How do I assess the HOA/condo fees?
Want to avoid getting stuck with huge condo fees? Read this short, direct checklist.
Why HOA/Condo Fees Matter
Condo fees are more than a monthly bill. They affect cash flow, resale value, and your risk of surprise special assessments. Learn to evaluate fees like an investor so you buy smart.
Quick 5-step framework to assess HOA/condo fees
- Get the official documents
- Request the latest budget, financial statements, reserve fund study, and meeting minutes.
- Ask for a list of recent special assessments and fee increases.
- Check the reserve fund strength
- Reserve fund = savings for big repairs (roof, elevators, facade).
- Rule of thumb: reserve balance should cover planned capital work. If the study shows underfunding, expect special assessments.
- Action: divide reserve balance by number of units to see per-unit cushion.
- Analyze expense growth and trends
- Look back 3–5 years: fees that rise faster than inflation are a red flag.
- Identify one-time costs (legal disputes, major repairs) vs recurring increases (utilities, staffing).
- Identify hidden costs and coverage
- What do the fees include? Heat, water, cable, parking, security, concierge, exterior maintenance?
- If utilities are billed separately, add average monthly utility costs to compare total ownership cost.
- Spot governance and risk factors
- Management company: professional management lowers risk. Self-managed buildings need stronger boards.
- Pending litigation or vendor disputes: can trigger big assessments.
- Occupancy mix: high rental ratios often correlate with higher wear and variable income.
Quick math every buyer should do
- Effective monthly cost = condo fee + average utilities + estimated special assessment amortized monthly.
- Example: $600 fee + $100 utilities + $18 (assessed $2,000 over 10 years) = $718/month.
- Compare this to comparable units and to cost of owning a freehold property nearby.
Red flags that should stop a purchase
- Reserve fund is less than recommended in the reserve study.
- Unexpected legal expenses or frequent special assessments.
- Year-over-year fee increases above 5–7% without clear cause.
- Poorly documented financials or failure to provide minutes and contracts.
Final checklist before you sign
- Request audited/independently reviewed financials.
- Confirm recent maintenance and upcoming capital plans.
- Ask the board about planned assessments or major projects.
- Speak with current owners about living costs and management responsiveness.
Decide with numbers, not emotions. If you want a quick, professional review of a building’s financial health, I review HOA/condo packages for buyers and point out risks and savings opportunities.
Contact a local expert for a no-nonsense assessment: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
