HOA Fee: What is it Good For?

Nef Cortez

By Nef Cortez

A first time homebuyer once asked me, in reference to the HOA Fee, why do I have to pay that? What is it good for, and how does it benefit me anyway? In today’s real estate market, when many of the Homeowners association fees run anywhere from $250 -$500 per month, that monthly payment could pay for an additional $40,000 to $70,000 in purchase price or property value, meaning they could buy that much more of a home in terms of price.

Here are the benefits received when paying a Home Owners Association Fee (HOA Fee); The HOA Fee generally pays for all common area and amenities’ maintenance as well as for a master policy covering the structure against loss due to fire (Fire Insurance Policy). This Fee includes  the repair and/or replacement of the Roof, maintenance or replacement of most of the fencing in a complex (usually used to create patio areas) and the proper care and maintenance of amenities such as swimming pools and spas, tennis courts, and playground areas, as well as the hardscaping and landscaping of the complex.  In most cases, it also covers the “Trash Bill”, and in many instances also covers the water bill.

Think of what it would cost to replace an existing roof with new materials. Possibly $10,000? What about the cost of paying for a monthly or annual fire insurance policy? Maybe $50-$90 per month? What about the cost of paying a monthly bill for waste disposal? $30-$40 per month? What about the water bill? Another $50-$60 per month? Monthly gardening bill? Another $50-$60 per month? How about a liability insurance coverage? Another $50-$60 per month?

As you can see, it quickly adds up to more than $200 per month in payments for a direct value received. There is no question that the payment of an HOA Fee is well justified for a well administrated and administered Home Owners Association.  Feel good about paying that fee if it also enable you to go ahead and get started on Home ownership. Starting sooner rather than later is usually a wiser choice, as 90% of wealth has traditionally been accumulated via real estate ownership.

This article was written by Nef Cortez, a licensed Real Estate Broker, Ca BRE # 00560181 since 1976. He can be reached via e-mail at nefcortez@gmail.com.  Please feel free to email any questions regarding real estate.

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