We have a client right now who has been searching for freehold townhouses with NO CONDO FEES.
“There’s no way I would EVER pay condo fees. What a rip-off!”
We hear that language all the time. But if you examine what condo fees include – exterior maintenance, including roofs and windows in some cases, road maintenance, lawn care and monthly water bills – it doesn’t seem as bad. Right?
But still… most people have an aversion to the condo fees.
Let’s have a look at the costs. Right now at the end of 2024, you can buy a freehold townhouse for about $900,000 plus or minus. The equivalent value for a condo townhouse might float around the $750,000 range with an average of $450/month in fees in Milton. Both houses would provide three-bedrooms, similar size, a functional basement and a smallish backyard.
Let’s have a closer look at the two expenses that REALLY matter: how much you need UPFRONT, and how much ONGOING, and we’ll see where that takes us.
FREEHOLD $900,000
Downpayment: $180,000 (assuming 20% down, although you could buy with 5% down)
Mortgage payment: $3,787/month (4% interest rate)
Taxes: $320/month
Condo fees: $0/month
TOTAL PER MONTH: $4,107 + utilities
TOTAL UP FRONT: $198,000 (with 2% budget for closing costs)
Now let’s look at the condo townhouse option…
CONDO TOWNHOUSE $750,000
Downpayment: $150,000 (assuming 20% down, although you could buy with 5% down)
Mortgage payment: $3,156/month (2.5% interest rate)
Taxes: $260/month
Condo fees: $450/month (includes water, exterior maintenance and building insurance)
TOTAL PER MONTH: $3,866 + utilities
TOTAL UP FRONT: $165,000
Now we’re talking! In case it wasn’t clear:
You save a total of $33,000 in up-front day one expenses, and $241 per month by buying a condo townhouse.
If the interest rate never changed… over the next 25 years, you would SAVE $72,300 by choosing the condo option, including all those extra monthly condo fees.
Plus, for some condos like the one in the picture, you wouldn’t be paying for building insurance, exterior maintenance or your water bill. If your roof needs replacing, the condo takes care of it. A new roof might be $6,000 ($400 per year for 15 years), so about $30 per month needs to be saved so that you have enough for that roof.
People don’t think about homeownership in a freehold that way, but that’s how condos budget for their expenses.
So really, the condo option would likely save you another additional $150-200 per month if the monthly maintenance includes any of these items.
That certainly makes it worth considering, don’t you think?
