One of the objections I often hear from people regarding condominiums is that they don’t like the idea of paying maintenance fees. So I’ve been meaning to do a post for some time now that breaks down and explains exactly where that money goes.
Here is a simplified example. It ignores some of the miscellaneous income that buildings usually receive (from guest suites, the party room, public parking and so on). And of course, these numbers will vary based on the age of the building, specific amenities, and any deficiencies it may have. Nonetheless, it should give you an idea.
So assuming you pay $400 per month as a common element fee, a percentage of that will—or at least should—get immediately stripped away as a reserve fund contribution. Again this will depend on the age the building and the periodic reserve fund study that’s typically required to be done.
After that you have the operating expenses. The biggest items you’ll notice are contracts and utilities. Contracts are things like janitorial services, snow removal, property management fees, security/concierge services and so on. They’re contracted items. Utilities are self explanatory.
Once all the operating expenses have been paid, any remaining money then goes to retained earnings and sits in the condo corporation to handle any other expenses that may arise.
Looking at the total operating expenses ($263), you should notice that it’s only about 66% of the total common element fee ($400). A big chunk of your common element fee is actually going towards saving for the future. Assuming the building is being properly managed, I’m okay with this.
If you have any feedback on my numbers, I’d love to hear from you in the comment section below or on twitter.