If you’re looking to buy a condo, chances are that you want one with great amenities and a well-maintained building. The amenities and maintenance are mainly what the condo fees cover.
Ryan Haley, broker and owner of Atlantic Shores Sotheby’s International Realty, explains how condo associations come up with these fees.
Good condo associations always look ahead. They are always looking for various types of things to do to the building and to the amenities to continue to improve the condominium and thereby, keep the values high.
To maintain the quality of the building and its amenities, the condo association needs to put aside some money. This amount is typically about 10% of the annual budget. This reserve fund is allocated for future use. This is typically how a good, strong condo association operates—always looking at the future.
If a condo association knows that it has a big-ticket item that needs to be covered, but it has not been putting aside a good amount of money from the annual budget, then it will resort to raising the condo fees for a period of time. This action is aimed at raising enough capital reserve fund to address the big ticket items, e.g., a new roof for the building.