Condo HOA Fees (Miami, Coral Gables, Edgewater: insurance, condos, how much)

[WonderfulAlex]

I've been looking at condos in the Miami Area (Brickell, Midtown, Edgewater, Coral Gables). I noticed that many have extremely high HOA fees ($1000+ per month!).


Are HOA fees negotiable? The uncertainty of this cost continuing to increase bothers me as someone interested in purchasing a Miami condo. It seems like an uncontrollable expense that would make it unprofitable to convert the property into Airbnb or a long-term rental.



If that cost can be locked in via contract, it would make the decision to buy a lot easier. But I'm not sure if this is even an option. Anyone have experience in this matter?

[jr8999]

Originally Posted by WonderfulAlex

I've been looking at condos in the Miami Area (Brickell, Midtown, Edgewater, Coral Gables). I noticed that many have extremely high HOA fees ($1000+ per month!).


Are HOA fees negotiable? The uncertainty of this cost continuing to increase bothers me as someone interested in purchasing a Miami condo. It seems like an uncontrollable expense that would make it unprofitable to convert the property into Airbnb or a long-term rental.



If that cost can be locked in via contract, it would make the decision to buy a lot easier. But I'm not sure if this is even an option. Anyone have experience in this matter?

I have experience with the financials of condos in the Northeast and most recently in the Miami area. Most condo associations struggle to maintain a break even scenario due to ever increasing costs to run a building. The areas you have listed are among the neighborhoods that offer higher end amenities which add to those costs. Most recently, like other types of residences, insurance costs have increased two and threefold over the last few years. Appraised values of Miami area buildings have increased which further drives up insurance costs. Condos are also required to maintain reserves for specific maintenance costs. All of this pushes HOA fees higher.

Most condo associations have limits on how much they can increase each year. Many HOAs have been increasing on a regular interval to play catch up on the aforementioned rising insurance costs. You will find all of this information in the condo documents that are available to you before you purchase. I would also highly recommend reviewing the HOA financial statements.

As far as negotiable fees or locking in fees via contract, that is something that I've never run across. When negotiating you are dealing with the seller and not the HOA in most cases and the seller does not have direct control over the fees. Unfortunately there will always be uncertainty is the costs of future HOA fees. I would suggest incorporating a 3-5% annual increase in HOA fees into your budget, much like you would with any other type of living expense.

[MiamiLIFE]

Originally Posted by WonderfulAlex

I've been looking at condos in the Miami Area (Brickell, Midtown, Edgewater, Coral Gables). I noticed that many have extremely high HOA fees ($1000+ per month!).


Are HOA fees negotiable? The uncertainty of this cost continuing to increase bothers me as someone interested in purchasing a Miami condo. It seems like an uncontrollable expense that would make it unprofitable to convert the property into Airbnb or a long-term rental.



If that cost can be locked in via contract, it would make the decision to buy a lot easier. But I'm not sure if this is even an option. Anyone have experience in this matter?

HOA fees are not negotiable. The fees have been increasing for two primary reasons: 1) rising insurance costs and 2) a number of properties were not maintaining sufficient reserves per changes to state law. Most buildings with luxury amenities, doorman and elevators are running around $1.30 psf +/-. The only thing negotiable is the purchase price of the property. I do see the increase in HOA and interest rates putting some downward pressure on condo pricing. I bought a place recently and used the HOA as part of the reason for not increasing my offer. There seems to be some recent evidence that insurance costs are starting to stabilize as well.

[bale002]

Originally Posted by WonderfulAlex

I've been looking at condos in the Miami Area (Brickell, Midtown, Edgewater, Coral Gables). I noticed that many have extremely high HOA fees ($1000+ per month!).


Are HOA fees negotiable? The uncertainty of this cost continuing to increase bothers me as someone interested in purchasing a Miami condo. It seems like an uncontrollable expense that would make it unprofitable to convert the property into Airbnb or a long-term rental.



If that cost can be locked in via contract, it would make the decision to buy a lot easier. But I'm not sure if this is even an option. Anyone have experience in this matter?

My understanding is that condo associations whose building(s) exceed a certain height (not very high) must comply with the new maintenance and reserve requirement laws by the end of 2025. Also by that time there may be a lot of new supply on the market.

So either wait another 20-32 months or make sure that you inspect the building’s financial statements and maintenance records, especially any one built before 2000-2010, before signing any contracts or having clear contingencies to that effect.

In any case, starting in 2025, expect HOA fees to increase in line with annual inflation rates and/or building maintenance costs, including insurance, whichever is higher. Insurance can be a wild card because one never knows when a major hurricane will strike any developed part of the State, which affects insurance rates throughout the State.

Good Luck!

[Rick In Madison]

If you have to ask about HOA fees then you cannot afford the condo.