What is a Reasonable Maintenance Fee for a Coop vs. Condo?

Brokelin just gave a WONDERFUL synopsis of how to approach coop and condo maintenance charges and what to look for. I lived in a 9 unit self managed building which had very low maintenance, a relatively small underlying mortgage and a medium sized reserve fund.

I believe he/she said this but the difference between a condo and coop is that a condo has its own deed. In the case of a coop, there is one deed for the whole building and the owner of the apartment actually owns shares in a corpoation. And most coops have mortgages on the underlying building. You need to know the terms of that mortgage which is often the biggest component of a coop maintenance.

I think Brokelin should post his or her answer as a separate article or Forum post. It would be valuable for anyone buying a coop/condo.

It is complicated understanding those costs (and potential costs) and you really need to do your homework to understand each situation, since all are different.

1. You need to learn the difference between coops and condos, first. In a coop, the maintenance covers property tax, as that is paid by the building as a whole, not by individual unit owners, as is the case in condos. Also, most coops have an underlying mortgage held by the building that the building makes payments on monthly. As a result of these two things (building tax payments and payments on building’s underlying mortgage), all other things about a building being equal, a coops’ maintenance will thus generally be higher than a similar condos’ common charge – usually.

2. I say usually, as there really is no answer to your question. You need to educate yourself by looking at apartments, asking questions, and figuring out what a building’s expenses are. A larger building with services (doorman, staff, elevators, landscaping) will often have higher monthly charges than a similar apartment in a walk-up building with no staff (because, as mentioned above, this stuff has to be paid for.) Large buildings also pay management companies to manage the building; in a small building, the owners do it themselves – this keeps costs down. Often that’s the case as well with things like cleaning common areas, shoveling snow, raking leaves, putting out the garbage – you do it in a small building if the building doesn’t decide to pay someone to do it.

3. People mix up the heat and utilities all the time. It makes no difference whether a building is a coop or condo. Heat and other utilities are paid separately when a building has installed separate heating units for heating apartments, and when the other utilities have been metered separately. Usually in a large old building, heat is still paid in common. In newer construction, it is usually separate (hence the confusion with condo v. coop on heat, since most all new construction is condo.) Some condos and coops are each way. (There are condos in older buildings that still have one boiler, so heat is paid in common, not separately.) So you have to look at what the maintenance/common charge to see what it covers, so you know if you will have a separate bill to pay for heat. Ditto for utilities – though not as important, as gas (other than when used for heat) is pretty cheap for cooking, and even for running a clothes dryer, and electricity is almost (not not always) metered separately. (Just consider it an unusual bonus if you don’t have to pay a separate electric bill.) Heat is the biggest expense there. (AC is a big electricity hog, but you will almost always be paying for that yourself anywhere in your electric bill – if you aren’t paying for your AC, again, a nice bonus.)

4. The size of the apartment will somewhat determine the charges – at least relative to other units of other sizes in the same building. (Though apportionment isn’t only per size – high up in elevator buildings with nicer views will pay more than lower in a coop.) Usually – apparently there are some cases where it is not proportioned by share or size (and you should probably avoid buildings like that.)

5. Taxes are different in different neighborhoods. And some size buildings have higher taxes than other size buildings because of the tax class they fall in. Taxes get complicated. Don’t try to figure it all out. It will only matter to you if (1) a coop’s maintenance is unusually high because it pays high taxes, so this explains why maintenance is unusually high in that building and (2) look at your taxes carefully when you buy a condo. Know whether they are abated, and when the abatement runs out, and what they are projected to be then.

6. So don’t look at just the monthly charge – add to that your taxes (if in a condo), plus any utilities you have to pay (especially if you are paying for heat – so you can compare to buildings where heat is included in your fee). Then you know what your true monthly costs will be, so you can compare apartments.

7. You still aren’t done. If you get serious about a place, you need to ask about the history of past assessments. Some buildings keep their monthly charges low, but assess (may you pay) for projects that need doing. And, you also have to look at the size of the buildings’ reserve fund (because this will pay for repairs, and if it isn’t big enough, you will pay out of pocket for them through assessments.)

8. It isn’t that complicated. But you can’t just ask a simplistic question like how much is reasonable. You need to add up the monthly charge, and taxes if a condo, and utilities you’d pay (especially if paying for heat), and take into account the history of assessments, the size of the reserve, the condition of the building (good reason to get an inspection done of the whole building so your incpector can tell you what needs to be done), ask what capital improvements projects the building has or hasn’t done in the past 10-15 years (replaced the roof? repointed brick? brownstone chipping off the facade and stairs? sidewalk cracked and in need of repair? lobby, stairs and hall in need of sprucing up? cornice falling off? etc.) and the projects to be undertaken mentioned in the last 3 years of board minutes (which you will get once you have an offer accepted), the size of the unit in square feet, and any amenities your charges pay for (the doorman, super, elevator, common areas cleaning and landscaping, etc.) and compare to similar size apartments in similar buildings with similar amenities. Then you are comparing apples to apples. (Your attorney will help you by asking about these things before you get into contract, but only to see whether the building has big expenses coming up to warn you, if they are onl the ball – s/he won’t actually be

Also: http://bstoner.wpengine.com/forum/archives/2011/02/new_constructio_11.php

This is the kind of thing I was wary of — we looked at a bunch of undersold buildings with crazy low maintenance ($200 on a 1000 sq ft unit), but I was really unclear as to what recourse we had to keep the maintenance low.