Many second home owners find that condominiums are an attractive property type for a variety of reasons. They allow more time for enjoyment without a lot of worries like maintenance and daily tasks. They can also offer amenities that are not easily available to single family home owners like swimming pools, shuttle services, game rooms, etc. In many areas the possibility also exists that your unit can be rented out to tourists on a nightly or weekly basis helping offset some of your ownership costs. Naturally there is a fee for all of these services but since the costs are shared amongst all of the owners may make it more manageable for the individual owners.
All complexes should have a Home Owners Association (HOA) and in many states it is required. In most cases the HOA contracts with a management company to handle the day to day items needing attention as well as provide a reservation service to manage the rentals. In most cases the HOA meets annually to discuss items pertaining to the property and the management of those items. It is important prior to ownership to understand how the HOA functions and what their contractual relationship is with the management company. Review the HOA financials, Rules and Regulations and, at least, two years of HOA and Board of Directors meeting minutes. Often these will not be released to you until you have a unit under contract. Meet with the President of the HOA as well as the property manager to better understand if this is a complex that appeals to you. Remember also that once you are an owner you are part of the HOA and part of the decision making process.
HOA dues can cover a variety of items and it is important to understand what those items are. Dues can cover trash service, water, common amenities such as hot tubs, television, exterior building insurance, lawn and driveway maintenance, etc. HOA dues may be collected on a monthly, quarterly or yearly basis.
Most management companies provide the HOA a ten or twenty year forecast of what maintenance issues might be upcoming like replacement of roofs or sidewalks and the approximate costs involved. This is how the HOA can determine the HOA fees to the individual property owners (usually allocated on a sq. ft. basis). If the property is in a short term rental location they will most likely manage your unit and take care of guest check in, cleaning and maintenance. Their fee is a percentage of the rental income. Find out what this percentage is and what they provide for this fee.
In situations where short term rental income of your unit is possible the management company may inspect and rate your unit annually. The management company’s desire is to attract as many return guests as possible so they generally rent the nicest units first meaning more income for the owner (and perhaps more wear and tear). In many instances the management company has someone on staff that can guide you through the cost benefit or upgrading your unit. Find out what your unit is rated and if there is a benefit to upgrading the unit. Also get rental income figures for like units understanding that individual units may vary due to location within the project and owner usage.