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The Condo Mania Team

News > Does an HOA Fee Make Condos a NO for Investors?

When considering your options for real estate investments, you do have to take into account all costs, and one of those inescapable costs for condos and townhomes are the monthly HOA fees.  Depending upon the community amenities, low-rise Scottsdale condo HOA fees usually run between $230-$260 per month, while Scottsdale highrises run significantly more, usually $400 to $700 per month (or more).  So does an HOA fee take condos out of the race for investment money?

What does an HOA fee Pay for?

First, you'll need to examine what the homeowners association pays for.  Let's take luxury highrises out of the equation here, because they usually have a larger percentage going towards staffing for a concierge/door person and more interior community space. Here's an example of how one fairly large "resort style" condo development in the Scottsdale area allocates its funds:

Expense Percentage of total HOA expenditures
Administrative     8.7%
utilities     38%
maint     31%
reserves     21%

Some of the administrative expenses are purely costs for an investor, but about half of the administrative costs is for Insurance on the buildings and common areas, which is also a cost for single family homes.  Utilities (water, trash, pool electricity) can lean towards a cost too, unless your tenant pays higher rent because these are costs are rolled in.

The maintenance and reserves replace much of the maintenance that you would have to do in a single family home.  If you've lived in a home, or have investment homes, you know that costs for repairing the roof, termite treatments, re-painting, pool repairs and landscaping repairs (or fixing the landscaping mess your last tenant left) can be significant.  The reserve fee is just a way to "save" for future maintenance costs down the road.  Are you factoring in future maintenance costs when looking at single family homes?  When comparing costs between condos and homes, make sure you are comparing properly. 

The bottom line is not to rule out all condos and townhomes just because at first glance you don't like the HOA fee - a full expense comparison between your choices needs to take proper maintenance costs into account.

Lower HOA fees?

When comparing condos, it generally helps your bottom line to have lower HOA fees, however, during the inspection period, you'll want to make sure the reserves are funded sufficiently.  A costly assessment would wipe out any lower monthly HOA fees you've taken advantage of.

Some condo communities with lower fees are included below.  Contact us to put our expertise to work for you in purchasing an investment condo or townhome in Scottsdale!



Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

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Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.

Last Updated: 2024-05-21 05:14:02