Condo Living: You Can Get it For Fees

CORY PORTER WAS FED UP with writing rent checks every month. The 30-year-old public relations professional at Sage Communications in Vienna, Va., decided he was ready to buy a condo.

But when he mentioned his plan to friends and co-workers, they reminded him about one of the most important things to consider when thinking of going condo: How much are the monthly fees, and what will they get you?

"Initially, they weren't even on my radar," says Porter. He ended up searching for 14 months before buying a two-bedroom, two-bathroom condo in the Rhapsody building near the U Street corridor in D.C. in January 2007. Part of what motivated him were reasonable — by local standards — dues of $350 per month, which include some utilities, building upkeep, a rooftop deck, an on-site gym and other niceties.

"I have to admit I was taken aback by the amount people paid in fees overall," Porter says. During his hunt, he looked at condos with dues ranging from $285 per month for a one-bedroom condo near Eastern Market to another unit that demanded a whopping $600 per month, which had a comparable asking price and was located only a few blocks away from the abode he ultimately settled on.

Condo fees, though the bane of many owners' existence, cover a multitude of expenses. The basic concept? Owners share the cost of the square footage of the project or building's common areas. Each pays a fee based on the square footage of his or her unit.

That money also goes toward operating costs for things like trash pickup, snow removal and landscaping. In a 2005 poll taken by the Community Associations Institute, 23 percent of U.S. condo residents said that not having to deal with maintenance issues was the best thing about living in a joint-ownership situation. The same poll found that 15 percent of people say paying dues is the worst part of the deal.

Monthly dues also cover upkeep and repairs, since the antique facade on that charming three-bedroom unit in a converted grade school downtown will eventually need a face-lift.

Funds also go toward insurance rates and can increase due to everything from hurricane damage to a nasty lawsuit from a disgruntled tenant. One huge factor is the amenities that come with that studio with a view, like swimming pools, tennis courts, fitness centers and boutique hotel-ish recreation rooms.

"Those costs get passed through to individual owners," says Richard Swerdlow, CEO of Condo.com, an online marketplace that connects owners, buyers, sellers, developers and agents. "There are lots of amenities that owners may not use, but the costs get passed on whether or not they take advantage of them."

Swerdlow says there is no national average for condo fees because buildings in cities like Las Vegas and New York cost so much more to operate than those in less-expensive markets. But he says one thing holds true no matter where you call home: "Buy the square footage that's appropriate to your lifestyle. Just because there's a good deal [on a bigger unit] right now, be wary of the combined costs of association fees and your mortgage."

"Everyone asks the same questions, but not what they need to ask," says John Mahshie, vice president of Tutt, Taylor & Rankin Sotheby's International Realty, which has offices across the metro area. He says, "They ask, 'How much are the condo fees?' They never ask, 'Why are we paying for things we don't need?'"

As part of its real estate business, Mahshie's firm researches which amenities are most popular. They worked closely with developers on such buildings as the Grant Condominiums, a restored Art Deco building at 1314 Massachusetts Ave. NW, where the developer wanted to put in a fitness center. Mahshie's research showed that potential customers preferred more space to entertain, so the firm recommended a swanky lounge instead.

It's not the only time the firm has steered a developer in a different direction. "One developer wanted to put spa tubs in every unit, but we found that people don't use them," he says. "Yeah, they look romantic and alluring, but people don't want them. They'd rather have more space in the bathroom, not a tub they'll use once a year."

So, what do people desire that they don't mind paying for? Mahshie says outdoor space tops many wish lists, whether it's a private balcony or a common rooftop garden for relaxing.

The other thing on nearly every homeowner's mind? "Storage. Everyone has more things than they have space for," says Mahshie. "If you live at the Taj Mahal, you still need closet space. You could have 6,000 square feet and you'll still say you need storage."

You may find that certain accoutrements just aren't worth your hard-earned moolah. Condominium gyms rarely offer things like fitness classes or racquetball courts. They generally just contain treadmills and weight machines. Concierge services could be another luxury you might want to forgo, since buyers pay dearly for the convenience of having someone available to help them 24/7.

"The front desk can be a big drain financially because you're spending money to pay peoples' salaries. There are fewer new buildings that have them than don't," says Mahshie. "Even if it's only an extra $100 on everyone's fee, wouldn't you rather have that to put toward an extra mortgage payment?"

But that front desk has been a lifesaver for Ray Rahmati, 28, at top, on more than one occasion.

"I use the concierge service when I lock myself out of my apartment, which is quite frequently."

Rahmati, who works for a public relations firm in D.C., pays $460 per month in dues for his one-bedroom, 650-square-foot unit at the Promenade in Bethesda. That's roughly 42 percent of his mortgage payment, but that includes everything from electricity to cable.

"While this does seem a bit high compared to the condo fees of some of my friends, I really think that it's a deal when factoring in all that I get," he says. Rahmati cancelled his gym membership after buying here in 2005 and now works out in the building's fitness center. He also enjoys other perks of his abode. "The fact that everything was included, all of the amenities, and there's a grocery store in the basement, dry cleaners and restaurant — was just really convenient."

What's less convenient? Increasing fees. "I worry about that," says Rahmati. "A few months after I bought the place, they incorporated a $50 increase."

Can you tell before buying whether the fees on that cute loft will soon skyrocket? J. William Reynolds is a certified property manager with the Alexandria-based firm Legum and Norman, which specializes in condo, co-op and homeowners' association management. He cautions that you need to look at the past several years' worth of history to have grasp where the dues might be going. Clearly, newer buildings don't have some of the expenses that older ones do (replacing worn roofs or lift-style elevators, for instance), but Reynolds says what happens at new developments can be a bit trickier to predict.

"It's much more difficult for a new association to establish a condo fee that you can feel confident about," says Reynolds. "There's more likelihood that a new association will incur a larger-than-cost-of-living adjustment in fees because of a lack of history."

But he also mentions that some existing associations keep their fees artificially low, and that can be a warning sign to a new buyer. "If they're bragging that their fees haven't gone up in five years, you should be wary. [When a new board comes in], they might have a more aggressive attitude, and there could be a significant increase in fees."

A good rule of thumb is to shop for the amenities when you're shopping for the space. If the building has luxuries you won't use, look elsewhere. Mahshie says, "It's as if you were paying $1,000 to go to a banquet where they serve every food on earth. You yourself can only eat so much, no matter how many choices they give you." Once you've found a place that offers the right layout and amenities, make an offer and don't look back.

Cory Porter says he's at peace with his monthly dues, but only because he did plenty of homework before signing on the dotted line.

"I did my due diligence, and I think the amount I pay in condo fees is slightly above average, but I don't feel cheated [for what I get out of it]," he says.

The monthly fees actually led him to do something he never anticipated when he bought a home — become active with the condo association board.
"It's prompted me to get more involved, because I don't have bottomless pockets," says Porter. "I want to be sure my fees are being well-used."

Written by Express contributor Lynn Thorne
Photos by Chris Combs/Express