When shopping for a condo, it is always important to look at the condo fees. Too often, I see buyers attracted to a particular condo because of what looks like a reasonable price only to be turned off when they see the high condo fee.
Don’t be that person. Don’t look at the condo fees as an afterthought. Look beyond just the sales price and consider what your total monthly cost will be: mortgage payment + condo fees + taxes + insurance.
Are low fees always good? Not necessarily. If the fees are kept unusually low, there could be large, special assessments down the road. I’ve seen some buildings run by a condo board run by absentee owners/investors that have the first priority of keeping the fees low with no increases over the years. Expensive, preventive maintenance projects get deferred and corners are cut where they can. The result can be a special assessment that runs into the thousands of dollars for each unit owner. Nobody is happy to get hit by a special assessment.
Are high fees always bad? Not always. High fees can be a sign of a board that is forward thinking and that is taking the necessary steps for a well-run building for years to come.
One of the main factors in determining condo fees is the number of units in the building or complex. With a large building, you have more owners to share the costs. Some costs scale with the number of units and some don’t. For example, if the building has a 24/7 fully staffed front desk, the cost is going to be about the same whether it is for a 400 unit building or a 50 unit building. However, the cost per unit will be very different.Utilities
Are the utilities metered separately or included in the condo fees? Some older buildings include most or all utilities, which is equivalent to anywhere from $75 to $300 per month if paid separately. Most newer buildings have the utilities metered separately and each unit owner pays their own.Amenities
The amenities offered can add a significant cost to running a building. Not all amenities cost the same to maintain or run. A theatre room has an initial upfront cost but incurs a minimal cost to maintain, unlike a swimming pool that requires staff (lifeguards), chemicals, and maintenance.Building age.
As buildings age, their systems will degrade over time and will require replacement. The first ten years or so should see minimal replacements, but after that, management should be increasing the amount put into reserves.
For more on condo fees, check out my Ultimate Guide to Condo Fees.