How are condo fees calculated? We’ll remove the shroud of mystery for you
There is a lot of money moving around when you buy a condo – or any real estate for that matter. Points, closing costs, inspection fees, down payment, mortgage insurance, moving costs, taxes, and condo fees are just a few places your money gets allocated.
Some are straightforward, while others are cloaked in mystery. Figuring out your mortgage payment or closing costs is easy enough to determine. You know ahead of time what your condo fees are, but how are condo fees calculated? If you’re going to be paying a fee every month, it’s only fair that you know how those fees are decided.
What are condo fees?
Condo fees aren’t calculated randomly. There is a science behind it. Fees boil down to basic math and percentages, but that’s getting too far ahead. What are condo fees, anyway?
Whether you live in a small condo with three units or a high-rise condominium complex with hundreds of people, you’ll pay condo fees. Condo fees go into a collective account to cover expenses such as electricity and heat in common areas, general maintenance, amenities, and salaries for the condo property manager, concierge, or any other service providers. Some of your condo fees are set aside to pay for bigger projects like repairing or replacing a roof or painting the exterior of the condo building.
One of the great benefits of condo fees is that when one of those extensive repairs becomes necessary, you’ve already paid for it. If you live in a condo with a workout facility, your condo fees cover that, too, so you aren’t paying an additional fee for a monthly health club membership.
How are condo fees calculated
So you’re paying condo fees. You know what they are used for, but how are condo fees calculated? As a condo owner, you own a percentage of the condo property – usually the square footage of your unit plus any storage or parking space. You also own a share in the collective spaces, like a pool, community room, or tennis courts.
Your condo fees are based on the amount of ownership you have. So if you own ten percent of the total condo property, your condo fees will be 10 percent of the yearly operating budget.
That’s the short version. Condo fees are calculated based on that percentage along with an estimated yearly budget. Your condo community’s budget considers expenses like garbage collection, paying a property manager, liability insurance for the grounds, general maintenance and improvements, plus an additional amount to set aside for the unexpected costs that invariably come up.
For instance, if the yearly operating budget for your condo community is $100,000 and you own 10% of the total property, your yearly condo fees would be $10,000. Divide that by 12 months, and you have a monthly condo fee of $833.34.
Obviously, the operating budget and condo fees can vary immensely, depending on the size, location, units, and amenities offered. While it’s true that no one wants to pay extra fees, once you understand where the money is going, and why your are paying a specified amount, it makes a lot more sense. And it hurts a whole lot less when you are sharing expenses with other condo owners! If you owned a single family home, you’d shoulder every expense on your own.
If you haven’t bought a condo yet, or if you have and are active in your condo association (and you are, right?), condo fees are something to take seriously. Don’t go for low fees just to make it easier on your wallet – that could end up hurting you in the long run. If the fees are too low, you could get hit with an assessment (an addition to your regular fees) to cover expenses that aren’t properly budgeted for.
Ask for a copy of the budget from your condo board or property manager to get a better idea of how your specific condo fees are calculated. In the meantime, go enjoy your condo amenities knowing they are paid for, and when something breaks, it won’t be up to just you to take care of it!
If you’d like to receive announcements about scheduled maintenance, events, or emergencies in your condo right on your phone, Evercondo is the app for you! Tell your property manager to contact Evercondo for a free demonstration today.