Condo Association Fees Explained

Condo Association Fees Explained

Things to consider when buying property on the Emerald Coast. Part 1: Condo association fees and annual ownership costs.

Congratulations! If you are reading this blog post, it means you are interested in learning more about purchasing an investment property along Florida's Emerald Coast. The good news is that I will begin by outlining some of the fundamentals for those who are unsure where to begin. Today, we'll begin by looking at condos. This will be a weekly series, so let's get started.

First and foremost, what is a condominium? Owners own their individual units but share ownership and use of the common areas. Lobbies, elevators, fitness rooms, pools, green spaces, and beach access are all examples of common areas. In other words, an ownership structure in which a building is divided into individually owned units but is surrounded by jointly owned common areas.

What exactly are condo association fees?

Condominium buildings have a condo owners association fee that is typically paid monthly or quarterly (every three months) for things like running the day-to-day operations of the property, funding future reserves for improvements, exterior building and common area maintenance and insurance, and individual unit and community utilities. Individual unit utilities vary depending on the building, but can include any combination of water, sewer, trash disposal, television cable, internet, gas, and electricity. Some buildings, such as Sundestin, managed by Scenic Stays, include all utilities, including electricity, in the monthly HOA fee, whereas others have lower monthly fees but only include some utilities. Depending on the property, there may be an additional association fee known as a Master Association fee. These fees are distinct from the condo owners association fees mentioned previously, and they are typically associated with resort-style properties that include multiple communities and/or condos within one larger all-encompassing property. Sandestin, Tops'l, and Seascape are some notable examples of Emerald Coast properties that include a master association fee.

How are condo association fees calculated, and do they ever go up?

These fees are typically pro-rated based on the square footage / size of each unit. A 1,200 sq/ft 3BR unit, for example, will typically pay a higher condo association fee than a smaller 950 sq/ft 2BR unit in the same building. I say typically because a condominium association can levy all units equally. Condo fees are adjustable and are determined by a budget each year. If the building's insurance costs rose, the increase in association fees would be reflected in the following year's fees. In some cases, owners may be required to pay a prorated per unit fee for a specific purpose known as a special assessment. We'll go into more detail about special assessments in a later post, but for now, just know what they are.

The following is a real-world example of a vacation condo, its association fees, and other annual ownership costs.

Building  – Located on Scenic Gulf Drive in Miramar Beach, FL

Amenities – Private beach access, Two Pools, Fitness Room and Owners meeting room.

Total units : 70

2BR HOA Fees $2,000 Quarterly ($667 Monthly / $8,000 annually)

Fees include – Accounting for the HOA, Insurance of the exterior and common areas, maintenance of exterior and recreational facilities, use of recreational facilities, water, sewer, trash disposal, TV cable and internet.

What is not included in the fees? Individual unit property tax assessment and monthly electricity cost.

How much would it cost to own annually not including servicing any debt with a loan?

HOA Fees - $8,000 annually

Homeowners Insurance – $2,000 annual Estimate - Varies based on a variety of factors.

Electricity – $2,400 annually / $200 monthly average Estimate. Electricity bills are typically higher in Spring and Summer and lower in Fall and Winter. $150 - $200 monthly is a range for a 2BR condo.

Property Taxes – $4,500 annually. This will vary based on the location and size of the property as well as market conditions. It is publicly available information for each specific unit. For this building I pulled a unit that had a 2022 property tax assessment of around $4,500. We will use that number for this example.

In our real world example, the total annual estimated cost of ownership to operate this condo is $16,900.  

Keep an eye out for the next part of of our series on or sign up to receive e-mail notifications here . Every week, a new topic will be covered in this weekly series.

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