A friend of mine who lives in the same building as I recently commented to me that he is happy to pay whatever is necessary to live in our building as long as it was maintained to the same high standards he had bought into when he purchased his home. If the costs of maintaining the building became too expensive for him, he would sell and move someplace else. His attitude is one that if he finds himself unable to afford the cost of taking care of his home (monthly HOA dues) then the greater community should not suffer (by cutting maintenance expenses from the budget) and he should move on.
Some would approach this from the opposite perspective of let’s reduce the expenses so that I can afford to live in my home. Well, when expenses are reduced…something has to give. This is especially true in a large high-rise building with common area amenities that need to be maintained or replaced on a regular schedule.
Smart condo buyers will investigate the prospective homeowners association to understand the community’s financial situation and operational practices before making an offer on the condominium unit. Some issues to consider include:
1) Review the annual budget.
2) How are actual expenses trending compared to budgeted expenses?
3) Review past Board meeting minutes to get a glimpse of decisions made and issues being discussed
4) Are annual contributions being made to the reserve fund?
5) Is the reserve fund adequate?
6) How well are the common areas, i.e., lobby, amenities, elevators, gardens, pool and pool deck being maintained and does the property have “curb appeal” when you enter the property?
When most of us bought into our building the developer was still in control. The developer will always ensure “things look good” as they are selling a product and lifestyle. Once a developer is gone and the homeowners become responsible for the building…things can change quickly for better or worse. Having previously lived in upscale multi-family buildings my friend was keenly aware of the importance of keeping tabs on how a building is operated by a volunteer board and outside management staff.
Some homeowners may not fully understand that they are only one of many who reside in a large-scale high-rise building and if their financial situation changes, the rest of the community must continue to generally maintain the lifestyle, quality of life and expectations each individual had when they purchased in the community. If the expense of living in a certain condominium community becomes a burden for “one” individual, then the “one” should find a more suitable living situation. It is not appropriate for the entire community to alter their expectations and lifestyle in order to cut expenses for one individual’s needs.
If you are considering moving into a luxury residential building with amenity areas, take a critical look at the common areas. Don’t be so blinded by the beautiful appearance of the individual unit or the “must have” view, that you fail to evaluate how the amenity / common areas are being maintained. If a developer, board of directors or management is not maintaining the common areas in an acceptable manner in an effort to produce monthly dues that are low and attractive…the cost to you can be much more in the future. Or, the building may continue to be less competitive in the market and, as a result, devalue your individual unit.