Co-ops and condos are forms of ownership used to enable sharing the costs of running a property. Co-ops collect maintenance fees monthly from unit owners which are used to pay for the building’s operating expenses. For condos the fee is referred to as a common charge. As a rule of thumb for 2019, monthly maintenance fees or common charges should be approximately $2.00 per square foot of the unit. Note that the formula is based on the square footage of the unit, not the shares or percentage interest.
Do you know what percentage increase in maintenance or common charge fees is typical? As much as we all prefer they didn’t, operating costs tend to rise every year. But ultimately, that is a sign of a healthy economy. After undergoing the annual budgeting process, many properties will initiate an increase early in the new year. On average, you will receive an increase every year or two to keep up with inflation. In recent years, due to the rising fuel and real estate costs, buildings have had to impose increases to cover unavoidable costs. Average increases range from 2% to 3%.
Oh, that famous line, “We can’t increase monthly charges by that amount”! And yet, the board’s responsibility is to cover expenses and whatever they are, there needs to be sufficient revenue. By default, after reflecting other forms of revenue, the last place income can be projected to come from is unit owners in the form of an increase in monthly maintenance or common charges. It’s plain math, but people’s perception sometimes differs from reality. Everyone understands that costs rise each year and, yet they don’t want to pay more. Don’t confuse the need to complain with an understanding of reality. Find a way to let people feel that they have been heard, give them time and they will come around. Never, ever, vote for a lower increase than the budget calls for. You are simply kicking the can down the road.
Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at email@example.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.