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Buy a condo/loft without joining a HOA in LA or San Francisco?
March 11, 2014 12:41 PM   Subscribe

Is such a thing even possible? I have always rented apartments and am now looking into purchasing a loft, preferably, in either San Francisco or Los Angeles. I really have no interest in then paying for "rent" to some HOA at around $400/month. Is there a reasonable way to not do so, or does it entail looking for solo owned places which are probably really expensive? I'm hoping to keep it around 500k total. Thanks in advance for any advice.
posted by madglee to Home & Garden (17 answers total) 1 user marked this as a favorite
 
If you buy a condo, you're going to be paying HOA fees.

The HOA arranges for insurance on the building, landscaping, repairs of the structure and common areas, lights, water, security, parking lot repaving. If the roof needed to be replaced, all tenants would have to pony up for it. If you were all independant, only the ones on the top floor would voluntarily contribute, since the problem doesn't affect those on lower floors.

Now, there are two different HOA thoughts. One takes in the fees and they bank any reserves, againt any future raises in insurance or any unplanned repairs to the building. The other charges a minimal amount monthly to cover insurance, light, water, and maintenance, keeping a minimal amount in reserves. If a problem occurs, the board can assess each owner for their share of the repair.

So, you can pay $400 per month, and hopefully, if the roof needs repairing, there's enough in reserves to cover it. Or you can pay $250 per month, and if the roof needs repairing, you can be asked to cough up the $2,500 that represents your share of the repair.

At this stage of the game, I wouldn't buy in San Francisco OR LA. One earthquake can wipe you out, and the ancillary costs in those cities are heinous! (Price insurance, and see what I'm talking about.)
posted by Ruthless Bunny at 12:53 PM on March 11 [3 favorites]


HOA fees are part of owning a condo. You own your unit and what is inside its walls. The common areas and overall building expenses are shared by the unit owners. Even if you buy a townhouse in a planned community or something, the HOA fees go toward maintaining the common areas there like landscaping, etc. So no, it is not possible to buy a condo and not pay monthly fees.
posted by bedhead at 1:01 PM on March 11


Someone has to pay for the expenses for the building's common areas and systems, so your options are HOA or solo ownership. If not being in an association with others is that important to you, you need a house. Even then, you have to take care to make sure it isn't part of a neighborhood association.
posted by Area Man at 1:02 PM on March 11


I had a coworker who lived in a condo that didn't have a HOA (in Houston, but still). The residents went around and took a collection/donation for common items. You can imagine how that worked out. After her roof got so bad the rain came through it, and her neighbors (who shared the roof) would not pitch in, and finding out it was an all-or-nothing roofing situation, she finally paid for an entire roof for herself and her neighbors, then declared bankruptcy and moved.

Think very carefully about this.
posted by Houstonian at 1:05 PM on March 11 [13 favorites]


Think of it this way: You're going to share ownership of a building with a bunch of other people. Do you not want them to be legally required to share costs with you, or would you rather be in a position where you bear the entire cost of any repair or maintenance that you want done that benefits them but they don't want to pay for?
posted by The World Famous at 1:14 PM on March 11 [1 favorite]


You're looking at this the wrong way - if you buy a $500k house, there's a maintenance cost - roof, driveway, landscaping, deck, fence, furnace, hot water tank, etc. - that is over and above the cost of purchase. These items are perishable. A roof at $25k that lasts 25 years works out to $1,000/year amortized.

Those fees are smoothed in a condo - by paying a monthly fee into reserves, you ensure the building is kept in a state that you will be able to live in it and to extract your investment in the future. It's not rent - it's the same cost to upkeep that you would pay on a house, except you're no longer responsible for the work.

Many people look at this as "lost" money, but if you buy a house, all the maintenance (not upgrades) is as much "lost" money. The only difference is how much risk you yourself bear.
posted by rutabega at 1:16 PM on March 11 [2 favorites]


No, there is not a way to own a condo without paying HOA fees in SF or LA.
posted by BabeTheBlueOX at 1:16 PM on March 11 [3 favorites]


Googling brings up results like this, in which people say there are condos without HOAs in LA. Apparently duplexes and four-plexes. And apparently you maybe can get a mortgage and insurance on it. I wouldn't recommend this course of action (see my story above), but you could follow up on this by focusing on places with fewer than 5 units.
posted by Houstonian at 1:26 PM on March 11 [1 favorite]


Even if you could, I wouldn't recommend it. The HOA covers a lot of costs that you would otherwise have to pay anyway: These may include regular maintenance, repairs, utilities, etc. Otherwise, it is almost impossible to gather enough money to reroof the building or reside the building (two common, larger scale projects).

If you buy a house, you would still have to save up for repairs and maintenance, and they are not cheaper. You just have less predictability of how much and when you'll be spendign the money.
posted by ethidda at 1:33 PM on March 11 [1 favorite]


I know someone who was in a situation like that, where the roof was leaking, the top floor and this guy were willing to pay, the third person was not. They eventually paid for it just the two of them and sued the third person in court.

If you all share a building, you absolutely want a legally binding agreement that covers common areas and the structure in general. You can look for one where the rules are to your liking, but consider roof replacements and other major structural repairs.
posted by jeather at 1:46 PM on March 11 [2 favorites]


Unsure about those markets specifically, but often smaller buildings have smaller fees (though you are of course on the hook for your portion of major projects). Look for buildings with two to six units instead of large buildings. Of course, you'll want to look closely at the finances and the condition of the parts of the building that are owned in common.
posted by ssg at 1:47 PM on March 11


You could buy a single family home, but then you would pay for garbage pickup, water services, and maintenance on the exterior and the property-- all things that are taken care of by the condo association when you have a condo.

The way I handle this is to find condos where the fees and services are as small as possible-- no place with a doorman or extensive grounds or a gym, etc. I make sure that the condo fees pay for the precise things that are inherently shared and that I would be paying for, anyway, if I owned a house-- water, garbage pickup, insurance on the exterior, etc.
posted by deanc at 2:19 PM on March 11 [1 favorite]


Yes, to add to the horror story of buying a duplex: my friend bought half a house. No condo fee, but an end-stage alcoholic co-owner who abused his kids when they visited and played loud music and kept insisting that he could do all the roof work himself. (He just died a few weeks ago, which means that his estate will be tied up in probate, which means my friend still can't do certain things to the house.)
posted by Melismata at 3:02 PM on March 11


You are going to have to pay monthly fees for the upkeep of the building no matter what they are called.
posted by brujita at 3:37 PM on March 11


To keep HOA fees on the lower side (especially in SF), consider places that don't have community amenities like a pool, as the higher cost is often to off-set the liability associated. SF condos with pools have HOA fees that skyrocket close to $1000 per month.
posted by chloe.gelsomino at 8:09 PM on March 11


There's HOA fees and then there's everyone's favorite, the Special Assessment. That's for big, expensive stuff that can't be covered out of the cash reserve: new roof, blown boiler, HVAC replacement.

You're making a trade. If there's no/super-low HOA fees, then the building likely isn't being maintained. In that instance, your special assessments will be frequent and expensive.
posted by 26.2 at 11:22 PM on March 11 [1 favorite]


Some smaller condos (like duplexes) don't have HOAs. The two owners jointly decide how to handle maintenance. You'll still have to pay something towards maintenance, though.
posted by redlines at 2:59 PM on May 3


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