Association Dues in Plaza Resort & Spa.
Jon,
I have been considering looking to buy in the Plaza Resort and Spa in Daytona Beach....but the $428 monthly maintenance fee...what is included in this? Seems high, but I know its a very nice place to live / vacation?
This is from the e-mail I have received from AR reader. I have written about it before, but could not find it in those hundreds and hundreds of blogs.
Plaza Resort & Spa is a Condo-Hotel. It is one of the oldest hotels initially built in 1911, and then completely rebuilt in 1969. It was converted to condominium type of ownership relatively recently, in 2005.
In general Association Fees (Maintenance Fees) are higher per sq. ft. than in residential (apartment) condominiums, and the fees are significantly higher. A 372 sq. ft. studio in Plaza Resort & Spa would cost you $428.22, and if you buy a 2 bdr/ 2bath condo with full kitchen (which is not in a 372-sf unit), your maintenance fee will be about the same $400 a month.
Of course, the difference is that in residential condos only water is included, and the rest of the fee covers everything OUTSIDE the unit. In the condo-hotel it is much easier to list what it DOES NOT cover, which would be property taxes (paid annually), and liability insurance, so that you are protected when the guest gets hurt ($16.41 a month).
Everything else is included: electricity, cable, local telephone, plus every expense for the common areas (undivided interest in common areas) to cover maintenance of the building and the grounds.
The Plaza Resort & Spa has chosen the system where each condo is assessed the same amount, no mater of the size, so each unit, whether it is 372 sf, 462 sf or 513 sf studio, or even a one-bedroom unit, the Association fee today is $428.22.
The way the association fee is calculated is by preparing the budget. And yes, if the cost of KW of electricity goes up, it would affect the budget. Increased cost of water would affect the budget, growing labor costs would affect the budget, cost of materials sure affects the budget. So, if the projected budget is set higher than the last budget and the difference is not offset by the increase in revenue, the Association fees can go up.
Keep in mind that people who vote for the budget are owners like you, and they are not interested in just voluntarily hiking the fee. They are paying it as everyone else.
So, is $428.22 a month high? What if the fee is lower, but the management has to cut corners to keep it lower? Would it cost less? Well, all these cut corners, and all the work that was not done, and preventive maintenance that was not done do not go anywhere. They would come in the form of Special Assessment and will cost you more than a professional management.
Actually, if you walk into lobby of Plaza Resort & Spa, and If after that you are concerned about the association fee, maybe condo-hotel and condo is not for you. I think Buyers should be careful when the maintenance fee is lower than on average, and there is no reasonable explanation.
There are no miracles. You want to buy a unit in a premier condo-hotel, then you are faced with higher Association fees. Woldn't you pay more for a Mercedes than for a Chevy?
The funny part is that the amount of the Association fee is never a concern for the owner. The difference between the rental income, and particularly the difference between the owner portion and all expenses is what owners should think of.
You can have $300 a month Association fee and have no revenue, or, like in large units in Ocean Walk, have $1,056 a month Association fee and enough revenue to offset your expenses.
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