When buying a condo, one of the deciding factors can be the amount of monthly Home Owners Association (HOA) dues. HOA dues typically cover some of your monthly expenses, such as water, sewer, garbage and building insurance. In large buildings, they also fund amenities such as a concierge, fitness center and owners lounge. In Belltown, HOA dues can range anywhere from 33 cents per square foot (The Pomeroy) to 93 cents per square foot (Continental Place).
This graph illustrates the average 2012 HOA dues for the condo buildings in Belltown:
HOA dues also have a large impact on your ability to get financing. For every $400 per month you pay in HOA dues, it is equivalent to adding on $100,000 to the purchase price. Here is an example:
If you purchased a condo for $300,000 and put 20% down, at 4% interest your monthly payment would be $1,146. The monthly HOA dues are $400 per month bringing your total monthly expenses to $1,546.
If you purchased a single family home for $400,000 and put 20% down at 4% interest rate, your monthly payment would be $1,527. Since single family homes have no HOA dues, your monthly expenses are actually lower on a $400,000 home than a $300,000 condo.
Personally, I love condos. No yard work, no gutters to clean, and not a lot of worries. Condo living allows one to live in the heart of the city, have a place to call home, and to build equity. When choosing a condo, keep your eyes on the HOA dues and the long term impact they will have on your investment.