October 13, 2014
Homeowners Association Dues
Homebuyers in the Crested Butte and Gunnison area are often surprised at the costs of the Homeowner’s Association (HOA) dues. HOA dues vary wildly, and for buyers coming from other areas, they are often more than the buyer is accustomed to seeing. Meanwhile, on some websites it may be difficult to discern whether those dues are monthly, quarterly, or yearly. Not to mention the biggest question of all- just what do those dues cover, anyway?
For properties that involve HOA dues, an examination of those dues is essential to finding the properties’ overall value. Depending on what the homebuyer is looking for, it is entirely possible that a property with higher dues may be more desirable than one with lower dues. Examining what the HOA covers, and what those costs would be if you had to pay them on your own, along with determining which amenities are important to you as a homebuyer, is the key to determining the value of homeowners association dues.
Let’s take a look at some of the common items that HOA fees may cover:
- Insurance: HOA’s carry insurance on the building, and lenders definitely look into the coverage before making a loan on a property. You will still want to carry insurance for your unit and your possessions, though this is typically a much lower cost, than if you were paying all of the insurance yourself.
- Snow Removal: Snow removal in a snowy winter can run hundreds and even thousands of dollars, including both parking areas and roof shoveling.
- Water/Sewer: Though this is not typically a large expenditure, it’s one less bill to worry about every month.
- Building maintenance: Conditions at 9,000′ are harsh, from the wind to the sun to the snow. A good HOA will keep up with painting and other items so you don’t have to.
- Amenities: This is really a personal preference question. If you want a pool and a hot tub, or are planning to rent your condo, this may be an important consideration. If not, the portion of your HOA fees going to this expenditure may be wasted money.
- Cable and/or internet: If you or your guests require this, ask yourself what you would pay if the HOA did not cover it.
- Heat: Though uncommon, some condo HOA’s cover heat, which can costs hundreds of dollars per month in our cold climate.
- Capital Improvement Projects: Some HOA’s charge extra monthly fees before, during, and/or after capital improvement projects. In many cases, this means that the dues will return to a lower level once the project is complete. While this can be a burden for homeowers, it is often preferable to a large, one-time special assessment. Special assessments for big projects such as a new roof, new windows, or new siding can cost tens of thousands of dollars.
- Rental Management: Many HOA management companies also offer management services for short term rentals. Typically this is an additional cost beyond the scope of the HOA dues, but not always.
One final item to take note of is the Condo association’s overall financial health. A poorly run HOA may make it impossible to get a loan- an important consideration whether you are trying to purchase a condo or looking to sell down the road. This most often occurs when a condo doesn’t keep enough money in their reserve account.
The important thing to remember when it comes to HOA dues is that every property is unique, as are your own needs and desires. The HOA dues, what they cover, and their cost, are just as important as any other part of a property. In fact, the HOA may be more important- after all, remodeling the kitchen is generally easier than changing a homeowner’s association. For more information regarding specific HOA dues and what they cover, please contact me.