When You Buy a House, Should You Charge Yourself a "HOA" Fee?

Real Estate Agent with RLAH Real Estate AB95346

Some of the people I've worked with have preferred a house to a condo because they don't want to pay a monthly condo fee, in addition to their mortgage, real estate taxes, and hazard insurance.  

But wait!  

With a house, they will have to pay their mortgage, taxes, and insurance, and then they must maintain the place themselves.  

Any house is a complex set of systems that have a way of getting clogs, leaks, bugs, electrical shorts, and other signs of a breakdown.  There is usually a lawn to mow, driveway to keep paved, paint that peels, and wood that rots or gets eaten by termites.  So, just like a condo building, a house will take money to keep it in good repair with all systems working.

Well-run condos set up an annual budget, and an important category is "Reserve Funds". This is to deal mostly with money set aside for expected repairs over a period of time.  If a roof lasts 20 years, and the current one is 10 years old, part of the reserves will be set aside so when the time comes, there will be funds to pay for a new roof. There will also be money set aside to replace hot water systems, boilers, hallway carpet,  and anything else the condo board can identify.

Just like a condo building, the systems in your house will predictably - and sometimes unpredictably - break down.  And once in a while, something not so predictable happens.,

A few years ago, I set up a separate account for breakdowns in my 100-year old house. It came in handy for replacing my old kitchen appliances, re-keying locks, and replacing the roof over my front porch. When termites showed up for their mating ritual in my basement, the reserve fund paid the exterminator. And right now, as I wait for a plumber to repair or replace my aging hot water heater, I will use this account to pay the bill. 

Then there are the reserves that I'm building up to re-build a rear verandah, waterproofing the front room in the basement, and a few other projects that I've earmarked for completion this year.

Bottom line, having to pay for your home's upkeep, whether it's a condo or a house, is as certain as death and taxes for any property owner! The only exception is when you don't own your home. 

Comments (44)

Dan Hopper
Dan Hopper - Gold Way RE - Westminster, CO
Denver Broker / Author / Advocate/Short Sale

Always a good idea,   .  Having a "slush fund" or a "maintenance fee" for your own home is a fabulous way to ensure you have funds for those unexpected and recurring repairs.  Another reason, I remind new home buyers, that your Primary Residence is a liability.  Treat it like a savings account.

Sep 17, 2020 06:04 AM
Randy Mitchelson,APR
Marketing Advisor & Squeeze Mortgage - Bonita Springs, FL
First Impressions are made at First Click

A smart perspective on budgeting and saving up for those home repairs and upgrades that inevitable crop up when you least expect it.

Sep 17, 2020 06:11 AM
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH

Great analogy! Thanks for sharing!

Just like a condo building, the systems in your house will predictably - and sometimes unpredictably - break down.  And once in a while, something not so predictable happens.,

Sep 17, 2020 06:34 AM
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

It is smart advice for any homeowner to have an account and put away for things that we know will break, we just don't know when!  I always recommend a good Home Warranty for the 1st year at a minimum as they get used to the new appliances, and understand the house.

Sep 17, 2020 06:34 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Patricia Kennedy ,

Excellent post! You are right the bottom line is whether you own a home or a condo keeping up repairs is as certain as death and taxes for a homeowner!

Sep 17, 2020 06:59 AM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Patricia,

This has been my recommendation for years. Have a separate account (preferably with a higher interest rate) that you pay a certain amount into every month. If it runs long enough, you can use it for a new roof, new water heater, etc, whenever the need arises. If after 15 years you find that you have done such good maintenance that your reserve funds are too high, take a little bit to supplement a fun activity. However, it can also come in handy in case of a large car repair or an illness with crazy co-pays.

Sep 17, 2020 07:48 AM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

Great idea, Patricia Kennedy .  In fact, there are probably other annual expenses that come up like in real estate which seems to be at the end of the year. It's good to keep a certain amount stashed away just for this. Oh, and make sure that fund gets replenished FIRST in the new year.  At least that's how I like to manage it. This "little bit at a time" doesn't work for me, and probably not for anyone in real estate, because we don't get paid on a steady basis.

Sep 17, 2020 09:21 AM
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

Thank you for this great idea! :) 

Sep 17, 2020 09:50 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

I always suggest to those buying a detached home, or one not part of an hoa to put money aside for repairs and emergencies, a great idea to put it away every month. Like your idea.

Sep 17, 2020 02:10 PM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

I own a second home in Florida and we have very reasonable HOA fees which I don't mind paying at all due to the benefits.

Sep 17, 2020 02:42 PM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

All consumers should save a minimum 6 months of income for emergencies, however, most consumers don't have any discretionary income to save for an emergency fund, so, the cycle of debt continues to grow and grow, doesn't it? 

Sep 17, 2020 07:44 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Patricia Kennedy Great way to look at the expenses of maintaining a home. We have some properties that have both HOA and Condo fees. To really compare costs, you have to know what is included in those monthly fees. Coops may include taxes. Other condos may include all utilities. Charging yourself with an HOA fee is a great idea!

Sep 17, 2020 09:46 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Pat what an awesome idea, you never know what surprise might need those HOD.... alternatively if you can not afford that then get a Home Warranty and keep it annually cheaper but worth every penny. Endre

Sep 17, 2020 10:16 PM
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

That is a great idea Pat! It makes way too much since for most of us! I suspect it is probably too hard for most people, if they don't have to make the payment

Sep 18, 2020 03:38 AM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

Excellent post. I do think new homeowners should put some money away each month so they'll be ready for maintenance items (or as ready as can be!)

Sep 18, 2020 05:08 AM
AndreaBFerreira CRS - SRS - CLHMS
Keyes Co. - Davie, FL
Miami Dade, Broward and Palm Beach County in FL

I practice that often, not just our house but for a new car or anything we planned ahead. It is a peace of mind to have funds available when need it plus improve the discipline to deal with money. Great post. Congratulations!

Sep 18, 2020 05:36 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

All homeowners should have a "house fund" --we do!

My husband would be OK in a condo--I worry about loud neighbors, misuse of condo fees..

Sep 18, 2020 10:52 AM
Fred Sweezer Sr.
Hud Certified 203K Consultant - Long Beach, CA
Certified Home Inspector

That is great maintance advise.

Sep 22, 2020 04:06 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Hope all is well just wanted to stop in it has been a while, Merry Christmas, Endre

Dec 25, 2020 09:35 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Well I guess you are either very busy or just not connecting anymore wishing you a Happy 2021, Endre

Jan 16, 2021 10:07 PM

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?