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

Reblogger Joe Jackson
Real Estate Agent with Keller Williams Capital Partners Realty 277320
Original content by Patricia Kennedy 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. 


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Lisa Smith
Keller Williams Capital Partners - Worthington, OH
Listings Manager

I think this is a terrific idea! Great way to be sure to have the funds if and when something goes wrong.

Sep 17, 2020 09:55 AM #1
Shannon Jones
The Shannon Jones Team - Long Beach, CA
Long Beach CA Real Estate

Great idea!

Sep 17, 2020 02:03 PM #2
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Joe Jackson

Clintonville and Central Ohio Real Estate Expert
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