofs, golf club, pool, landscaping, trash, sprinkler systems and fire alarms/smoke detectors, external structural issues, driveways and that sort of thing.

Thing is if there was an u expected expense they can do special assessments. Shortly after we moved there was a $65k per unit assessment for two bedroom units - more for larger ones. Make sure you’re aware of this possibility and that You have a good board that does regular maintenance so that you don’t find yourself in this situation.

I’m guessing you’re talking about Florida? (since golf course condos aren’t really a thing you’d find in DC, Clarendon, Bethesda, etc.)

Florida condos are a totally different ballgame — that’s a wild special assessment.

No, not Florida.

[Anonymous]

It varies a lot by building. Regardless I think it’s never worth it when the fee is that high

[Anonymous]

It depends entirely on the condo.

I lived in an old building where the condo fee included all utilities besides cable and internet.

Newer buildings have utilities all separate. But the condo fee covers salaries for staff, some building maintenance (not in your unit, but common spaces, roof, etc), groundskeeping, use of facilities, etc.