When considering an investment property, do Homeowners and Condo Association fees make a big difference?

My answer to that question is simple. It depends. In some areas the homeowners and condo association fees are fair and you actually get something in return for those fees. In other communities, those fees can get out of control and actually hurt property values. In these past few years, some communities that have had a higher drop in home values have had that disparaging drop because their community fees were so high that homeowners were more likely to struggle with payments than in other areas where the fees are more manageable. A perfect example of this is a condominium community in Altamonte Springs, it has beautiful condos, close to shopping, highways and in the community it has two swimming pools, a fitness center and a business center, all of this for $438.16 condo association fees per month for a two bedroom condo.  These condos used to sell for $170,000 for a 2 bedroom and $140,000 for 1 bedroom condo; currently these condos are selling for $22,000 for a 2 bedroom and $18,000 for 1 bedroom.  Even those who are considering buying these units now are put off by the condo fees, and the units are selling for 13% of what they were selling for as little as three years ago. In today’s recession, people are cutting back, they are minimizing spending and realizing that fees that were taken for granted in the hype of the housing market are actually a big deal.

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If you are considering investing, I recommend a neighborhood that has moderately low or no homeowner’s fees, the difference in potential income can be great. I have a great example to illustrate why I think so.

On a condo that just sold in Seminole County, for $61,900 I calculated that after all fees, taxes, insurance, and home warranty is paid the investor would yield 8.17% return on investment. I found a similar home, sold in the same time period, it was the same number of bedrooms and almost same number of square feet in the same area for $62,000, this one had no homeowners association fees, at the same market rent rate this property would yield the investor 13.85% return on investment. For simplicity I assumed that the investor was a cash buyer. Now, on these two very similar properties the difference is almost 5% more return on investment for the property with no home owners association.

Condo fees vs communities with low or no hoa

If you are interested in seeing the details of my analysis or which sold properties I used in my example, feel free to e-mail me at Erna@TheVikingTeam.com

Contact Erna and Petur Sigurdsson, Realtors at The Viking Team, Realty at 321-263-5096 for help buying or selling a home in Longwood, Lake Mary, Altamonte Springs, Sanford, Seminole and Orange County and the surrounding areas of Central Florida. To Search For Homes For Sale in Central Florida Click Here. 

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