As a condominium owner, you will find that the condo fee is an expense that will not go away. The challenge for most owners is that when purchasing a condominium, many of the costs wrapped up in the condo fee are the same expenses you would face in a non-condominium purchase. Expenses such as water, refuse pickup, utilities, lawn maintenance, etc., are costs of ownership any homeowner will face in today’s home owner association world.

The problem with condo fees, is that the monthly expense is rolled into your debt-to-income-ratio by mortgage lenders and can affect your buying power. For instance, if you have a condo fee of $300 per month, your purchasing power could drop by $50,000 if you were buying a home with a 6 percent mortgage on a 30-year note.

Nevertheless, the popularity of the condominium lifestyle -- the ability to lock it up and leave -- makes the monthly fee an acceptable expense for those home dwellers seeking a low-maintenance lifestyle.

Homebuyers deciding between non-condo and condo living should consider the services offered by the association for the money being paid out. In addition to analyzing the services received for the fee, ask for a history of the condo fee revenues -- is everyone paying their fair share? Have the fees increased reasonably over the years? What are the expected capital expenses for the near future and how will that affect your cash outlay as a new member of the community?

Published: April 29, 2008

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Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple. Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.