The Expert Podcast

So our condominiums the next time shares, many people have heard of timeshare horror stories where you can't get out of them You have fees coming left and right. Matter of fact, Dave Ramsey has famously said that. timeshare is the only thing that you buy that you don't know what the final price is going to be because every year you can get higher and higher fees attached to your timeshare and you can't just walk away from it because you signed the contract. Well our condominium is going the same way in many areas the condo fee the monthly HOA fee. Is an accumulate.

of repairs, insurance taxes other fees that the community as a whole is responsible for paying. But at that. Management of the condo board is not done properly These fees can escalate very quickly Sometimes even when it is managed properly. The cost associated go up dramatically And sometimes it's causing people to lose their condos, partially because the price is too high for them to afford But sometimes the condo board is taking people's condos away from them. Because of the changing nature of the community what do we mean?

by this Well, let's suppose that you live in an area where the condominium has an insurance policy on the building that may be cost. You know 500,000 a year for the entire complex. Well if because of excess claims maybe you live in Florida where there's hurricanes maybe you live in. California where there's floods or fires. Maybe you live in a place where there's a lot higher.

Re,

reconstruction costs because the lumber prices went up. Maybe there's higher crime that's causing liability. That insurance policy now may go from 500,000 a year to 2 million a year We've seen jumps like this. The other thing that can go up is…deferred maintenance. Part of your condo fee covers the repair.

Of community property. Community property or things like the roof. Common areas, the roads the pool things that are not part of your individual unit. But our part of the entire community. And let's say the roof is going to cost 500,000.

If every month. Certain amounts are put into a pool or put in reserve when that room. comes due in 15, 20, 30 years. All of a sudden now you have a bill for 500,000 There may be what's called a special assessment. That's placed on that condominium.

Sometimes that assessment is 10 15 $20,000. We've heard. In the state of Florida. Because of the recertification of high rise buildings because of that. Miami condo that collapsed Florida passed a law that says all high rise condominium buildings have to be re-engineered certified You have to have a licensed engineer come in and look at the building to make sure it's not going to tip over.

And they are. to sign off on what repairs are needed. Sometimes these repairs are 1, 2, 5 $10 million, and that puts a special assessment on each unit That could be six figures. So. Just because you don't own a timeshare your condominium.

May have…

an amount due on condo fees that is higher than the value of your unit. And what do you do…

Well you could pay it and you know not have a, have an expense It wasn't a. predicted or expected, or you could just walk away from it The problem is if you have a mortgage you're walking away from it it doesn't clear off your mortgage So you still may have to pay for something you don't own. Sometimes the condominium association will come up with a way for you to finance that special assessment or those higher fees, but a condominium. In this market is turning into not exactly the same but similar to a timeshare in that the fees and expenses can escalate very very quickly, especially in areas where the core expenses. Are going through inflation look inflation expect is it.

affecting everything. Right. construction cost insurance taxes, but those costs are baked into divided up into your condo fee You may not see them in one of those jumps up dramatically. You may find your condo fees in this story here…

There's condominium owners that were paying 350-400 a month All of a sudden now their fees are 1200 to 1400 a month. It's more than their mortgage on their condominium So if you are a condo owner, drop a message below let us know if you're seeing this in your particular development and how it's affecting the value of your unit.