Thinking about a Rhode Island Condo purchase? Condos are convenient and cost effective but they come with certain fees you need to understand. Condo fees serve a purpose for property owners, even if no one likes paying them. When allocated properly, condo fees are a cost effective way to maintain and add value to your property.
Here’s what they cover:
-Capital Reserves: Some associations have minimum reserve requirements. Your capital reserve is essentially a forced rainy day fund. It covers things like insurance deductible payments, unexpected repairs and capital improvements. It’s there to keep things running smoothly and to avoid the need for a special assessment. The higher the association’s capital reserves, the easier the units are to sell, which adds value.
-Insurance: A condo association needs to keep general liability insurance, insurance for the common areas and exteriors. This brings down your homeowner’s insurance because you only need to insure your personal items and the interior of your unit.
-Common Area Maintenance: If you hired someone to mow your lawn, shovel your driveway and walk ways, clean your hallways and windows, you’d have a pretty hefty bill at the end of the year. Not to mention the cost of lighting your parking lot, walk ways and hallways. These expenses are paid with your monthly condo fees. The constant care of your property helps maintain the value.
-Taxes: The association pays taxes for the land and common areas. You still have to pay taxes on your condominium, but your taxes are significantly less than they would be if owned all the land yourself.
-Filing fees, attorney’s fees, management & bill pay: These miscellaneous expenses are necessary for operating the association. The need will increase for larger associations.
In short, you’re paying yourself to keep your property and surroundings in good standing and operating smoothly. If you’re considering a condo, be sure to evaluate the condo fees, docs, finances and by-laws. Be sure the capital reserves are adequate and any pending assessments are manageable. If you’re considering a condominium, one of our many qualified agents can guide you in the right direction.
Jeff Brooks, Realtor, Hogan Associates, 129 Bellevue Ave, Newport, RI 02840 401-484-7368, Jeff Brooks the REALTOR