The average cost of owning a condominium is not really that much different than owning a home. Some people think paying the HOA fee (average is $200 - $400 monthly) is wasted money.
This is not usually true. Typically most of the HOA fees go towards the maintanence and repair of anything on the outside of your unit (roof, stucco, paint, walls, fences, garage doors, etc.) as well as the common areas... asphalt, walkways, hand railing, landscaping, pool and or recreation areas, etc. etc. as well as the basic "master" fire and hazard insurance coverage for all of the units and common areas.
The "master" insurance policy does not cover your personal property, interior upgrades to the unit, or interior liability (slip and fall, etc. inside your front door). Your own insurance agent can provide the extra coverage for this (a condo policy) and can usually be purchased for a nominal fee ($30 monthly on average). It is optional and not required for you to do so
When you own a home, you may not pay for these things monthly...but when it needs a roof, paint, stucco, landscaping, walkways, driveways, garage door, etc. etc. then you have to fork over the cash.
Other than the HOA fee, the condo insurance policy (if you choose), the property tax (1.25% of the purchase price in California), your mortage payment and mortgage insurance (if required) the only other expenses would be maintanence and repairs on the inside of your unit, if any. If you would like to estimate these fees, contact a mortgage lender (I happen to be a mortgage broker as well).
The other agents did a good job advising research into the financial condition of the Homeowners Association, as well as any restrictions......you should get the current budget, by-laws, articles of incorporation, rules and restricitons, CC&R's, as well as copies of any minutes or other announcements from the board of directors during the 12 months preceding your purchase). Beware of any pending litigation the association is involved in, as well as an owner occupied ratio of less than 75% of the units...these can make it difficult to get financing, which in turn can hurt you when you go to sell it as well.
For more info..please contact me at 818-481-8555 Mike Stone
You want to make sure that the condo has adequate reserves for major repairs. Otherwise, if something expensive needs repair or replacement (elevators, the roof, the boiler), then you could be hit with a special assessment. That's a one-time charge (or maybe several times, spread out over several months), but can be substantial...often in the hundreds of dollars.
Second, if it's a new condo, watch out for unreasonably low condo fees. The developer wants to sell the condos, so he's going to make it as attractive as possible. And some costs really may not be know until the condos sell out. So you might be told that the condo fees are, let's say, $200. But when the next budgeting year comes around, those fees might go way up, to say $400.
Hope that helps.
I suggest meeting with a REaltor and talking about your needs, wants, and goals.
If you are a first time buyer, you no doubt are concerned about what it cost . Sitting down with your Realtor is step one.
Step two is to talk with your CPA and have them explain the tax benefits of homeownership. If you are moving from renting to owning, there are huge changes you can expect, and you should know that the US Tax code is written FOR homeowners.
The scope of this post is too limited, so please take my advice and talk with these professionals. The numbers provided are helpful, but the tax side is so significant that you need to address this as well before you make a decision,
In this market... suggest buying a home, not condo......
If your purchase is going to be an older condo you should be aware of the possibility of assessments for major renovation. These can come in the amount of thousands for things like repaving, pool renovation, plumbing, etc. etc.
Our best advice is to find out what has been done, what is in the future plans, and the reserve fund status.
The "Eckler Team"
Michael Saunders and Company
Venice, Fl 34285
It is really unexpected repairs to the building that may surprise you, and these need to be addressed by a case-by-case basis. I own 4 condos and each Association is a separate animal.
upon whether your down payment on the purchase,is less than 20%, your lender may also require that you pay morgage insurance.
Other than that, you are going to incurr costs in purchasing your condo (i.e. closing costs which include a variety of things).
Hope this helps. If you need any more information or advice, please feel free to contact me. I also can give you a referral for some top agents in your area if necessary.
Prudential California Realty
You will still have utility costs and though structure insurance is likely carried by your HOA, you will still want to have contents insurance to protect your belongings and interior appliances, floor, wall and window coverings and other amenities.
You might also want to check the finances of the HOA to see if there are adequate reserves for building and common area maintenance and repairs.
I agree with Ron - add in the utilities (phone, gas and electric) and the interior home owner's insurance coverage. The only other item that you might want to build into your budget is to set aside some funds for special assessments. Prior to purchasing a condo, make sure to review the financial statements of the complex and the minutes of association meetings to see if there are any potential assessments that could be coming up.
Good luck in your condo search!