Virginia Beach, VA · Member since 2016 · 44 posts · 20 votes
On an investment in a condo or co-op, what numbers are you using to calculate Cap-Ex and Maintenance in situations where HOA fees cover external items like the roof, building exterior, foundation, landscaping, etc.? For purposes of discussion here, assume the HOA is well run, the annual operating budget is sound and the account balances for reserves are within the guidelines set forth in the most recent reserve study. Under normal situation most investors would factor in 10% of rent for each category, but where should one adjust to in this situation?
(I understand that some investors don't prefer condos due to the HOA. I'm not looking to start that discussion in this thread.)
With condos, you would have your standard HOA fee that covers few expense items. Other than that, you still need to include insurance (interior coverage), power/water, property tax, mortagage. I would consider ALL expense items to get an overall view.
Then I would review the rental value of the area, review the photos of conditions to see how close you are matching the market then determine a possible income rate to compare the values if the numbers work.