A lot of red flags here

Dear Dave,

I live in Dallas, Texas, and I’m wondering if I should sell my condo in order to pay off debt. I owe $120,000 on it, and it’s worth around $260,000. Plus, the homeowners association fee used to be $450 a month and has gone up $100 each year for the last two years, so now we’re paying $650. No one has ever told us why the fee went up so much. There haven’t been any major improvements to the complex in the last five years, so I don’t know what to think. Can you give me some advice?

Daniella

Dear Daniella,

As a homeowner, I’d want some answers by the end of day as to why the HOA fees are so high. I mean, for a $260,000 condo, the fee you mentioned is ridiculous unless the building owners are doing a major renovation, like replacing the parking lot or updating the community’s clubhouse. Even then, it’s crazy! On top of all that, it devalues your condo. Nobody wants to buy a $260,000 condo with a $650 HOA fee every month, especially when the fee has gone up that much for no apparent reason.

There’s always the possibility the company is building up a war chest for improvements in the next year or so. But you have a right to know exactly where the money you pay in HOA fees is going. Ask to see a copy of their financials, and if they won’t do that – or explain why the fee is so high and where the money’s going – you need to sell the place because it’s being poorly managed.

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