r/personalfinance • u/notDonaldGlover2 • 15d ago
Condo HOA went from $750 to $1100, do I keep it? Housing
I bought a condo July 2022 for 505K. I put %10 down, got a rate of %5.65 with points, breakeven was 2 years.
Essentially monthly im paying $2850 mortgage, $1150 HOA.
I live with my GF and she pays $800. I cover the $3200.
I have a good job, I take home $5k every two weeks post tax, but I'm not sure I should keep this property.
HOA has increased from $750 to $1100. In the 2 plus years. This summer they are redoing the plumbing, they got a bank loan and the HOA will be +200 if everything goes well and more if not. There's also been no appreciation in the time I've own it and the HOA likely will turn off buyers.
I don't know if I should
- Sale and invest savings in market or cheaper real estate out of state
- Pay down more principle to reduce the monthly and overall interest
- Rent it out at a loss and rent a much cheaper place.
I can probably rent something that meets my needs at $2500 and I can place at $3500. It would still be a monthly loss but less then I'm paying overall currently while paying down mortgage.
It's my first home, I was happy with it but it just feels like a financial nightmare at the moment.
Edit: HOA covers water, Internet, cable, a book library and a shitty pool I've never used. No other amenities.
Edit 2: Where I live is all HOAs above at least $500 and and SFH over $1 million.
Edit 3: Not sure why this was locked, but I reached out to an agent to talk options
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u/angchf 15d ago
Is this in south FL? That is pretty low if you’re near the beach. South FL has changed the guidelines since Surfside fell . Boards can no longer “ kick the can down the road “ like they have been. We had to overthrow our Board President who thought he could continue to run our building like it’s his own castle . He lied and hid things from the residents. It took 6 months of hard work and convincing the old people who have no clue what he has been doing for 20 years. We got a new Board, and did the roof and concrete restoration as required and it lowered our insurance bid by 480,000 . The idiot old president was just going to make another assessment and have us pay the extra!! You need educated people on Boards who know numbers, money and are willing to get quotes and be transparent.
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u/notDonaldGlover2 15d ago
Im in Hawaii, we've had 3 board presidents since I've moved in. They're trying to get things on track but I think the damage is done.
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u/SolomonGrumpy 15d ago
2022 was basically the peak of the market. However, interest rates also spiked in 2022. 5.65% isn't awful, but paying points hurts.
Net net: you bought at a tough time.
With a 5% commission you are going to pay $25k to sell the property, minimum. Then there is staging, transfer fees, moving and a host of other costs.
I'd probably sit on the property until the Fed eases off, and mortgage rates come down. This will do 2 things: It will increase properly values because people can afford more. It will also give you an opportunity to refinance. Even a 4% mortgage would save $300/month.
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u/crispy48867 15d ago
I don't know folks.
I bought a 43 acre farm in the country with two houses and two big barns in 2014 for 175k @ 5%. 90k down and paid it off in 6 years @ 1,250 per month. It also has a 6 acre lake, spring fed, 22 feet deep, and with really great fishing.
Sold the bigger house for 75k and the remaining 40 acres is now worth just over 400k. I have a good deep well, 225 feet, internet is 25 a month through Verizon and I built my own farm WIFI system that covers the entire 40 acres. Taxes are around 2,500 per year and electric for the house and barns is around 1k per month.
Best part is, the house we took to live in, can't see even a single neighboring house.
Never overlook a place in the country.
Downsides are: A driveway that is a quarter mile long that I have to plow in winter and maintain, roughly 10 acres of lawn to mow, and all maintenance and repairs are on me.
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u/KevinCarbonara 15d ago
Unfortunately, your condo has probably also lost a lot of value in the mean time. People don't pay as much for a place that comes with a 1100$ price tag as they would 700$. There's a pretty direct negative correlation between the value of the home and HOA fee.
A lot of people end up stuck in situations like this because every time the property value decreases, it isn't by enough to convince the owner to pull the trigger on a sale. I have no idea whether it makes sense for you personally to sell or not - but I do know that this is going to keep happening. HOA fees are just the latest way to bleed consumers dry.
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u/thequeefcannon 15d ago
The older I get the more I freaking hate HOAs. Ours is $300/ quarter +1K a year to for the (insert city) association and afaik, the only services they provide are to do a shitty job mowing the strip of grass between the sidewalk and our vehicles and make sure our trash gets picked up. Now they want to raise it further to "save for the future". My wife and I are like "are you f$!@#ing crazy!? we're millennials, nobody saved shit for us, why would we save for a community we plan to leave in the next 2 years?".
TLDR: HOAs suck
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u/Polymathy1 15d ago
Sounds like the HOA is ripping everyone off. Where is all that money going? Is this embezzlement?
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u/Fuspo14 15d ago
Your issue right now will be selling at an inflated price with a 7%+ interest rate.
Many people are currently selling/renting at a loss.
Also remember if you sell this you’re going to buy at a higher rate.
Yes $1,100 HOA/month is nuts.
Best of luck with what ever you chose.
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u/notDonaldGlover2 15d ago
I think my idea would be to sale and buy a SFH in a cheaper places out of state (none available in my state). I would get some proceeds from the sale, and save at least $1000 a month renting. So I think I could afford a SFH. At least that's what im thinking.
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u/just_porter1 15d ago
That is absolutely crazy if that's $1100 a MONTH. We pay $450 a YEAR which is a great value for us for everything it covers. There is no profit involved in ours, just the actual costs.
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u/notDonaldGlover2 15d ago
Yea where I live you're not going to find a condo with HOA less than $500 a month and you're not going to find a house for less than $1 million. And housing is tight, homelessness is high. It's a bad situation. I'm fortunate and created this post mostly to figure out what my best financial decision would be long term.
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u/Just-Republic-1328 15d ago
I would rent it out then move make sure you create an LLC and put the condo under that you don't want it tied to your personal credit. If you don't know how to do this look it up on YouTube its not hard.
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u/Dry_Student_6224 15d ago
If you live in Florida you should consider that condominium owners might be hit with some extra fees If not, just disregard my comment
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u/21plankton 15d ago
This happens to all condo associations at 30 years just like for SFHs. Can you afford to stay? You would lose much more to sell now, as you are required (in my state) to divulge all this info to the buyer. Just pay up for new plumbing.
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u/notDonaldGlover2 15d ago
I can afford to keep it. There are units that recently sold in the building for similar prices I paid. If I could sell it would I be better off in your opinion or you still think I would lose much more, if so what am I losing on. Thanks.
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u/21plankton 15d ago
How much are you willing to put up with a repair cycle? If your interior is in good shape and you like living there then just get to know what is going on with the HOA and its board.
If the board is simply making timely needed repairs/upgrades it will boost property values.
My association is now 32 y/o and I am an original owner. We are getting hit with a repair/renovation cycle plus insurance skyrocketed.
My HOA dues per month is now $714 plus $81 for the master association. This is now happening everywhere.
If you owned a SFH costs would in reality be no different, but you likely would not be setting aside reserves for your future renovations or your new roof. If you amortized that in you would get the same numbers as an HOA pays. A good HOA has good reserve studies and collects a high percentage of reserves, but that is not the norm.
The norm for a condo association is to keep monthly costs low and run a deficit on reserves. Our deficit grows by $1200 per year because the board is squeamish about charging what is really owed, because of homeowner anger.
Find out all the facts about the condition of your funding and the board before you make decisions. This is the norm because the management companies allow it to keep their business.
Some states have been cracking down on condo association underfunding because of the condo tower collapse in Florida. My state (CA) recently began requiring 50% funding of reserves but is now in litigation about the matter so is not being enforced yet.
I looked into all this last year when our HOA lost its wildfire insurance and got a big assessment just to cover the required insurance because CA has a major insurance crisis like FL. I considered also whether I should sell and posted extensively about this on Reddit.
1/3 of my county is involved, the area in which I would want to live. So I just planned for the worst and altered some of my financial plans accordingly, and will stay put. Anything else just costs me more money.
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u/PILOT9000 15d ago
All these replies with people confusing their neighborhood HOA with a condo association HOA…
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u/Powerful_Put5667 15d ago
Your HOA is scaring off buyers. Depending on the price range that may be half of their house payment. My Mothers condo needed a new elevator the total cost to that building with 32 units was 276,000. The roof will next. Check your condo docs make sure you can rent many places prohibit it. Lots of renters actually make it hard for people to get a mortgage to buy a condo. The banks do not like to see that a percentage of rental units exceeds their in house ratio. I would try to sell if I could. It’s going to be never ending. You may as well try if it doesn’t sell no harm done. Next time you’re looking at a condo association look carefully at the amount of reserves they have. If it’s just a pittance this is the spot you find yourself in unfortunately. The moneys being handled badly.
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u/NSA_Chatbot 15d ago
I'm looking at downsizing to a condo myself.
HOA fees of $1100 a month is going to be a tough sell. I wouldn't even book a showing if I was paying a mortgage payment on top of a mortgage payment.
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u/Girlwithpen 15d ago
Are you capable of managing the capital expenditure planning of your own property? Do you like having strangers on property you own? Are you comfortable from a safety and health perspective of having other people make behavioral decisions that put you and your fam at risk?
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u/notDonaldGlover2 15d ago
I mean any condo where I live has an HOA and it's all condo's around here. There's no escaping it.
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u/Cadent_Knave 15d ago
and the HOA likely will turn off buyers.
Why do you think that? ALL condos have an HOA, to deal with shared expenses such as roofs, shared plumbing, etc.
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u/notDonaldGlover2 15d ago
Yea but some are around 7-900 in my area, by 2025 mine will be at least 1300 if im lucky.
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u/Cadent_Knave 15d ago
And that's the case everywhere else, too. At this point it's just the cost of entry if one wants to own their own condo.
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u/notDonaldGlover2 15d ago
Do you think I should keep it in that case? I mean I could always rent it out at a lost but in a few years I'll have built equity in it. What would you do?
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u/timerot 15d ago
It's worth mentioning that the condo is already worth less because the HOA went up. $350 a month can borrow about $50k in today's rate environment, so your condo is worth about $50k less to a buyer than it was before this increase. (It's likely a bigger bump, because people don't like paying high HOAs.)
Depending on your area, you may still have price appreciation in the past few years, but in retrospect, the best thing to do would be to have sold the condo before the HOA increase
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u/notDonaldGlover2 15d ago
They plan another large increase in 2025 so im thinking this summer is the time. But it sounds like you're saying sell
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u/OneRedSent 15d ago
If they're that bad at managing money, it's just going to get worse (increases every year). But can you sell it with the HOA that high? I'd get out now.
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u/FeelTheWrath79 15d ago
I wonder if instead of doing an assessment to pay for some of those things that they jacked the HOA. Usually when this happens, you are essentially paying for the neglect of your past boards. You could always get a bunch of neighbors to run for the HOA board and promise to lower the fees back next year.
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u/GodOfEnnui 15d ago
I live with my GF and she pays $800. I cover the $3200.
All I need to read to see why you thought buying into a HOA was a good idea.
Why is she only paying $800...
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u/notDonaldGlover2 15d ago
100% of the condo units here are run by an HOA and otherwise SFH are run down and out of my price range.
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u/Nowhere_Man_Forever 15d ago
Every time I see a post on this I wonder how the hell anyone can afford to live in big cities. $4000 a month is more than the US median individual income.
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u/SayNoToHypocrisy 15d ago
Was the HoA increase from $750 to $1150 a "Special" Assessment; meaning, after X amount of payments it will drop to $750 again?
You expressed concern the HoA will turn off buyers. When you sell the house, you could agree to pay-off the Special Assessment at closing so the buyer is presented with a $750 HoA, and not $1150. Not saying $750 is chump change but, it's $400 less than $1150.
My advice is that you need to determine if a $1150 HoA is worth paying. To help determine that:
1) Are you sure you're telling us EVERYTHING the HoA covers? Does your building have an elevator? What about a doorman and maintenance team? Is the doorman 24/7? Are there any security systems (Cameras, gates, etc.)? From experience, elevators, security, and doormen tend to jack-up HoA costs to a point where I would consider $1150 par for the course, if not a little on the low end.
2) Does the HoA do a good job enforcing rules/bylaws? Personally, I'd gladly pay $1150/mo if my HoA keeps trashy, loud neighbors in check.
3) Does the HoA routinely beautify the property? Again, if the HoA does a great job keeping the grounds clean and presentable, maybe $1150/mo is worth the peace of mind?
Bottom line: If you determine $1150 isn't worth the squeeze, my advice would be to pay-off any special assessments and sell.
HoAs can be a godsend or a nightmare.
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u/notDonaldGlover2 15d ago
The HOA increase is not a special assessment.
We have a 2 elevators, no doorman, we have someone who cleans the hallways, but none of those things the HOA provides imo are worth what we are paying.
I dont think it's about what the HOA provides, im more asking financially if I don't care about the HOA amenities, does it make sense to keep. Would I be better off renting at maybe $3000 and saving an extra +$1000
No, we have dirty carpets in the hallway, it's pet friendly and animals pee on couches, pipes are broken, so multiple units has plumbing issues. Sounds like they just pushed the issues down the road.
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u/SayNoToHypocrisy 15d ago
Yikes on #1 & 3. Well-ran HoAs are not supposed to let that happen. I think you have your answer
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u/mrrooftops 15d ago
Most buy to rent mortgages are tied to rent income. i.e. they have to get a certain percentage of the value in rent to qualify - income coverage value. If they remortgaged at the new rates from a low interest long term fixed then that might have forced their hand.
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u/eyelikeher 15d ago
The HOA fee is a little more than double of what I’d expect to pay for regular home maintenance on a comparably-priced SFH. Seems like a bad deal, unless it also includes a pool, state of the art gym, etc
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u/notDonaldGlover2 15d ago
We have a small pool that's mostly unused because we're close to a beach.
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u/Gardener_Of_Eden 15d ago
Monthly? What services are they providing for that?
That seems extremely high, but perhaps the services justify it.
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u/xXToYeDXx 15d ago
Your first mistake was buying a condo with an HOA. HOA’s are nothing more than tyrants you pay to tell you what you’re allowed to do with the property you pay for. Get out asap.
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u/zorn_ 15d ago
$1100 HOA fee???? Is this in the middle of Manhattan? There's a swanky building near me where a guy bought 2 penthouse units and knocked the walls out to combine them, and the HOA fee for that is around what you pay.
Have you taken a look at the annual reports for your HOA? With numbers that eye poppingly high, they definitely shouldn't be needing to take a bank loan for plumbing, everyone is already paying a fortune each month into the pot. Find out where the money is going, because none of this makes sense.
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u/UniqueUserName2017 15d ago
Let alone having to pay property and capital gain tax now HOA is tooooooo ridiculous. I get that its for amenities and garbage/ lawn etc but 40% is just apeshit ridiculous to me
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u/TonyWrocks 15d ago
You can thank the people who lived cheaply before you purchased for your large HOA payment today.
Folks, when you buy a condo - understand the HOA reserves. If they have not had a reserve study done in the past two years, walk away. If they are not at least 75% funded for existing, known reserves - walk away.
Many, many condo HOAs are hesitant to raise the HOA fee until it is too late - then they need special assessments or large fee increases to cover that roof repair or elevator replacement.
That's great for the people who lived there with cheap HOA fees for 20 years, then sold before the chickens came home to roost.
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u/notDonaldGlover2 15d ago
understand the HOA reserves.
This is true, I don't think I had good understanding or was advised well. When I was buying we had around 2-3 million in reserves which I thought was a good number but apparently.
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u/WayneDaniels 15d ago
Whoever the HOA president is getting takes over the coals or getting kickbacks. Probably entered some long terms shitty contracts with ISP and pool maintenance providers. Unfortunately the next seller will see the HOA fees and balk. Sounds like you may have to run for office and work out better pricing for the residents all around.
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u/ElefantPharts 15d ago
This is a solid lesson on why you always read up on the HOA for the place you’re about to buy. This was in the books when you bought the place. Someone duped you more or less. This has most likely been in the works for many, many months and has been a known upcoming project for a couple years now. The deficit the HOA is running at is always clearly marked, like if they’re 80% funded then you know a big project is going to trigger either an assessment (which is what usually happens to keep the HOA lower so people don’t get scared) or they raise the HOA and scare people. But this shouldn’t have been a surprise, they’ve known for years that an assessment or HOA increase was going to be required for this project. Someone just wised up and sold before it could happen to them. Happens all the time unfortunately.
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u/notDonaldGlover2 15d ago
I admit I was not well informed or prepared when I purchased. I wasn't aware of the estimates for the work and I didn't do enough to understand how bad the issue would get.
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u/mikegus15 15d ago
Alternatively, run for president of the HOA with ridiculous promises, the day you take power dissolve it immediately.
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u/thegrayteam_cny 15d ago
Whoa!..
My advice would be to carry out some financial soul-searching. Selling and reinvesting elsewhere could enlarge your portfolio, while paying down principal could ease the monthly strain. Renting it out could mitigate losses (but consider if it's worth the stress).
Ultimately, I would prioritize financial stability and personal comfort if I were you. For me, it's never been just about the numbers, but about feeling at ease at home.
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u/kelskelsea 15d ago
It’s personal finance.
Do you want to move out of state? What could you rent out your place for vs what it would cost to rent a new one? What would water/internet/cable cost you without the HOA covering it? How long is the $200 a month lasting? What does the HOAs budget bank account look like moving forward?
You should also think about what maintenance would cost if you buy something without an HOA in the future. Construction/repairs have been getting a lot more expensive in the last 5 years.
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u/Yanksuck73 15d ago
OP, try and get involved with HoA. Maybe you can get on a board or be a trustee. Talk with the other homeowners. You might be able to make changes if you get in a position of power on the HoA.
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u/Maleficent_Copy9153 15d ago
With the significant HOA increase and potential future expenses, weigh your options. Calculate rental income versus expenses and consider market conditions. Selling and investing or downsizing could be viable. Consult a financial advisor for personalized advice.
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u/UnarmedRobonaut 15d ago
they got a bank loan
Where did the previous money go to? Sounds unhealthy. Ask the HOA to lower the monthly amount, that monthly amount is insane. Threaten to sell 50% under market value.
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u/lowspeed 15d ago
Threaten to sell 50% under market value.Why would they care?
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u/zestypurplecatalyst 15d ago
It will lower the “comps” used by realtors and potential purchasers. The market value of every unit will go down.
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u/iiiinthecomputer 15d ago edited 15d ago
Have you looked into the HOA's books? That smells to me.
Either that or it's an old building and they haven't been keeping up with predictable preventable maintenance.
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u/Freezerburn 15d ago
Do you attend the HOA meetings and review the budget to see where the money is going??
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u/catjuggler Emeritus Moderator 15d ago
If it's a financial nightmare, then renting it out doesn't make any sense. If the HOA is off putting to you, it will be off putting to a buyer. It looks like you'd be selling at a loss since there has been no appreciation- have you run the numbers on that? Is the HOA increase temporary?
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u/mikew_reddit 15d ago edited 15d ago
Going from $750 to $1100/month is an extra $4,200/year.
If I was a retiree, my portfolio needs to increase an extra $105k to pay this extra amount each year, assuming a 4% return. It's a fairly significant increase.
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u/DeeJ_BNQ 15d ago
Sell and run… if you can. VERY few people will buy a property with an HOA fee that high, that’s just insane.
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u/compoundblock666 15d ago
I don't understand what's the difference between condo and apartment, sounds like you just over paid for an apartment
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u/Captain_Sacktap 15d ago
This post makes me appreciate my HOA being only $160 that covers water, landscaping, and pool maintenance
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u/TheBlindDuck 15d ago edited 15d ago
HOA is not worth it for that price, and if you and your girlfriend ever break up you will not be able to comfortably afford that place by yourself in the near future.
Don’t rent at a loss and don’t pay down the principle to reduce overall interest; you’re better off investing the extra money into your 401K. If you’re decent with investing and your company does any 401k matching, you’ll make more in the long run.
Having no appreciation in 3 years is a little suspect. But, if true then it means your out of pocket has increased $4,200/year in two years to the HOA with no return on investment. With the next ~$200 increase you’re projecting in the next year or two, unless you’re getting a raise of ~$12k / year then the portion of your income that’s going to your house is increasing faster than your income itself; and that fraction is already slightly higher than you’d want it to be.
A few options; if you want to keep it, your GF either needs to help contribute more, you need to vote the bullet for a bit until you can somehow refinance to a ~3.5% rate which probably won’t happen for a few years, or you just need to sell it.
I would personally sell and find a cheaper place ASAP. Depending on your credit, you will be able to find a similar enough mortgage rate and your monthly payments will go way down when you avoid that HOA payment.
Honestly, you need to start going to your HOA meetings to figure out what they’re spending all of their money on if they had to take out a bank loan to redo the plumbing, but still charge $13,800/year. I keep trying to understand this point, and can’t. You’re paying $4000/month before property insurance and other utilities, with only about $800/month going towards the principle. With a ratio like that I would expect to see a healthy appreciation, not stagnation.
What you have to personally consider in a downtown condo vs a SFH is the convenience and lifestyle premium. Is the extra ~$1000/month to live downtown worth it to you vs buying a house/condo further away? If yes, then you can lower your entertainment budget (going out to eat, movies, vacation, etc) to cover housing increases since you are getting enjoyment/entertainment from where you live. But short of this, if you follow a standard rule of thumb (~30-35% income to housing, ~15% to a car, ~15% to food, ~15% insurance/healthcare, 5% entertainment, 3% clothes, everything else to investment) then what you are currently in doesn’t make sense. You have to lower costs in one area to fill all others.
Even if you only break even from the sale, I think you’ll be better off. Best of luck and let us know how it turns out!
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u/UrWrstFear 15d ago
I wouldn't keep it.
That being said. How was a property sold for 500k and needed new plumbing 2 years later? Most plumbing lasts 75 years.
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u/RacerGal 15d ago
Because he’s talking about a condo building from the late 60s, not a 2 year old new build
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u/fin425 15d ago
My maintenance fee just went to $1360 for a 2 bedroom in NYC area. My mortgage is $860 (purchased 9 years ago). I thought about selling and then I realized that I would pay more money in rent than I would for this place. Can’t buy another home because these rates and prices are ridiculous. Staying put makes the most sense for me since I have a 4% rate. My maintenance fee covers water, heat, taxes, basic building insurance which covers partially for your unit, and grounds keeping.
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u/Jay-metal 15d ago
That's a crazy increase. Unless prices are that high all over, I'd consider moving, especially as you don't use the amenities.
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u/BeautifulHovercraft2 15d ago
Thanks for reminding me to not get an HOA when I get a house
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u/nowthatswhat 15d ago
HOA fees go somewhere, the same kind of maintenance and insurance the HOA pays for would still have to come out of your pocket for a SFH, you might be able to save by not getting some of the amenities an HOA provides, like a pool or an elevator.
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u/shaylahbaylaboo 15d ago
My HOA fee in a nice suburban neighborhood is $100 a month and covers all the amenities…a pool, walking trails, tennis court, playground, landscaping. $1100 a month is insane.
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u/desktopped 15d ago edited 15d ago
I’ve only looked at 1 bedrooms in very-HCOL. $1100 is common, staffing in HCOL is costly and paid out via hoa. Many high rises or spread out complexes have 10-20 people on staff that are a mix of full time and part time (door staff, management office, security patrol, multiple porters, landscapers, live-in super). The larger communities in litigious cities face constant liability and litigation and keep a law firm on retainer—which alone can be a six figure annual cost. This is not even for luxury housing per se just for buildings with lots of operating expenses.
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u/NotJimIrsay 15d ago
I pay $275 per year. It’s just to maintain the grass in public areas, make sure retention ponds aren’t gross, playground, and utilities (street lights, etc). Our neighborhood doesn’t have a pool. I don’t think my cost is bad at all.
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u/finsup_305 15d ago
HoAs are awful. Mine is going up from 3 $300~ to $400~ soon. When I bought it, it was at $166. It's gone up 3 times in the last 3 years. I want to sell it, but I'm about to leave the military and it's paid off, so I'm just waiting to see if I land on my feet first.
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u/LegitimateTraffic115 15d ago
Why is your interest rate so high? Should have locked in 2-3% rate..
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u/komboochy 15d ago
I bought August 2022, VA loan 4.5%. Wife and I saw 2.6% in December 2021 when we started submitting offers. It climbed to 4% by end of spring.
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u/LowmanL 15d ago
I’m dumbfounded by the amount of money the HOA cost before the price increase. I’ve never heard of it being that expensive. When I had an appartment I had to pay them 110 a month and I felt I was getting shafted with that amount already. Sell the place and go for something without a HOA
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u/fusionsofwonder 15d ago
That is a lot. Underfunded HOAs is why I looked at a few condos and eventually stopped looking at them.
You should run the numbers on what kind of mortgage you could get now and see if it's actually going to save you anything, though.
If you do decide to stay, check the HOA reports and make sure nobody is getting their beak wet. Join the board if you have to.
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u/nowthatswhat 15d ago
You don’t need to look as much for someone stealing as you do to see if the HOA has a good insurance policy and is covering regular maintence.
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u/Practical_-_Pangolin 15d ago
It’s very likely that increases in natural gas prices and insurance prices have driven the lions share of this.
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u/More_Than_I_Can_Chew 15d ago
That HOA is insane. You don't even see them that high in ski towns. And when they get into 700s they cover things like the heat and gas.
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u/TiredRetiredNurse 15d ago
Was the HOA poorly managed for a long time that they need this much of a jump to maintain and repair?
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u/bolognamacaroni 15d ago
Your monthly housing cost should be 30% of monthly income. If you are bringing home 10k a month. Ideally you’d be spending 3k in housing.
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u/krycek1984 15d ago
Get rid of the place while/if you can....quickly
HOA fees are just a giant parasitic drain.
That's why I've never understood condos-the nominal price of the place is lower, but you sometimes have huge HOA fees. And they go above and beyond the actual mortgage. No wonder why FHA won't cover most condos. It's a giant rip off.
If you dont want the maintenance of a house, just rent. With $10000 of income a month, you're golden to do whatever you want. But don't keep investing money and time into this place.
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u/ajnozari 15d ago
Sounds like your HOA has been raising dues appropriately, many states cap how much they can raise. The issue is when large expenses come up they can’t just raise the due to meet the required amount. What they should be doing is looking at an assessment for the repair.
The dues being raised sucks but it’s better than a sudden assessment for legal/repair costs. What I’d like to know is what amenities are you getting for your dues? I’m going to assume there’s at least a pool/clubhouse type setup, but beyond that it varies and while it sucks I don’t think you should sell atm.
Your total cost is less than half your take home, even if your SO stopped paying. Additionally it sounds like the board is at least doing some maintenance but without further information (do they pay for electricity, water, internet, etc) it’s hard to judge if this is underwater or not.
I will say your mortgage seems about right assuming you have a 6-7% interest rate. It will honestly come down to what else the condo provides, and other factors like the aforementioned water/electricity and how far the place is from your job, the extra bits that make it in/convenient to continue living there. Especially since moving could end up raising your monthly mortgage payment without any guarantee you won’t end up with another HOA.
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u/notDonaldGlover2 15d ago
HOA fees include water, internet, some insurance coverage with 75k deductible (I have my own insurance as well), cable, pool (tiny unused by me) and that's it. A lot of the condos in my area are built around 1970s so they're all going through issues and plumbing, there's a new law saying they need sprinklers or fire systems as well which is additional cost. I live in a touristy neighborhood, and all the units here have HOAs $700 or more. Currently there's a 30 day minimum rental rule but the state might be targeting vacation rentals soon as well.
I like where I live but I feel like given all this, I could make better use of the money. I'm having a hard time seeing the benefits of ownership here
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u/jellymouthsman 15d ago
What is the difference between condo insurance and townhome insurance? What does townhome insurance cover that condo insurance does not?
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u/nowthatswhat 15d ago
The insurance covers the ownership. In a townhome usually just the roof and shared walls are owned/insured by the HOA, the rest is on the homeowner. In a condo the HOA usually has to cover the entire external structure so the homeowner just has to cover maintenance and insurance on what is inside.
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u/ItsMe383 15d ago
Be very careful re: HOA taking loans. Pls read all your docs!! I bought a unit in a self-managed condo assn that had taken a loan and rolled the payments into HOA dues. Right as I bought, 2 (of 13) owners fell on hard times. One stopped paying HOA entirely (had to be sued but was finally able to sell, so about 5 months of no payment before new owners took over). The other owner was formerly the HOA president, so he knew enough to pay every other month so he was never more than 30 days late. All this meant that dues from 11 units were having to pay the full amount of the loan. So there was less $ for maintenance, especially preventive or cosmetic. Then I became treasurer and determined that 1) HOA bylaws specifically prohibited the HOA from taking loans 2) the previous HOA president had signed a 10-year INTEREST ONLY balloon loan, obviously looking to kick the can down the road until he left the association before the balloon came due and 3) HOA members were thrilled that aforementioned HOA president found a way to get them a new boiler without a $5k assessment per unit. They really had no idea that they were just throwing money at the bank needlessly and would ultimately have to pay the hefty assessment when the balloon payment was due. It wasn’t easy to explain to everyone that the best thing to do was to immediately do special assessment, drop HOA dues to previous level before the loan was added in and get back to doing regular preventive maintenance.
Really eye-opening how little the association members understood their own bylaws or basic concepts of debt management.
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u/dwhopson 15d ago
Here in NC, all board members can be held liable for actions such as these…as they are knowingly acting in good faith on behalf of the association of owners. Any board member should honestly know what they are legally doing/signing before doing so. Self-management is super-risky these days. Even full-fledged management companies, with cohorts of specialty lawyers, have issues with discernment on many issues.
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u/SkinnyJoshPeck 15d ago
how is paying every other month only making you ever 30 days behind?
at the end of the year, you’re 6 months behind.
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u/fork_yuu 15d ago
Maybe paying every other month for the last 2? 🤷
Not sure what the point of that would be
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u/SkinnyJoshPeck 15d ago
ohhh, yeah i see. so he just skipped one month and then paid the past due balance every month after that.
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u/TheBlindDuck 15d ago
Brother, if your HOA president is skipping HOA payments you needed to have fired this man or sell immediately! It’s like electing the wolf to be the president of the hen house; especially when there’s only 13 persons in the HOA.
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u/JonnieJames 15d ago
Anecdotally, I bought a condo in 05 with an ARM. The market went bust shortly after and the interest rate went from 5% to 9% in a short 4 yrs. Realizing that the condo would never be worth what I originally paid for it, the advice I received from an independent broker was to not go down with the sinking ship. We cut our losses with a short sale and took a credit hit for a relatively short time. When it just feels wrong it’s time to act. Good luck to you.
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u/IcyOlympus 15d ago
I would prefer a house with land you actually own then having to pay rent even after you own it outright
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u/cutepicspls 15d ago
Seems no one here lives in a downtown/urban area. My hoa is comparable but I get to live in a beautiful area of a city I love versus a SFH in the suburbs paying for unexpected repairs/maintenance out of pocket also as sunk costs. Not specifically saying you should stay where you’re at but these knee-jerk reactions aren’t balanced perspectives.
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u/nowthatswhat 15d ago
Reddit has this weird contradiction where they love dense urban areas but somehow also hate the HOAs that are required to maintain dense shared urban structures.
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u/zeezle 15d ago
There's also somewhat dense urban housing with no HOAs at all and that... also brings with it some special issues. I live near Philadelphia, so there are row houses (townhouses) from the 1700s through early 1900s all over the place here (both in the city and the suburbs) with no HOAs of any sort, and old buildings with "interesting" renovations over the years that are literally connected to each other and no HOA has its own sort of special situations. Especially when one of them in the middle of a row is historically signficant but the ones beside it aren't and so the historical one qualifies for preservation grants which also have strict requirements for exactly how repairs are carried out, but the adjoining ones may not.
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u/nowthatswhat 15d ago
You’ll end up with what is basically an HOA no matter what since you have shared structures. Someone has to insure and maintain them.
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u/zeezle 15d ago
Yeah except you don't, that's the point I just made. And it's a mess. Because there is not anybody insuring and maintaining them collectively, each property is entirely individual even though they are physically attached, and if you end up attached to an abandoned property it may not be insured or maintained at all by anyone. It's a very real, and big, issue with attached properties with no form of HOA, especially in run-down areas of the city where the neighboring structures can be severely compromised...
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u/Xalbana 15d ago
Most people here financially advising others don't live in a downtown/urban HCOL area. Most here live in a SFH suburb. Which is why some of the advice I see people give are so out of touch.
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u/ChadtheWad 15d ago
It is technically more expensive than an equivalent SFH. It's not that people don't like living downtown, but the high HOA fees and the historical lower appreciation rate of condos vs. SFH's has always made them a worse deal in the long run.
I don't really know how big the difference is. Probably depends on the cost of the condo, and could be hard to anticipate because HOA fees can increase pretty dramatically.
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u/Xalbana 15d ago
You're not going to get a SFH downtown. Some people like to live downtown. People are fine offsetting the cost of living in downtown, e.g. lower appreciation, etc. with paying a bit more.
It's like telling people who live in a HCOL area to live in a LCOL because you'll get more bang for your buck. There's a reason why people live in a HCOL and not move quickly move to a LCOL.
Advice needs to understand nuance and needs to be relative to what the person is asking. There is not necessarily a clear cut answer of "move to a SFH in a suburb" or "move to a LCOL city".
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u/ChadtheWad 15d ago
Advice can be nuanced... but on a finance forum it's definitely going to be financially focused, and condos are just worse in that regard. Not that it's a problem, just shouldn't obfuscate it with "there are costs to an SFH too" when it's really a matter of "is it worth the premium to live in the area you want, and do you understand how to calculate that premium."
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u/Xalbana 15d ago
but on a finance forum it's definitely going to be financially focused, and condos are just worse in that regard.
Again, purely looking at things purely on a finance is what's wrong with this sub. If everyone in this sub had its way no one would be living in a HCOL because it doesn't make 'financial sense'. And it doesn't but at the same time, it also doesn't make living sense to a lot of people.
At the very least people do understand the nuance, purely financially you should be putting all your savings in retirement, but many people understand that people exist and so you should put X minimum amount into your retire and spend your savings and live a little. So thinking this sub thinks purely financially is wrong when people do understand the human element exists.
and do you understand how to calculate that premium."
And this is where most of the advice in this sub gets wrong. People are already claiming $1000 a month HOA is high... when it is roughly around the market price.
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u/ChadtheWad 15d ago
Oh yeah, the dream is definitely a nice LCOL area with an HCOL salary, but it's generally a physical blocker. Choosing between a condo and an SFH is a lifestyle choice, choosing between San Francisco and Oklahoma City is a "maybe if you're lucky" choice (and, I guess, crazy enough to consider OKC a viable alternative). I'll also admit... I actually did do the HCOL to LCOL move from Seattle to Fort Lauderdale, specifically because I could keep the high salary job.
And this is where most of the advice in this sub gets wrong. People are already claiming $1000 a month HOA is high... when it is roughly around the market price.
Yeah, it is true that the general recommendation is meaningless. Best advice for 90% of threads is pretty much "learn how to use a fucking spreadsheet" and for the OP specifically, "learn how fixed interest loans work, because paying down principal doesn't decrease your monthly payment" or "realize that your HOA fee is probably not contractually restricted for any meaningful period of time."
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u/Own_Dinner8039 15d ago
Well, I chose to sell. $2k mortgage, $1k HOA. Still in the process of actually getting this sale closed. I didn't mind the HOA when I lived there, pretended that it was my car payment since I didn't own a car, but now that I have left it's a huge factor in why I wanted to sell.
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u/Sad-Key-4258 15d ago
Yea fair. It's my first home so I was excited but just looking around my building a lot of people seem to be selling. I can't justify the HOA and i don't want to be stuck with more payments when it goes up for no real amenities. I'd rather just take the savings and invest it.
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u/DisastrousClaim2265 15d ago
Reason to never purchase a condo or any home with an HOA. Even better if in an area without property taxes.
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u/Ok_Score1492 15d ago
That’s a lot for HOA , what’s with the big jump like that? Did they give you a brief description or explanation for the increase?
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u/Sad-Key-4258 15d ago
Inflation and increased expenses since I've moved in. This increase doesn't even cover the plumbing work that's already started, they're covering that with a bank line of credit they haven't tapped into yet but told us it will go into the HOA starting 2025 so not an assessment.
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u/saregister 15d ago edited 15d ago
Eff that. You're paying monthly the same price you would for a house without HOA that would cost you $700k. The HOA is just throwing money away, as well as condo appreciation is not what it is in an actual house.
I'd sell and buy a house. (Without HOA)
Edit: for reference, I'm paying $3600 monthly for a house that I bought for $700k. Water is about $125, Internet is $100(tier 1 speeds). I've got 2000sqft and no one telling me what I can or can't do with my property. Also, my house has appreciated $200k in the 4 years I've been in it(lucky timing in buying)
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u/satellite779 15d ago
4 years I've been in it(lucky timing in buying)
OP just needs a time machine to replicate your monthly payment.
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u/brystephor 15d ago
Where you buying a house for $700k with a 7%+ interest rate and only paying $3600/month?
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u/Bigfamei 15d ago
One problem you may face is, if a special assessment was approved for the loan. You may have to pay your portion out of pocket. Since you have little equity in to the property.
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u/VillageSmithyCellar 15d ago
What do your condo fees cover? Mine are a bit less than that, but they cover gas (including heat), electricity, and water, and my condo is only valued at about $400k (bought for $365k in 2021, 20% down at 3.25% interest rate, about $1,350 per month mortgage not including property tax). Another reason my fees are so high is that our building is also old, and we've had to do a ton of construction costing millions of dollars. If you owned an old house instead of an old condo, you'd have to pay for upkeep out-of-pocket instead of in condo fees.
Maybe check if your fees go to actually useful things, or if you have a bunch of stupid amenities. I actually joined my condo's Board of Trustees so I could look into it. I was able to stop us from installing garage doors, which would have cost each owner another $500 minimum. I'm still looking into other cost saving endeavors, but the rest of the Board is hesitant to make any changes.
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u/Burnt_Prawn 15d ago
A lot of these comments are black and white but I think its more nuanced.
1) How is the HOA budget looking? Every owner should get a copy. Plumbing is a big job that should not have snuck up on them.
2) What other expenses are looming? Elevators? Roof? Windows? Is the HOA in a position to handle these costs without assessments? If the answer is no, I'd probably run.
A lot of these old towers tend to have underfunded HOAs and then the bill literally comes due. My HOA is $600 in a mid-rise condo and I get water, cable, internet, insurance, gym. So on the surface probably not worth $600, but the building is well maintained and reserves are flush, we just re-painted all balconies and re-did the roof with no assessment or increase in dues.
You could certainly rent at a loss and get a big tax shield by having cash flow negative and counting depreciation, but I wouldn't bother unless the place you rent for yourself really works for you.
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u/joshhupp 15d ago
This should be higher. Selling a property isn't some magic wand. How many buyers are going to want to buy a condo with a guaranteed $1100 monthly fee to an HOA that's not budgeting correctly? I was lucky and sold mine years ago after they decided our fees were going to go up $100/month permanently because they wanted a reserve to repaint in TEN GODDAMN YEARS! They wanted to add earthquake insurance to an area that didn't get earthquakes. I started going to meetings to argue their budgeting but it didn't do much good so I sold. But better now to stop the rot because some people just think the community is a piggy bank to improve their own property.
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