When buying a condo, it's important to consider condo association dues (HOA). The dues can be a substantial part of your expenses. They always are at least an expense to factor in when considering buying a condo. 

 

HOA dues vary widely. Some $300,000 condos have HOA dues of $160/month. Some $300,000 condos have HOA dues of $300/month or more. Some 1000 ft condos have HOA dues of $160/month; some are over $400/month.

 

HOA dues typically cover the cost of some utilities--water, sewer. Some cover cable. Some cover heating. All cover the cost of maintenance and upkeep. This includes the cost of landscaping, upkeep on common areas--hallways, window washing, parking, club house/room. HOA dues cover the cost of repairs of all exterior surfaces. And all associations must keep some reserve funds for unexpected expenses--roof leak, basement leak, broken window, etc. Many associations hire a property manager or management company to oversee maintenance and upkeep. This can be a substantial part of expenses. 

 

One of the problems facing condo owners these days is that HOA dues were based on the market value of the condo when it was built--typically in the early to mid 2000s. A $500,000 condo with $400/month HOA dues was not unreasonable. But now that condos have decreased in price, that $500,000 condo may have a market value of $325,000, but the HOA dues are still the same. Buyers may balk at $400 dues on a $325,000 condo, and they often do.

 

When buying a condo, be sure to factor into your costs the HOA dues. They can amount to thousands per year, easily $5000/year. That becomes a substantial outlay associated with home ownership. Also keep in mind that the dues cover some utilities that you don't have to pay separately. And the dues also cover exterior and common area maintenance that you don't have to think about.