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Learn why Flagstaff HOA dues vary so much

Flagstaff townhomesIn recent years, I’ve heard more prospective buyers than ten years ago say they want nothing to do with Homeowners Associations. These have usually been people relocating to Flagstaff.  When I ask why they don’t want to buy a home or townhome that is part of an HOA, I hear a horror story of restrictions on house painting or landscape preference. These issues are less common in Flagstaff than elsewhere, I think.

Of course, many properties do come with deed restrictions – whether there are active HOAs or not – and it is very much worthwhile to learn whether what you want to do with the property is permitted. This is similar to making sure that government zoning matches your intended use.

What is a common theme with Homeowners Associations, and one worth looking into when buying a Flagstaff townhome or condo, or a Flagstaff single family home with an HOA, is the financial stability of the association.

Some homeowners associations have high monthly dues and some are much lower.  Some Flagstaff golf course home developments have capital contribution and annual membership fees in addition to the association fees.  It’s an important detail to watch when buying any Flagstaff home because the monthly association fee is counted by mortgage companies when calculating the house payment you can afford. The dues add up quickly in the payment.

For example, a townhome with a list price of $225,000, association fees of $110 per month and taxes of $1600 a year will have nearly the same house payment as a townhome listed for $190,000 with an association fee of $210 per month and taxes of $1600. A townhome listed for $225,000 likely offers more features or nicer condition than one offered at a list price of $190,000.  Buyers will miss opportunities if they focus solely on list price.  It’s smart to learn from your mortgage officer or Realtor® some shortcuts to calculate the monthly house payment on individual townhomes.  This knowledge will allow you to consider a wider range of property.

There are three main reasons the dues vary from one complex to another:

1. Difference in services paid by the association.  Items covered by association dues may include lawn care, snow removal, management fees, building maintenance, exterior materials and roofs, hazard insurance, water and sewer and heat. If an association covers all of those items it will have higher dues than an association covering just a portion of the items.  Some associations offer pools, tennis courts and playgrounds and they add to the operating expenses. However, Flagstaff’s Country Continental Country Club Association manages to keep its fees lower by opening its golf course to the public.

2. Serious Shortage of Reserves.  Associations invest and save some of the money from dues to build up cash reserves for anticipated expenses like roof replacement and exterior painting.  If an association has experienced an unexpected cost which depleted the reserves, the dues may be increased to build up reserves. Shortages can be caused by storm damage, lawsuits, flaws in building design or mismanagement. You will have an opportunity during the transaction to review association financial documents and cancel the transaction if you are not comfortable with what you discover – very similar to a physical inspection of a home.

3. Construction materials. Newer townhomes and condos are materials that last longer and require less expensive maintenance.  These complexes do not need regular painting and siding replacement which translates to lower operating expenses.

When buying a Flagstaff single-family home in a homeowner’s association with dues, you’ll need to find out what is covered and who is in charge. Sometimes the only responsibility of the HOA is maintenance of a drainage retention area. Other times, a miles-long paved road will need paving work and snowplowing.

In summary, when shopping for a Flagstaff home, remember to consider association fees along with list price. When buying a Flagstaff home in an HOA, review the financial reserves and budgeting process used by the Association, understand what is covered by the dues, and make sure you have confidence in the management.

We’d be pleased to discuss these and other issues related to owning a Flagstaff home which is part of a homeowners’ association. Give us a call or write us a note: Elite Team at RE/MAX Peak Properties. 928.714.0001.

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