Homebuyers are often averse to paying condo fees or living in an association, but in Hawaii they should reconsider this point of view.
- After seeing unregulated neighborhoods, most people prefer communities with standards for noise, pets, construction, and maintenance.
- On an island land is limited, and in urban Honolulu the most economical housing is located in a high-rise condominium building.
- On the leeward side of Oahu, it’s rare to find a home not located in an association, since most construction projects in the past 30 years has involved large developers building master planned communities.
What Am I Paying For?
The important question to ask when paying association fees is: What am I paying for?
Select Utilities: In most associations, the homeowner is paying the association for utilities instead of paying the company directly. Depending on the number of people in a family, and the type of water and sewer usage (pool, sprinkler system, etc.), a homeowner not residing in an association may pay $100-250 per month out of pocket to the utility instead. Sometimes, particularly if a building has central air conditioning serving all the units, electricity will be included also. Some buildings do not pay for all electricity, but pay for the amount used to heat water, as it’s located in a central water heater.
Reserve fund for future expenses: Associations are also required to put money in a reserve fund for future expenses, both planned and unexpected. Of course, homeowners are supposed to do this also, but how many of us have been surprised by bill for a plumbing problem, roof leak, or air conditioning failure? Due to the old age of buildings in Honolulu, many have undergone complete system overhauls in the past several years, and many more need to be done. If an association has not saved money in reserve for plumbing replacement, concrete spalling repair, roof replacement, or window replacement, owners may be asked to pay a “special assessment” when the work is unavoidable. This assessment not only raises the dues for unit owners, it also decreases the marketability of the condo, should an owner want to sell. A healthy reserve fund is always better! Fortunately, to verify this, a potential homebuyer is given a review period for all of the organization’s documents, including the budget, once they have an accepted contract.
Insurance: Often, the association carries insurance on the exterior and common areas of the building, so a homeowner pays less out of pocket monthly, only insuring from the “walls in” – essentially the interior structure and personal property.
Common Area Maintenance: This means if your community has a elevator, sign, trash service, private road or driveway, lighting, landscaping, a lobby, a shared roof, or a shared building exterior, the dues pay toward that upkeep. A homeowner not located in an association would be paying to re-seal their own driveway, maintain their yard and exterior lighting, replace the roof, and paint the exterior. That said, some associations of single family homes do require the homeowner to maintain their own roof or paint their house, but there is nearly always some common area the association is maintaining, and the dues should be lower than for an association maintaining those items.
Extra Services or Amenities Requiring Staffing and Maintenance: Pools, tennis courts, fitness centers, extensive gardens, cable/internet, and recreation areas are examples of amenities the homeowner’s dues may pay toward. Some associations have a resident manager or concierge services on site to address any owner’s needs, or a security patrol dedicated to the property. An owner not located in an association would have to pay additional membership fees or use public facilities in order to enjoy these features.
The bottom line when considering a condominium or homeowner’s association is the value you receive for the monthly dues. It’s important to understand exactly what the association pays for when budgeting for your purchase. Try adding up the following amounts you pay monthly, to see how a property you’re considering compares:
- pool/fitness center membership
- alarm system/security
- party room/pavilion rental
- savings for unexpected repairs
- exterior maintenance
- driveway maintenance
Is An Association A Good Fit For You?
I have worked with buyers and sellers of homes in many associations around the island. Contact me today and we can discuss whether a home in an association may be a good fit for you!