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Maintenance fees: how much is just right?

Written by Super
December 7, 2021
Maintenance fees: how much is just right?

Too little, and you may not have enough for future repairs. Too much, and it can be harder to sell in the future.

Chances are, you’ve seen a real estate listing for a condo, co-op, or homeowner’s association where the description boasts “low monthly maintenance fees!” or “healthy reserve!” The odds are lower that you’ve seen a listing that has both statements about the same building. No one wants to overpay, but they also won’t be happy having to pay a special assessment to cover planned or unplanned problems. So how should a building think about what’s appropriate when evaluating its maintenance fees (or HOA fees/common charges)?

Maintenance fees are the primary way condos, co-ops, and homeowners associations pay for its maintenance and repairs (planned and unplanned). Building types will affect what the fees pay for. For instance, in a co-op, these fees also cover taxes and any underlying mortgage on the building which typically make them more expensive than a condo or HOA’s fees. 

Let’s start by outlining the differences between what the fees cover in a condo, co-op, or HOA.

HOA fees cover:

  • Basic upkeep of the property’s common areas: cleaning, landscaping, trash & recycling, repairs
  • Maintenance of any amenities, such as a communal roofdeck, pool, or gym
  • City services and utilities: gas, and electricity for common areas, sewage, water, and trash removal
  • Insurance for the HOA’s common spaces, general liability, and potentially D&O
  • Security systems and services
  • Tax preparation and filing
  • Staff, property management, and software services
  • Reserve funds to set aside savings for future needs

Condo fees cover everything in the HOA plus:

  • Building repairs to areas deemed to be building responsibility in the bylaws may include the roof and exterior facade
  • Condo fees are also not always split evenly the way they are with HOAs, they may be calculated by square footage percentage ownership within the building or by access to common elements—such as a private balcony or backyard

Co-op fees cover everything in the condo plus:

  • Property taxes
  • Any underlying mortgage
  • Potentially also interior repairs to a unit as well as utilities

Beyond the type of building, the other major driver of higher maintenance fees is the type of amenities and services available in the building. 

Factors that increase maintenance fees in a building include:

  • Staff: the higher your payroll, the higher your maintenance fees will be
  • Expensive amenities that have lots of upkeep like elevators, pools, and outdoor parks or playgrounds
  • Building size and age: older and larger buildings tend to have more upkeep
  • Building health: a poorly-maintained or poorly-constructed building can expect to have large repair projects

Low-maintenance amenities that may not impact fees significantly include:

  • Fitness facilities, after the initial cost of equipment
  • Storage facilities may even generate revenue
  • Parking may even generate revenue
  • Commercial space pays into the building maintenance and may generate revenue if the building is collecting the rent
  • Laundry facilities, after the initial cost of equipment, may even generate revenue
  • Package rooms, if unattended

The “right” fee for your building will depend on a number of factors. But you’re probably still wondering, what are some benchmarks for fees, and how often those fees are raised?

Expenses can be expected to rise over time with inflation, so a 2-5% annual increase in fees is typical for a building that is managing well with its current maintenance fees or chooses to raise additional funds through special assessments or a loan.

The cost of services and staff will vary by location, however on average, HOA fees are about $200-300 per month. Condos can vary greatly—even in New York City alone, a 2019 analysis found that fees can range from 0.05% to 0.35% of the median list price of a unit (that’s translates to $278 to $1,876). Co-ops in New York City are estimated to require between $1.40 to $5.90 per square foot, a similarly large range.

Ultimately, the right fee for your building will come down to how efficiently and effectively it is managed, and the type of maintenance needs you expect for your property. Property managers and boards should review the building's finances on a regular basis to understand if the maintenance fees are enough to cover expenses and contribute sufficient reserves to cover planned and unplanned needs.

Good financial management is a cornerstone of a healthy building. As the operating system for buildings, Super’s software platform helps property managers, boards, and residents streamline tasks and enhance transparency and accountability.

Ready to get started? Schedule a demo of Super.

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