Condo Vs House To HOA Or Not To HOA

Dated: March 21 2016

Views: 207

So many buyers struggle with the costs and benefits approach when trying to decide whether or not to purchase a single family home with no homeowner's association (HOA) or a "maintenance free" condo/townhouse and paying an HOA. 


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This blog post is not here to persuade you either way, but rather to help you make an informed decision based on all tangible evidence available.

Sometimes, there is a CLEAR-CUT answer that pushes you in one direction or another. Any single family house is better than a poorly-run HOA or condo association. Poorly-budgeted HOAs can lead to large assessments taken out of the owners' pockets, increases in HOA fees, and overall complex and price deterioration. 

1. A well-run HOA is very important  

HOA's need to have a good history of escrow reserve funds available for future fix-ups and regular maintenance. Escrow reserves are a savings account for associations to dip into when things need to be repaired or replaced.

2.  Amenities and costs covered

This one comes down to what the HOA is giving you for your monthly or quarterly contribution.  Most of the time, HOA fees cover building exterior, grounds maintenance, gated community, some utilities like Water, Sewer, and Trash, a public swimming pool, building insurance, roofs, and uniformity that keeps prices stable. 

So how much is all of that worth to you?

Mowing a lawn or hiring someone to do it is CHEAP, but there's still a cost to it. You can hire a lawn company to mow your lawn for about $25 per mow. Yearly, you mow about once every two weeks (winter and summer months differ) so the monthly cost is about $50.

Next easiest item to calculate is utilities. Water, sewer, and trash costs you about $100 a month on average. 

Building exterior insurance, never having to replace a leaky roof, never having to paint the outside of your house, these are items that are more difficult to put a hard value on. Sure building insurance on a single family home can cost anywhere from $1000 annually on up but that's not the whole story. You must still cover your condo's CONTENTS with a separate insurance policy in case of total interior loss (fire/smoke/water damage). This is similar to a glorified renter's policy. 

3. Single Family Homes (SFH) increase in value more quickly and consistently.

Even though condos have the "uniformity" factor, SFHs still increase in value more quickly and consistently than condos or townhouses. Year over year, SFHs have increased 12% whereas condos and townhomes, in a strong market, have only increased 9%. 

4. Which is a better fit for your LIFESTYLE?

Do you own pets? What kind? Do you have kids? Grandkids? Do you do well with stairs? How important is waking up to a view?

Lifestyle will usually play the largest role in determining whether someone decides to purchase a condo or a house. 

Pets are a HUGE factor. Other than townhomes which are usually much more pet-friendly, condos restrict the size, number, and even breed of animals you can own. Even if condos do not restrict you, being on the 12th floor of a high-rise may restrict you from letting the dog outside 3x daily...

Thoughts? Leaves them in the comments. I hope this helps!!!

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