Most homebuyers on the mainland decide against condos because they don’t want to pay “expensive” Home Owner’s Association Fees (HOAs) on top of a healthy monthly mortgage commitment. However, in Hawaii, and especially in Honolulu, this picture is starting to change as all the expenses covered in HOA dues are better understood.
Regardless of the property type, flood, fire, liability, and natural disaster insurance are always factored in as fixed costs. Now, consider all the other costs of homeownership covered by the HOA like roof repairs, pool service, landscaping, plumbing and electrical, garbage and recycling, cable, and facilities security. You will quickly start to observe how HOA fees in Hawaii make good financial sense.
While it is true that you might “save” on some of the labor costs associated with the tasks listed above, in Hawaii, the value on the time you’re committing to complete them is $30-$50 an hour. And that estimate is per person. So, because long-term deferred maintenance is a problem you cannot afford, property management and home contracting become your new part-time job by proxy.
In the event that you must source qualified staff to paint your house or install a new roof, that cost proves excessively prohibitive when compared with average HOA fees in Hawaii. With that in mind, basic routine pool service in Honolulu starts at around $300 a month. If your home comes equipped with a below-ground pool, and you want your pool to last, professional routine maintenance is a must.
The benefits of HOAs in Hawaii
Many real estate professionals convince homebuyers to approach HOA fees as a type of emergency savings account for a rainy day. There’s one thing those same people often fail to mention. They don’t usually tell you that there is a good chance it might downpour only a month or two after all final documents are signed and closed and, perhaps, quite frequently thereafter. Depending on your means, a serious and unanticipated maintenance event could spell financial disaster.
The best approach is not to consider HOA fees as money conserved but, rather, a fixed sum of money invested into everything you need to pay for anyway. In Hawaii, tropical weather also happens its greatest obstacle when it comes to owning and maintaining a home in the state. When you’re invested in HOA dues every month, you’ll find it much easier to sleep at night, should that pleasant coastal sea breeze ever render itself as something more than soft.
Ensure you’re factoring all home expenses
It is hard to imagine a better place to retire than Hawaii, but if you’re operating on a fixed income, joining an HOA means you’ll always have “payments” on the home. While it is true that you’ll always pay property taxes along with the many other obligations mentioned above, keep in mind that HOA fees always increase with time.
Expect power prices to go up, infrastructure to degrade, insurance risks to elevate, and employees become more expensive to hire. Your HOA must necessarily account for all of the above, year-over-year, by increasing dues. While it’s not likely, but still theoretically possible for your property taxes to go down from the previous year, it’s entirely assured that your HOA fees won’t.
The worst case scenario with HOA
The main benefit to an HOA is that it represents an in-built, hands-off property management service. But that is one of its core setbacks as well. When you buy into an HOA, you’re investing the entirety of your trust into its Board of Directors, the sole person responsible for dutifully managing the association’s long-term budget.
Let’s assume for the moment that you moved into an exquisite burnt-brick converted shoe factory from the 1930s because it reminds you of your old warehouse loft in Soho. A year on, the association informs you that a structural analysis of the building revealed that its southeast quadrant is poised for imminent collapse.
Even worse, several association members have already been foreclosed upon for not paying their dues. At the same time, the HOA has been unsuccessful at defending several lawsuits from another unhappy segment of its membership. Under these dreadful, worst-case circumstances, you could be facing a hefty one-time special assessment fee that you can’t afford.
Do your homework when buying a home in Hawaii
In most situations, HOA dues work in your favor and make sound economic sense. But make sure that you work with your real estate professional and perform a strong due diligence check on any association before you join one.
Request to look at the board minutes and financials so you can determine whether or not their budget is in the red. A careful analysis of your prospective HOA’s financials should give you a clear picture of what to expect, and maybe even a little added bargaining power as you enter into negotiations for the sale.