If you live in a condo where the fees haven’t gone up for years, or if you are looking to buy a condo where they are advertising a low condo fee as a “feature” take a closer look. It’s likely that the costs of goods and services have not gone down. Try to determine if something isn’t happening that should be happening?

When evaluating the financial position of a condominium there are some cost-of-ownership items that don’t apply in single-family home ownership. One glaring item is the cost of delinquencies. In today’s world of upside down mortgages and foreclosures many condominiums are struggling with a loss of operating revenue (monthly condo fees), due to delinquent condo fee accounts.

Well-managed condos will actually provide an allowance for some percentage of delinquent accounts to insure that they have adequate operating cushion. When looking at a condominium’s resale package be sure to look at the dollar amount of delinquent accounts and ask what that number represents as a percentage of the whole.

So what’s the upside of condo ownership? In a well-run, well-managed condominium where the Board of Directors takes its responsibility seriously, property values are protected through active maintenance and enhancement of the property. You not only get to enjoy a well maintained property while you live there and you can feel confident about the condition of your property when you go to sell.

While helping a couple narrow down the focus of their Reston home search recently, the husband made a statement that he would never own a condominium because the fees were in his opinion “a total rip-off.”

The fees at this Reston Condo cover spectacular community amenities including: Concierge, Dining Rooms, Hot tub, Party Room, Pool, and Spa

As a condo dweller active on my condo’s Board of Directors for years, I’ve heard this sentiment on condo fees many times before. So I decided to take the opportunity to talk about the true cost of ownership.

When you own a townhouse or a single family home you understand that sooner or later you will have replace your water heater, roof, windows, siding, appliances. Hopefully you have a financial plan that allows you to save for the replacement of things as they wear out.

It is a “pay me now or pay me later” situation, but you are going to pay. Most people would prefer to save a little bit each month rather than face a large unplanned expense.  Condo management requires this forced savings.

Every year condominiums (in Virginia) are required to confirm that they are reserving enough money to repair, replace and maintain the property. If a condo has not adequately reserved (saved) the money needed to make repairs and has a sudden failure in a common element, it must make a special assessment in order to make whatever repairs are needed to maintain the property.

So, a rip-off? Not if your property is properly maintained. More on that next week.