Just looking ahead 5-10 years.
I own my home free and clear. I’d like sell it and move to another neighborhood in retirement, and I am weighing the benefits vs. downfalls of condo ownership.
The one thing that really makes me pause is association fees. They seem pretty steep, and I understand they can be raised willy-nilly (is this true? Particularly the willy-nilly part?)
All input appreciated.
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Condos are the ultimate in HOAs (Home Owner Associations).
For me, the existence of an HOAis a deal-breaker - I will never (at 65, I can use that word) consider willingly dealing with one.
Horror stories are rampant, and with good reason.
They have a reputation for attracting petty tyrants who will foreclose (yes, they can) on you for having a pickup instead if a passenger car.
The HOA set dues and can set them at whatever level they like.
In the case of newly-built condos, the builder is responsible for dues until x% of units are sold.
They are notorious for setting the dues unrealistically low to attract buyers - who then find out that the pool, gym, clubhouse and playground require maintenance, and that means money.
It is possible for a condo (especially if there is no common property) to be run responsibly - at least until the next election of Board members.
I never heard of a condo with no common property. At the very least the building exterior. It’s the common property that makes a condo attractive to those of us who like condos, typically.
My inlaws live in a retirement community - not a condo, but it does have an association. Their fees are amazingly reasonable, and they cover water, sewage, and garbage pickup, as well as use of the pool, the gym, the bowling alley, and the golf course (some do have nominal user fees, I think.) So there are places where HOAs are not run by petty tyrants. You just have to exercise due diligence before you buy. I would recommend talking to other residents to get a feel for what you’ll be in for.
This is something in the back of my mind. Should my husband die before me, I won’t want to maintain this house and the 3 acres that go with it. But I’m hoping that’s still way off in the future.
Mine too. The secret is to look at a place with an established HOA and a long track record of being reasonable. Not having to deal with the exterior will eventually be a big plus. Condos are also relatively smaller than houses, which could be a better fit for when you retire.
Sure there are horror stories, but don’t let that make you think they are the norm. You need more research.
I own a house now, and I still am in a HOA. They are a bit obnoxious at times, but they also maintain two very nice parks and swimming pools (paid for by the users, not everyone) and do lots of nice stuff for the community.
That I could buy a condo in most parts of the country with the equity I have in my house with money left over is another plus.
An alternative to a condo would be an apartment.
Why not choose an apartment instead?
I lived in a big condo development (200+ units) and small one (3 unit triple decker) and there are pluses and minuses. For me, the pluses have outweighed the minuses.
In the big development they condo fees did rise dramatically because they were artificially low for the first 20 years and new retaining walls and roofs were needed. We had a special assessment and then fees went up from about $60/month when I purchased my condo to $250 in the space of a few years. But that also covered snow removal, trash, new porches, new roofs, the common areas (pool, mailboxes, tennis courts, landscaping, sewer/water) so cost of ownership wasn’t bad.
My current place has just three units and one is absentee so I end up doing a lot of the work with the bills and jobs around the place. Painting the exterior, the roof, staining the decks, clearing back the vegetation, and shoveling all take time and effort. But having someone here to look after the place when we’re away, to take out the trash on days I forget.
I’ve never really worried about the HOA aspects of the condo, it’s mostly been the money. And you’re paying for convenience, mostly.
If you have enough capital to pay off the mortgage that will save you some % of expenditures per month compared to rent. A comparable condo to my apartment, if I paid off the mortgage, would be at least 30% cheaper than rent.
In a condo do you have to do interior maintenance (unplug drains, replace water heater, fix the HVAC) or is that covered under the condo fees? I am under the impression condo fees are more for the roof, lawn and exterior.
If there is a history of “Special Assessments”, look out. That means the dues are too low to fund major (and quite predictable) long-term expenses.
The land, exterior of the walls and roofs are (IIRC) the minimum possible property the HOA owns.
That little patch of grass with the attractive community name by the entrance is also owned by the HOA and its care costs money.
Due diligence is indeed required.
Find out (from the Recorder’s office, not the HOA) how many of the units are owner-occupied. If a large percent are rentals, the landlords are setting their own expenses. Typically, these are not enough to create reserves for re-roofing, re-painting, etc.
I’ve lived in three different condos and have never had more than a minor disagreement with any neighbor. I’m know it happens but in my experience they are not the norm.
Pros: for me, it’s mostly that I don’t have to do a thing to keep up the property; it’s all handled for me. Someone shovels the walk, waters the grass, and performs general maintenance. I don’t like to do any of that stuff.
Cons: that convenience costs money in condo fees. We do have rules about certain things that can (or can not) be done but none of them impact me in any way.
I have a neighbor in his 70s still owns his own house. He looked into one of those condo retirement situations and he concluded they want way too much money for the condo, and he found the monthly fees too high. He said for that price, he could easily afford to stay in his own house and pay to have a lawn service and snow removal, and would still be ahead of the game than with a HOA. The other aspect to staying in his own home is that he is in control of the costs, because there are many competing services out there where in an HOA he’s stuck with them. He felt it was silly to pay into an HOA for things he was never going to use like the pool, gym, etc. He didn’t tell me this, but I suspect he prefers to be around younger people.
Why do people want to go to a retirement community? I can see someone who isn’t in the best of health wanting to be in an assisted living facility.
Why a retirement community?
They are all of the same generation - play the same music, have the same attitudes on many social and political subjects.
Nobody is going to treat you like you’re a bother or “out of touch”. Nobody will snicker at your hairstyle or clothing.
Herd instinct - every generation defines its own values.
Here is one reason why. In the US and Canada and probably most countries, the money you invest in ownership is earning your “rent” (i.e. cost of housing) completely tax free. If instead you invest it and use the earnings to pay rent, you have to add your marginal tax to the cost. This means, in effect, that renters (mostly the poorer people) are subsidizing the home and condo owners (mostly better off).
That said, there are condo horror stories, true enough. But the local government can be equally arbitrary. A former neighbor owned a small camping trailer that folded down into something that was a car-width’s wide, maybe 10 feet long and when folded only about 4 feet high. Yes, it was a pretty minimal camper. But our Town said that parking in their driveway violated local zoning. The same thing happened to some guy whose vehicle in his driveway was a small panel truck with the name of his business painted on.
Some of them, at least, provide services that I don’t think you get in an ordinary condo association. Not things like pools and golf courses, but services geared to people who are either not living there yet or not living there full time.For example, one place I looked at in Florida required that buyers be over 50. Now most people can’t retire quite that early and if you wanted to rent your unit until you retire , they would handle everything from finding the tenant to collecting the rent. ( I’m sure there’s a fee for it, but there would be a fee no matter who you hired to handle it and some people would find it preferable to have it all taken care of on-site).Snowbirds are generally not in Florida during hurricane season, and this community would put up and take down your hurricane shutters every year. They also had five or six locations in a fairly small area with different amenities ( one with a golf course, one with a boat slip etc) and as long as you owned in one location, you could use the amenities at any location.
There are two models commonly used for condo fees.
One model is to charge just for current expenses. So for a long-lived item like a roof no money is being set aside over the years and when the roof needs replacing a special assessment will be made for it.
The other model will be charging something every month to put into the roof fund. So when the roof does need replacing, they simply draw down the funds saved over the last 20 years or whenever.
There are pros and cons to each method.
The first method means low fees, but occasional surprises. The second method means high fees but fewer, smaller surprises. After all, nobody can say for sure what a roof will cost in 20 years, or exactly how many years it’ll last. So there’s no assurance the roof fund will be the right size when needed.
Some will argue that having large funds in reserve tends to support a spendthrift board that will spend (some of) the saved money on fripperies. Others will argue that the lack of reserves encourages scrimping on needed maintenance and waste a dollar to save a penny thinking. Both POVs have a kernel of truth in them.
When you buy a house, HOA or no, it pays to learn about the neighborhood and the municipality first. Understand what you’re getting into. Is the city about to run out of water, or are sewerage problems rampant in that neighborhood? How many crack houses are nearby?
A condo has all the same issues. And you have the HOA and board. Every complex has a personality. Some are impersonal, some are more like joining a social club. Some are run by skinflints, others by spendthrifts. Given the democratic nature of board elections, it’s pretty rare for a building to go from hard over one way to the other. Unlike government politics, there’s not just two diametrically opposed choices on offer at election time.
Owning one’s own single family home is often considered economically secure in retirement since costs can’t rise. But utilities, insurance, and property taxes can, and almost surely will rise. As will the price of plumbers, roofs, replacement dishwashers, and all the rest of the maintenance that goes with being a homeowner.
Condos are no different in that regard.
We understood that he meant “extraneous common property”
such as pools, spa, sauna, gym, gardens, entertainment areas , garage and perks like security staff .
She’s not retired, but my mom lives in a condo-like setup (they are duplex that quite cleverly look like single-family homes). It works out well for her. She doesn’t have to worry about outside maintainence, and she actually uses the common facilities (they have two very pleasant pools and some nice walking paths.) Her neighbors never give her trouble, and the HOA is sometimes silly, but relatively moderate.
Now, if you are the type of person who wants to build stuff, raise chickens, or otherwise tinker around, it’s not a good fit. But for a person who wants to own but without the hassels, it can be a really good fit.
An HOA board does NOT have the authority to act unilaterally. They can’t raise fees or change the by-laws and covenants without a vote of the membership. They also can’t foreclose without going to court. The HOA board exists to serve the membership and will only be as autocratic as they are allowed to be. If the membership doesn’t bother to show up at board meetings, then things can get out of hand; there will always be petty tyrants among us, but that’s what the annual elections are for.
Before buying a condo or any home that is subject to an HOA, I’d not only take a copy of the by-laws and covenants to a lawyer to check out, but I’d talk to people who live there to find out what the complaints are. Believe me, people will be more than happy to tell you their problems.
I don’t understand why Americans have to "own " something.
You are retired, sold your paid off house, why not rent? If you don’t like it, move on. Different neighborhoods, city, state or country. You are not tied down, and you are free!
Because Americans think renting is for losers. No one wants to be a loser, and no one wants to look like a loser.