Your search results

Condominium Budget – What is a Condo Budget?

A condominium budget will determine a condo apartment’s monthly common charges. It’s critical to analyze a condo budget before signing a purchase contract in NYC.

Many first time home buyers rely exclusively on their lawyers to scrutinize the condo budget as part of the lawyer’s legal and financial due diligence. However, since you’ll be the one paying common charges in the future, it’s best take take a look at the condo budget yourself to make sure its anticipated income and expenses are both reasonable and realistic.

Save 2% on Your Home Purchase

Save money without disrupting your deal by working with one of our traditional, experienced partner buyer's brokers who never openly discount. Discreet buyer closing credit check given at close.

What does a condo operating budget look like?

This is an example of a previous year’s annual operating budget for a condominium in New York City. Home buyers should carefully scrutinize the condo budget to make sure that expenses have been reasonable in the prior year’s operating budget.

Common Charge Income $216,336
Interest Income $230
Total Income $216,566
Electric $17,050
Water & Sewer $26,000
Telephone $525
Property, GL, Boiler & Machinery $28,000
Umbrella Liability $965
D & O $731
Crime $219
Workers Comp $782
Disability $125
Income Tax $800
Permits, Licenses & Fees $1,500
Accountant $5,040
Attorney $425
Architect/Engineer $2,000
Property Management $23,040
Repairs & Maintenance $15,000
Elevator Maintenance $24,216
Elevator testing/repairs/violation removal $5,000
Sprinkler Maintenance $4,500
Superintendent $25,600
Super Bonus $900
Supplies $5,000
Landscaping $3,500
Exterminator $3,400
Capital Reserve Contribution $21,700
Total Expenses $216,018
Net $548

You’ll want to scrutinize the charges incurred in the last operating year to make sure that the condo board isn’t being negligent in getting multiple quotes and making a reasonable effort to keep costs low. For example, an accountant shouldn’t cost over $5,000 depending on the scope of work. The building management company’s fee shouldn’t be in excess of 5 or 10% of the building’s total revenue from common charges.

Hauseit® Best Deal Guarantee

Real Brokers. Discreet Savings. You’ll always get the best deal through Hauseit, we guarantee it. If you find a better deal elsewhere, we’ll beat it. Plus, you’ll always be paired with a trustworthy, experienced, brand name real estate broker who never openly discounts so other agents won’t treat you or your agent any differently.

What does a projected condo operating budget look like?

This is an example of a forward operating condo budget for the same NYC condominium building for the current year. Home buyers should thoroughly compare the anticipated budget with the prior year’s budget to make sure costs have not increased dramatically. If costs have increased, it is an opportunity to determine whether the rate of increase is reasonable and in line with inflation.

Common Charge Income$240,000
Interest Income$230
Total Income$240,230
Water & Sewer$26,000
Property, GL, Boiler & Machinery$23,661
Umbrella Liability$1,081
D & O$819
Workers Comp$1,300
Income Tax$800
Permits, Licenses & Fees$4,500
Property Management$24,480
Repairs & Maintenance$22,000
Elevator Maintenance$24,372
Elevator testing/repairs/CAT1 curing$6,500
Sprinkler Maintenance$5,300
Super Bonus$1,500
Snow Removal$1,600
Capital reserve contribution$24,000
Total Expenses$236,496

A quick way to tell if common charges have increased is to see whether the revenue line item titled “Common Charge Income” has increased year over year. You can also see whether the building management company’s fee has increased. If the building management company’s fee has increased dramatically, it could either be because their fee has been the same for many years and this is a one time step up, or it could be a sign of a weak board that is not bothering to push back on fee increases.

Hauseit® Buyer Closing Credit

Save thousands on your purchase with a discreet buyer closing credit without disrupting your deal or upsetting the other party. After all, what’s the point of a sweet closing gift if you don’t close?

Are Operating Budgets for Condo New Developments Realistic?

Because new development condominiums do not have any operating history, you’ll be relying exclusively on the projections of the developer when it comes to the condo budget. However, it’s important to understand that sponsors are keen to make the carrying cost of their units appear low to make them more appealing for buyers.

Therefore, an inexperienced buyer’s agent will be unlikely to point out that you should comb through the projected condo budget to make sure that the anticipated expenses are not artificially low.

For example, it’s quite common for sponsors of smaller new development buildings in Brooklyn to claim that in the condo budget that there will be zero cost for a superintendent and there will be no building management fee because the building will be “self managed.”

However, this is deceptive because even if the owners choose not to hire a building management company in the future, they’ll still very likely need to hire a part time superintendent to help with maintenance and upkeep. It’s quite funny that the sponsor has decided to assume that the future owners will all be working for free as janitors and superintendents for their building!  What a clever way to keep the common charges being marketed low!

Save 6% Percent When You Sell with an Agent Assisted FSBO

Have time to show your home yourself? Consider our self managed, For Sale By Owner listing option that gives your home the same marketing exposure as if you’d paid 6% commission to a traditional listing broker.

What are Condo Budget Reserve Requirements in NYC?

Fannie Mae and Freddie Mac have tightened rules on reserve requirements for condo associations after the Great Financial Crisis of 2008. In order for a bank’s mortgage to be “conforming” and eligible for re-sale to Fannie Mae and Freddie Mac, a condo budget must set aside 10% of its yearly revenue to go to its reserve fund.

Condominium Budget - What is a Condo Budget in NYC

However, given that the average home sale price in New York City is $2 million, whether a loan is conforming or not may not matter for most New Yorkers. That’s because in order for a mortgage to be conforming, the size of the loan must be $424,100 or under as of 2017. As a result, it may not matter to most condominium buildings in New York because most buyers will be getting non-conforming, “jumbo” loans when they buy. This will be a relief for many NYC condo boards because everyone would prefer to keep monthly charges low, and setting aside 10% each year for the reserve fund may seem superfluous as special assessments are charged anyway if there is a big project that needs to be paid for.

Don't have time to sell your home For Sale By Owner?

Sell your home for only 1% seller’s broker commission! We’ve negotiated private label discounts for full service with New York’s finest listing agents so you don’t have to. Work with the best for less!

Disclosure: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).

Leave a Reply

Your email address will not be published.

  • You can save $20,000 or more on the average New York City co-op apartment by requesting a legal and tax-free Hauseit Buyer Closing Credit. Here’s how it works: we pair you with an experienced, brand name, local partner broker who will not only provide you with great advice but who has already agreed to discreetly offer you the highest NYC buyer agent commission rebate available in the city. Most importantly, our partner brokers never openly discount their services. This means you’ll never have to worry about being treated differently by sellers or listing agents just because you’re receiving a large discount at closing.

Compare Listings