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Thread: Highrise HOA Fees

  1. #1
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    Highrise HOA Fees

    I currently live in Oaklawn in a house/townhouse with no HOA that would most likely sell for $400k. I've been considering moving into a highrise condo because I enjoyed it when I rented one in the past. The piece that is holding me back are the steep HOA fees. Here are two examples of what I consider to be high HOA fees:

    Mayfair $490k / 1730sqft / $687 HOA
    Vendome $650k / 1941sqft / $1046 HOA

    Even an older building like La Tour has high fees:

    La Tour $400k / 1710sqft / $829 HOA

    However there are some buildings that have "reasonable" HOA fees:

    Renaissance $325k / 1391sqft / $367 HOA
    Block 588 $450k / 2215sqft / $250 HOA

    I fully realize that Mayfair / Vendome are nicer buildings than the others, but that is reflected in the price of the property. Are you getting that much more in services? I'd prefer to park my own car, and will most likely never use a concierge, but I'd still like a classy building.

    I'd pull the trigger on the Mayfair property today if the HOA was in line, but with $11k in taxes per year, $687 HOA and probably $200 insurance you are hitting $1800 / month before you even begin to pay your mortgage.

    Are these HOAs "for profit"? Also I've noticed that many properties of the same size and pretty much the same floor have big HOA differences. Is this a negotiation point? Lastly, I've looked at some of the newer buildings going up i.e. The House, Azure, W and really didn't see the value. Are there any under construction or pre-construction in the 450k - 650k range that don't have high HOA fees and aren't ultra-modern or loft types?

  2. #2
    Mega-Tall Skyscraper Member BigD5349's Avatar
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    Quote Originally Posted by omeganet
    Mayfair $490k / 1730sqft / $687 HOA
    Vendome $650k / 1941sqft / $1046 HOA

    Even an older building like La Tour has high fees:

    La Tour $400k / 1710sqft / $829 HOA

    However there are some buildings that have "reasonable" HOA fees:

    Renaissance $325k / 1391sqft / $367 HOA
    Block 588 $450k / 2215sqft / $250 HOA

    I'd pull the trigger on the Mayfair property today if the HOA was in line, but with $11k in taxes per year, $687 HOA and probably $200 insurance you are hitting $1800 / month before you even begin to pay your mortgage.

    Are these HOAs "for profit"?
    Wow, I am really surprised about LaTour. It seems like they have very high HOA fees for the price range and sq ft.

    No, HOAs are not "for profit". The fees are supposed to absorb maintenance and operational costs only, insurance, security, etc. Common utility fees can be in there, so you might check to see if that is covered or not. HOAs typically do special assessments for one-time capital improvements.

    I asked a friend of mine in real estate. He says 2011 Cedar Springs is in the $500k-$700k price range, but the HOA fees are somewhere in the mid $400 range. Seems to be a good deal compared to the others. It could be that 1999 McKinney is in that ballpark as well, does anyone know?

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    Mega-Tall Skyscraper Member BigD5349's Avatar
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    By the way, regarding your question if the HOA fees are negotiable...

    Not where I live. Individual owners control that figure only to the extent that they see the annual budget and get to vote on certain common expenses. Those fees are then assessed to homeowners.

    If every owner could cut a deal on their own fees, there would be a revolt in the building and the HOA would become insolvent.

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    I've wondered about those high HOAs also. I can understand that there is the cost of elevator maintenance, and maybe valets and concierge services. But I still find it surprising that all of these extras for a highrise can add up to $800 a month per unit (versus 200-300 in a low or mid-rise condo). Any insights on this?

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    Ask to see the buildings budget.And you can see exactly where the money goes. My building my hoa fees are about 60% of my morgage.

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    Mega-Tall Skyscraper Member BigD5349's Avatar
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    Quote Originally Posted by zigwamo
    I've wondered about those high HOAs also. I can understand that there is the cost of elevator maintenance, and maybe valets and concierge services. But I still find it surprising that all of these extras for a highrise can add up to $800 a month per unit (versus 200-300 in a low or mid-rise condo). Any insights on this?
    I never comparison shopped, so this is interesting to me.

    I guess there are two types of properties, some with amenities and some that are meat and potatoes. With my HOA, there are no "extras", it is strictly maintenance and operation.

    I thought La Tour would be lower because I thought that it had more units than most buildings. When you divide the expenses by more units, then each owner will be paying lower fees. It's economy of scale. But I can't explain the difference. Maybe someone living with a $800 per month fee can tell us what in there.

  7. #7
    Mega-Tall Skyscraper Member BigD5349's Avatar
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    Quote Originally Posted by Boredkid
    Ask to see the buildings budget.And you can see exactly where the money goes. My building my hoa fees are about 60% of my morgage.
    That's good advice. If you're becoming a part-owner in the property, you need to see what the HOA is spending their money on.

  8. #8
    High-Rise Member UrbanHope's Avatar
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    2 numbers for 1999 McKinney HOA (don't know why they're different)

    $711 per SF in one unit, $619 for another

    For 2011 Cedar Springs.... all the fees are around $400.

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    It helps to look at this on a cost/SF basis. This market averages between $.30-$.40/SF for many of the high-rise products.

    These properties certainly contain nice amenities from pools and weight rooms to wine cellars. However, if you aren't leveraging these facilities to the hilt, rest assured you are underwriting these assets for someone else. I can't justify foregoing a car payment, my child's college tuition investment or decreased vacation funds just for someone to open the front door (among other things) for me.

    Most smaller developments without significant amenities, like Block 588, provide exterior maintenance, insurance and common area utilites and are able to keep their overhead low.

    Bryan Street Station is about $.14/SF monthly. Monthly HOA dues for a 2BR are around $166.

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    Thanks for the input everyone. My big question that many others apparently are also asking is why there is such a big difference in fees at different buildings. Someone must see the value or I don't think that many people would be paying. At least with a mortgage you are getting something added to the principal and a tax deduction whereas the fees you get nothing.

    Here is my view on the amenities offered. (This is my opinion only as I'm sure people see different values in different items).

    Concierge - I may use once per year if I am sick and need some nyquil. Otherwise I like to make my own dinner reservations, etc.

    Valet - I'd rather park my own car anyway. I was a valet for a while in college so I've seen how they treat those cars.

    Security / Doorman - Worthwhile in my opinion. In a DT area it needs to stay clean up front and someone needs to keep homeless / panhandlers away.

    Exercise Room - I would use, but 24 hour fitness is only $25/month so it better be a nice one.

    Owners Lounge - Would use maybe 3x per year

    Wine cellar - would never use

    Spa - would never use, and you have to pay anyway so why subsidize retail that can't make it on its own?

    At the end of the day it doesn't appear there are any classy but traditional buildings without high fees. The loft / industrial style buildings are nice, but I'd really prefer a traditional apartment style building. I'll keep looking around though... I thought the Mayfair/Vendome prices might slide a bit since the W/Azure/House are opening and they would most likely be considered the trendy places to be.

  11. #11
    Formerly Trolleygirl2 CityLove's Avatar
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    Quote Originally Posted by omeganet
    Here is my view on the amenities offered. (This is my opinion only as I'm sure people see different values in different items).

    I'd have to agree with you on most of these, however, I don't think you or I are the clientele most of these buildings are targeting. Many people are used to services like these, and would expect nothing less. I'm constantly amazed by the certain segment of society who is pampered to no end and expects to have things done for them. BUT, to each his own. This is simply what they are used to and what they expect. I suppose if you can afford it...more power to ya!

    I guess what I'm saying is there are a lot of people who don't mind paying what some would see as high HOA fees. Perhaps they get more value out of that expense than Average Joe would. And as long as people will pay those fees, buildings will charge them.
    I tell everyone...I smile just because...I've got a city love...

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    These services provide much more. Once you have them its hard to know how you survived with out them. This is just a short off the top of my head addition to his list.

    Concierge - Not only can pick up nyquil or make reservations. But they can also help you find new places to eat. Places to get hard to find items. Take care of your place while you are out of town. Let the maid in. Let the grocery in.

    Valet - Not only parks your car, but also provides parking for you friends. Can fill up your car so you dont have gas hands. They can wash your car as well.

    Security / Doorman - While they keep the homeless afoot. They also provide a nice greeting and smile on your way in and out. Its also nice if you think you left your key in the door, to have someone be able to check for ya.

    Exercise Room - while a 24 hour fitness is okay, this way I can watch the channel I want. I know its clean, I know everyone there, plus friends from out of town have a place to work out.

    Owners Lounge - Great place to start the night. Have a few drinks before you hit the town.

    Wine cellar - While you may not, it is a great selling point. Most do use it.

    Spa - Always nice to be able to make a last min appointment after that long day at the office.

  13. #13
    High-Rise Member 1999McKinneyAve's Avatar
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    The HOA dues at 1999 McKinney are based on square footage. For instance, my monthly dues are $869/month, which works out to $.32 a square foot. It doesn't matter if you're in the penthouse or the first floor, everyone here pays 32 cents a square foot.

    What your HOA dues pays for varies from building to building. At 1999, it includes gas heat, water, homeowners insurance for common areas, heated saltwater pool and whirlpool, concierge and security 24/7, building maintenance, salaries and benefits for the building manager and 7 other employees, T1 internet connection, and basic cable.

    Tough part is my HOA dues were $499 when I moved in back in 2002. Dues have gone up because insurance, gas heat, and employee salaries have jumped substantially. What I wasn't aware of when I bought my place is that a developer will price HOA dues at an artificial low price when selling the units. Once the HOA is turned over to the residents, expect a quick 20-30% increase in dues.

    For older buildings, also expect more special assessments as major parts of the building (elevators, pool, etc) have to be replaced or the building needs updating.

    You can negotiate your HOA dues when buying from the developer. It's not unheard of to get 2-3 yrs HOA dues pre-paid by the developer at closing.

  14. #14
    Member Jimmy_pop's Avatar
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    I have a one bedroom @ Bryan Street Station. HOA is $85/ mo. The builders even designed the building so that there are No breeches in the standing seam roof. Meaning the roof has no cut outs - it is one continuous membrane - all the ventilation is through the exterior walls. The idea was to keep long term maintenance costs to a minimum. I appreciated that.

    Like others, I dont use the amenities that most apartments and highrises and i dont want to pay for them.

    Joel

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