Are Condo Fees A Waste Of Money? A Defense of Condo Fees

“Oh, I’ll never buy a condo! Condo fees are such a waste of money!”

In my four years as a licensed realtor in Virginia, I’ve heard this many, many times from both friends and clients. Many people rule out condos from their search because they say condo fees are like throwing money away. I agree that some condos have exorbitantly high condo fees, but there are also many condos with reasonable condo fees. In the current market in Fairfax County, Virginia, my personal opinion on condo fees is that anything under $300/mo is very reasonable, $300-400/mo is reasonable, $400-500/mo is a little high, and $500+/mo is probably a little too much. I currently pay $340/mo in condo fees for my condo. I hope the information I present changes your view on condo fees at least just a little bit.

The first property I owned was a condo, which I sold a few years ago. Today, we own a condo and a single-family home (SFH). Owning one of each type of property gave me a bigger appreciation of condo fees and a better perspective of what condo fees are used for.

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As with most things in life, there are pros and cons to condo fees. Today, I want to discuss some of the pros and a provide a defense of condo fees by showing you some of the things condo fees usually cover and how much they might cost if you pay for them on your own:

• Water/sewer/trash – In many condos, you don’t get a separate water/sewer bill. It is included in the condo fee. In my SFH, my last quarterly (3 months) water/sewer bill was $150.76. I also have to pay for my own trash pickup. That was $78 last quarter. If you average that out, it comes out to $75/month for water/sewer/trash.
• Lawn care / grounds maintenance – At my condo, I didn’t have to worry about any landscaping or lawn care. In my SFH, I hired one company to mow my lawn weekly during the mowing season and another company to apply fertilizer and weed control treatment. This sets us back about $1200/yr or about $100/mo for lawn care. In the fall, I rake the leaves on my own.
• Exterior maintenance (roof/siding) – Owning the condo means I’ll never have to pay separately for a new roof or vinyl siding replacement. The condo fees spread out the cost of these large expenses over many years. They recently replaced the vinyl siding on all the buildings at my condo. It was a major project, and I think it cost about $750,000 for 13 buildings. Being conservative, let’s say I have to replace my roof and siding once every 30 years and that it will cost me about $15,000 to do so. That’s about $500/yr, or about $40/mo for exterior maintenance.
• Master insurance policy – Condos usually have a master insurance policy that covers everything outside the walls of your condo. As a condo owner, your homeowner’s insurance policy is called an HO-6 policy, or a “walls in” or “studs in” policy. Your homeowner’s policy covers anything within your walls, and the master insurance policy covers everything outside them. The annual insurance premium at my condo is about $300 whereas the annual premium at my SFH is about $800. That’s a difference of about $500/yr, or about $40/mo for the difference in insurance premiums.
• Snow removal – When it snows, the only thing I had to worry about at my condo was shoveling the space behind my car. At my SFH, I have to shovel the sidewalks and my entire driveway. I was born and raised in Rhode Island, so I enjoy shoveling snow and do it myself. Just to be fair though, let’s say an average person might hire a neighborhood kid and buy some salt at a cost of about $120/yr or $10/mo for snow removal.
• Pool/fitness center – The condo I own doesn’t have a pool or fitness center, but many condos do have this amenity. As a conservative estimate, let’s say it would cost about $30/month for pool/gym membership.
• Property management – In a SFH, you are your own property manager. Many condos have a property manager that manages all the contracts for grounds maintenance, exterior maintenance, insurance, certain utilities, etc. This reduces the amount of things you have to think about.

If you add all these costs up, it comes out to about $300/mo for water/sewer/trash, grounds maintenance, exterior maintenance, difference in insurance premiums, snow removal, pool/fitness center, and property management. Granted, you are probably getting more space if you have a SFH. You may also be a DIYer and take care of some of these things on your own, like mowing your own grass.

Think about it this way. If you own a condo, how would you divide up the responsibility of mowing and landscaping? How would you get rid of your trash and recycling? Who would be responsible for managing major projects like roof and siding replacement?

Condos also present a much lower barrier to home ownership. They tend to be much more affordable than townhomes and SFHs in this area. In Fairfax County, a condo may be in the $200-300k range whereas a townhouse may be around $400-600k and a SFH might be $500k and up.

Related: How Much Does a 1% Difference in a Mortgage Rate Make?

I purchased a condo for $300k in 2009 and lived in it for about 5 years. Most of that time, I was single and had roommates that helped me pay the mortgage. Owning a condo allowed me to build up equity and learn what home ownership was all about. When you want to move out, you can either sell it or keep it as a rental property. Condos tend to require much less maintenance than a SFH and can be decent rental properties.

With all that said, I really do enjoy living in a SFH now. It’s nice to finally have dedicated parking spaces in a garage and to have our own private backyard for our dog and son to run around in. Without owning a condo, I think it would have been much harder to build up equity and save for our next home.

If you were a condo fees hater, I hope this post changed your view on them at least just a little bit.

Image source: Pixabay