"Why is the maintenance so high?” I get this question a lot. Often I find myself explaining that the maintenance they are referring to, isn’t high at all.
Maintenance is directly proportionate to the size of the apartment. Kind of like the size of one's shoe is directly proportionate to their sock. What did you think I was going to say? Anyways, the square footage is the basic calibrator here. And in this case, size matters.
If you want to get technical Mr. Fancy Pants, then technically, maintenance is directly proportionate to the number of shares the coop apartment is allocated. How are shares divided up? Based on factors such as square footage, (size!) floor height, view, private outdoor space, and/or it has some unique feature to it like, it's the penthouse unit. The more of any of these features the apartment has compared to other units in the same building, the more shares are allocated, respectively. More shares = more maintenance.
As a basic and broad rule of thumb, maintenance is approximately $2/sf per month. (Up to $3/sf is still well within the normal range.) If the apartment you’re looking at is 800sf, then the maintenance should fall around $1,600. People always think that condos have a lower monthly cost because common charges are typically around $1/sf. The same apartment would appear to have common charges of around $800. But don’t forget that in a condo you have to pay your real estate taxes separately. And at the end of the day, it’s going to be approximately another $1/sf per month in RE Taxes. So you see, it’s really apples to apples.
And while I say that maintenance is approximately $2/sf, it could be less if there are no added frills in the building such as an elevator or doorman. Likewise, it can be more (much more) if you have a gym, pool, concierge, playroom, cold storage, roof deck, etc. Another important factor that will affect maintenance is whether or not the building sits on a land lease. These are rare but they do exist. (See my article on Land Leases for more info on that!)
New construction condos can have common charges of $4/sf (and don’t forget your separate real estate taxes!) If you stick with the $2/sf barometer, you’ll be able to gauge whether the maintenance is within the normal range.
The point of maintenance is to cover building expenses, capital improvements, and real estate taxes. That’s right, all coops include real estate taxes in their maintenance. You should expect nominal and gradual increases as that’s life, baby. Property taxes increase and so does just about everything else like my weight on a scale.
Ok, first of all, chill out. An assessment is not an alarming thing. Instead of increasing maintenance which is for the long haul, an assessment could be implemented to cover the cost of one particular capital improvement or to simply pad the building’s reserve fund. Capital improvements are to be expected so don’t freak out when you discover that an assessment is coming down the pike for brick pointing work on the facade of the building. The main thing to keep in focus is that there is a plan in place to pay for inevitable capital improvements while keeping the building in solid financial health. I would rather have steadily low maintenance with a few assessments from time to time than to have to pay high maintenance which could over pad the building’s reserve fund and/or where the board could spend money less economically. Assessments and maintenance increases are inevitable and across the board.
Remember, Maintenance Means Coop
Only in a coop will you pay maintenance. And this maintenance includes your common charges and your real estate taxes, always. In a condo, you will pay monthly common charges (similar to HOA fees) and then you’ll pay your real estate taxes separately - often quarterly. And if you happen to stumble upon a COND-OP, don’t worry. It’s just a coop with condo rules so you’ll pay maintenance. Confused? I’ve got you, baby.