Wednesday, January 2, 2008

Your HOA and Special Assessments

Buying a condominium can be such a great deal and a very affordable way to enter the housing market. But, always look beyond the mortgage at your HOA dues and special assessments, making sure to figure them in to your real estate investment.

Now most people know that you have to pay monthly Homeowner Association (HOA) dues when you own a condo. This goes to take care of the upkeep and maintenance of the common areas, covering everything from general cleaning to security, depending on the building. A low maintenance building might have lower monthly fees, but premium buildings can often have HOA dues over $500 each month or more.

The fee to be very aware of is the "special assessment." This is when the HOA decides that some special maintenance work is needed, perhaps a new roof or paint job. Where does this money come from? Well, it comes from you, the home owner. If there is not enough money in reserves, the costs for the special work will be divided up and split between the homeowners to be paid as a "special assessment." And, there is no predicting how much it could be. It might just be a few thousand dollars here and there, but if the building needs a lot of work or if there is some emergency, your special assessment could be tens of thousands of dollars.

Sometimes special assessments can be paid for in an installment plan, but it is best to be proactive. One solution would be to save money to use in the event of a special assessment, or get involved with the HOA so that you have more of a voice in running the building. For more information, check out my previous blog entry "A New Way to HOA."

If you have any questions about condos and HOAs, please let me know. I am always happy to help. I can be reached at 510-547-5970 x57 or HAPPY NEW YEAR!