When you buy a condo or home, be very mindful of the cost of HOA fees. They will increase typically by inflation over the years and the accumulated cost is immense! In fact, just $300 worth of fees adds up to be $300,000 which is close to the price of the property itself!
How they go and everybody does beat bush today let’s talk about how much hoa monthly fees is really costing you i’ve been getting really surprised that the hoa fees that they charge these days especially in houses and condos it can range anywhere from like a hundred dollars all the way up to four hundred dollars a month now on the surface it doesn’t look too bad
Right because one hundred dollars is only one thousand two hundred dollars a month four hundred dollars is only four thousand eight hundred dollars a month when you look at it that way it’s a lot but then it’s actually a lot more than you think you see the way i look at these monthly fees is instead of looking at the dollar amount at face value i look at it as if
You’re taking this and put it in an investment account instead and getting 6% gain per year now six-person is kind of average and it takes inflation into account without inflation you might be getting something like 8% if you know how to invest correctly so over here i listed out some typical hoa fee if you might have something like $10 $90 $300 i just looked up
Some house randomly and it was $300 hoa fee the condo itself was actually three hundred thousand dollars yet hoa fee is about three hundred dollars sometimes it gets a little high and i put four hundred dollars in this little chart here now this little chart i put six percent compounded interest rate and you can download it down in the video description below if
You want to play with it every single line it’s a total accumulated payment that came out of your pocket you see when it’s ten dollars you paid up one hundred thirty three dollars and ninety seven cents if you would have invested in it because if you just add ten times twelve it’s really $120 but with all the investment gains it costed you one hundred thirty three
Dollars and ninety seven cents back for ten years the ten dollar is really one thousand four hundred forty-four dollars which is quite a bit now why did i put this 90 dollars in the second column because most cellphone plans cost each individual about $90 and i really liked using this example because i actually haven’t paid for a cell phone plan for the past ten
Years now if you look at this graph at $90 and go down ten you see is actually thirteen thousand dollars well past these ten years that i haven’t been for a cell phone plan i saved roughly thirteen thousand dollars compared to a person that actually did so my net worth is actually thirteen thousand dollars more than whoever that did and yes it didn’t look kind
Of crazy at the moment because i’m like oh i don’t want to use my cell phone i was using a work cell phone for about two to three of the ten years but they did allow personal use that’s why i didn’t have my own but the interesting thing here is the three hundred dollar column which is the hoa fee for an example property i was looking at that costed three hundred
Thousand dollars now three hundred thousand dollars maybe you might be getting a 30-year mortgage fixed rate or something and at the end of the thirty years you’re likely be paying double three hundred thousand dollars on the principle three hundred thousand dollars on the interest alone if you kind of went through the whole thirty years but the thing is when you
Look at the very bottom at thirty years you also paid three hundred and one thousand dollars just in hoa fees so this hoa fee you actually never get back it’s a fee and it does not get applied to the principal of your loan so you’re not actually increasing your net worth by paying down the principal this hoa fee sometimes to me it’s a little inflated because if you
Look at the association a lot of times they pay people to do administrative work and you can imagine there could be some inefficiencies in there in the association it’s not like they’re going to often go shopping around for the best price for everything for example for a gardener maybe they would hire someone that they actually know so then that benefits someone
That they know in turn that’s going to not make your hoa fee all that low vs. if you have your own property and you want to have a really low price for a gardener then yeah you would go compare across several places so there’s the issue of effort which could potentially be inflating your age away but i mean the hoa might pay for like a pool or a gym or like actual
Paving and things like that but to me three hundred dollars a month you can actually pay like $100 entry fee to some place and you can go a dozen times a year for a hundred dollars each and you would still be better off than paying $300 hoa every single month so over here is a chart form of this i’m sure you’ve seen compounding interests and things like that where
You put in a hundred dollars every month well this is instead of putting it in this hoa fee you put it in an investment account so this is kind of like what it’s costing you instead of what is actually going to save you so you can look at this and then go oh my gosh kind of exponential this is the very main reason why i’m so allergic to monthly fees whenever you
Have anything that’s recurring be very very very careful with this things like cable bill internet bill hoa fees cell phone plans magazine subscriptions things that are recurring where you absolutely turn off your brain and it just automatically charges you those are the most dangerous because once you just let go of it you just kind of forget and you go oh yeah
That’s my expense rate that’s my burn rate every single month and those expenses is just going to chug along and slowly while you’re not looking at this is going to exponentially increase i do realize that this channel does have a patreon which is also a monthly fee now how do i reconcile this when i’m telling everybody hey be very very careful with monthly fees
And yet i’m glowing hey look i got patreon here paid me a monthly fee you know support my channel on things like that i guess you should keep the patron really low to keep the expenses low for yourself but to me perhaps i am helping you so much that it more than offsets that amount that you do on my patreon i have a good feeling that i’m actually saving a lot of
People a lot of money if you actually follow what i’m trying to teach here these days so yeah i mean i have the patreon and i do hope you guys help contribute my to my channel to the point where it’s sustainable thanks for watching don’t forget to give me a like on this video comment down below let me know what you think of monthly fees and which one you’re going
To cancel right at this moment i have my patreon over here and don’t forget to subscribe thanks for watching
Transcribed from video
HOA Fee Death Trap | BeatTheBush By BeatTheBush
