Whether you are thinking of buying an apartment or condominium as an investment property or as your primary residence, you are going to have to pay more than just your monthly mortgage and living expenses. An additional cost of owning an apartment or condo is their monthly maintenance fees. The monthly fee covers the cost of the upkeep of the buildings, grounds, and common areas.
Your monthly fee can be as low as $50 per month to more than $1,000 per month—depending on the location and size of the apartment. Of course, location can be a significant driver of the costs of a condo and its monthly fees, especially if the property is situated in a highly-desired area such as a city or near the beach.
Who Determines the Monthly Maintenance Fees
The condominium association is charged with overseeing the upkeep of the building and community. Condo owners become members of the association, which meets to decide on projects or improvements for the property. Those who purchase a condominium pay the association the monthly maintenance fee, which is distributed to pay the necessary expenses. The association also maintains a reserve fund to pay for unexpected expenses. In other words, by paying the monthly fee, each condo owner is saving money that will go to repairs and amenities in the complex.
- An additional cost, aside from the mortgage payment, of owning an apartment or condo are their monthly maintenance fees.
- The monthly maintenance fee covers the cost of the upkeep of the buildings, grounds, and common areas.
- Investors should consider the costs of the monthly maintenance fees, but also the amenities that come with the cost.
What Monthly Maintenance Fees Cover
When it comes to buying a condo, investors should consider the costs of the monthly maintenance fees, but also the amenities and services that come with the cost. Monthly maintenance fees can cover a variety of services and expenses, including:
- Lobby and common areas
- Patios and sidewalks
- Tennis courts
- Swimming pool
- Snow removal
- Sewage lines
- Trash collection
- Buildings' physical exterior
Typically, there are also quarterly or annual assessments, which are additional fees for unexpected major expenses that don’t fall under the monthly maintenance fee category.
It's important to consider that monthly maintenance fees can vary greatly from one location to another. In addition to the general upkeep of a property, higher monthly fees could be the result of services such as a concierge, clubhouse, increased security, covered parking, or an underground parking garage. Depending on the building operator, some of those extras can be optional, which means you may be able to lower the monthly expense by foregoing some amenities. For example, if you didn't need access to the gym or swimming pool, your fee might be lower.
Before buying, research recently sold properties to get a sense of the market—whether prices have been reduced or not and how many days properties have gone unsold.
What Fees Don’t Cover
One of the disadvantages of owning an apartment or condo is that while you pay a monthly maintenance fee, you're responsible for the costs of any repairs if something goes wrong inside your unit. For example, let’s say the tile floor starts coming apart, condo owners would have to pay out of pocket. Conversely, renters would not have to pay since the landlord would have to cover the cost, assuming it wasn't the renter's fault.
On the other hand, condo and apartment owners don’t have to worry about shoveling their walkway after a snowstorm or doing the landscaping. Although the monthly fee can be an added expense, condo owners get to enjoy maintenance-free living for the most part.
Monthly Maintenance Fees and Property Values
Monthly maintenance fees can indirectly impact the property value of a condo if the fees are so high, it discourages anyone from buying it. As a result, the property stays on the market for longer than similar properties, and the asking price gets reduced to attract buyers.
However, just because a condo has a low maintenance fee doesn't mean it's necessarily a good buy, nor has it necessarily been maintained. Investors or those looking to buy a condo as a primary residence must consider if the condo fee is too low or too high and whether the property has been adequately maintained.
Do Your Homework
Since monthly maintenance fees can vary from one building to the next, potential owners need to compare the asking price and monthly fees to other properties in the surrounding area. It's important to monitor recently sold properties to get a sense of the market—whether prices have been reduced or not and how many days properties have gone unsold.
Obtain a list of what the monthly maintenance fees cover, so that you can make an apples-to-apples comparison to other condos with similar fees. If you're looking for a condo with a lot of amenities, compare it other condos with similar offerings. As stated earlier, it's going to be more expensive if the property offers a clubhouse and gym versus a property that doesn't.
Of course, it largely depends on what you're looking for and the amenities you need. For example, you might want a first-floor unit, so you have access to a handicap unit to avoid walking up stairs. Compose a list of the ideal amenities and do some research on recently sold properties that match your list. Also, call places and ask if they offer amenities a la carte to avoid paying for services you don't need or want.
The Bottom Line
Buying a property comes down to personal taste and preference as well as affordability. A monthly maintenance fee can help you live a maintenance-free lifestyle to some degree, but it should be within your budget. And remember, the fees are not fixed, meaning the condo association can increase them over time. However, people who like amenities and can afford to pay for them are going to be drawn to a building with higher monthly maintenance fees. While it may cost more, they may decide that the perks outweigh the fees.