Condo ownership might seem like a ticket to hassle-free living, but the hidden costs can blindside even the savviest buyer.
According to Realtor.com, this story dives into the financial realities of owning a condo or townhouse, unpacking the extra expenses beyond the mortgage that can strain your wallet if you’re not prepared.
At first glance, condos offer a compelling deal. You skip the headaches of exterior maintenance—like landscaping or roof repairs—that traditional homeowners face. As Darin Tansey, a real estate agent with Douglas Elliman in Miami Beach, notes, "With a condo, you usually don’t have to worry about exterior maintenance."
But that convenience comes with a price tag. Monthly expenses for condo owners include not just the mortgage, but also home insurance, property taxes, and homeowners' association (HOA) fees. Financial planner Eric Croak, president at Croak Capital, warns, "The mortgage is the low-hanging fruit when it comes to monthly housing expenses."
HOA fees, which often range from $300 to $400 monthly, cover shared amenities and upkeep. Think elevators, snow removal, landscaping, and even the HOA office itself. For a 1,200-square-foot unit, expect around $350 per month, plus additional maintenance reserves of $200 to $400 every couple of years.
Then there are utilities, internet, and parking costs. These can tack on $500 to $700 per month to your mortgage bill, according to Croak. Budgeting for these predictable expenses is non-negotiable if you want to avoid a financial pinch.
Beyond routine fees, special assessments loom as a major threat. These one-time charges, levied for emergency repairs or major projects like code upgrades, can range from $1,500 to a staggering $30,000 per owner. Majid Ghavami, a real estate agent at ReeceNichols Real Estate in Kansas City, MO, explains, "It could be anywhere from $1,500 to as high as $30,000 because they need to keep the integrity of the building."
Some condo boards offer relief by allowing owners to spread these payments over time. Still, the shock of an unexpected bill can disrupt even a solid budget. Croak advises setting aside an extra $50 monthly for such surprises, emphasizing the need to plan for "Murphy’s Law."
HOA fees aren’t static either. They can spike due to emergencies like a new roof or legal battles, and if reserves dip below a critical threshold, emergency fees of $1,000 or more per unit might hit. Staying ahead of these potential increases is key to financial stability.
Despite these costs, condos can be a smarter financial bet than traditional homes in some ways. A standalone house might saddle you with a $10,000 to $15,000 roof replacement, while condo owners often split such burdens through assessments. Ghavami points out, "With a condo, if something does go wrong, it’s going to be paid out over time."
Condos also offer perks that justify the fees for many. Amenities like pools, gyms, and security come without personal upkeep, and the built-in community can be a social plus. Tansey adds, "They also often come with a built-in community, which can be nice if you like that social aspect."
For frequent travelers, condos are especially appealing. There’s no yard work or personal security to manage, making them a low-maintenance choice. As Ghavami notes, "You can come and go with ease."
So, how do you prepare for condo ownership without getting burned? Start by budgeting conservatively—Croak suggests $150 to $200 monthly for insurance, $300 to $400 for HOA fees, and that extra $50 for surprises. Build these into your financial plan before signing on the dotted line.
Finally, remember that proper budgeting unlocks the benefits of condo living. You’ll enjoy the convenience and amenities without the stress of financial overreach. As Tansey advises, "Planning ahead for that makes life a lot less stressful."