Searching for townhomes in Lakeville and Farmington yesterday for a client, I sorted possible homes based on theÂ Association Fees.Â Some complexes have high monthly associationÂ dues and some are much lower.Â Itâ€™s an important detail to watch whenÂ buying a Lakeville or Farmington Townhome because the monthly association fee is counted by Mortgage Companies when calculating the house payment you can afford.Â The dues add up quickly in the payment.
A townhome with a List price of $139,000, association fees of $140 per month and taxes of $1600 a year will have nearly the same house payment as a townhome listed for $125,000 with an association fee of $210 per month and taxes for $1600.
A townhome listed for $139,000 likely offers more features or nicer condition than one offered at a list price of $125,000.Â Buyers in Lakeville and Farmington oftenÂ focus solely on list price and miss a great property which fits their budget.Â Itâ€™sÂ smart to learn fromÂ your mortgage officer or realtorÂ some shortcutsÂ to calculateÂ the monthly house paymentÂ on individual townhomes.Â This knowledge will allow you to consider a wider range of property.
There are 4 main reasons the dues vary from one complex to another:
1.Â Difference in services paid by the association.Â Items covered by association dues mayÂ include lawn care, snow removal, management fees, building maintenance, exterior materials and roofs, hazard insurance, water and sewer and heat. If an association covers all of those items it will have higher dues than an association covering just a portion of the items.Â Some associations offer pools, tennis courts and playgrounds and they add to the operating expenses.
2.Â Serious shortage of Reserves.Â Associations invest and save some of the money from dues to build up cash reserves.Â When I review Association Documents and Budgets for my clients during a transaction, the average reserves are 2 to 3 years of operating expenses.Â If an association has experienced an unexpected cost which depleted the reserves, the duesÂ may be increased toÂ build up reserves. Shortages can be caused by storm damage, lawsuits, flaws in building design or mismanagement.
3.Â Amount of grounds and parking lots to upkeep.Â Older townhome complexes often have higher dues than newer complexes.Â In the 1970â€²s and 1980â€²s when townhomes were built South of the River land was plentiful and townhome complexes did not have as high of density as townhomes built in the past 15 years.Â Lower density means more grass space and more trees, sidewalks, trails and parking space.Â Associations in these complexes must pay for more mowing, snow removal, and tree trimming.
4.Â Construction materials of the townhomes. Newer townhomes are built with vinyl siding, vinyl or aluminum windows, maintenance free trim, fascia and soffits and long lasting roofing materials.Â These complexes do notÂ needÂ regular painting and siding replacement whichÂ translates to lower operating expenses.
Remember to consider taxes and association fees along with list price when shopping for a townhome in Lakeville and Farmington. If you need assistance learning some good techniques to accurately estimate your monthly house payment use theÂ Ask a Question, we will be happy to help.