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:
Condo fees cover everything in the HOA plus:
Co-op fees cover everything in the condo plus:
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:
Low-maintenance amenities that may not impact fees significantly include:
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.
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