Is Your Miami Condo Association Secretly Overcharging You?
A new report from the property management firm FirstService Residential provides a "benchmark" maintenance fee for highrise condo towers in Miami-Dade County.
Living in a highrise condo tower with at least seven stories in Miami offers all of the modern day conveniences of residing near the coast without the burden - and the commute - that goes along with residing in a single-family home out west.
For this type of stress-free lifestyle, condo owners are required to pay monthly maintenance fees to cover the costs of everything from landscaping to pool service, common area electricity to water, concierge service to valet parking.
The fees are typically calculated based on the square-footage size of each unit in the tower.
For example, a $500 monthly fee for a 1,000-square-foot unit with would effectively mean that an association is charging about $0.50 per square foot monthly for maintenance. This fee wipes away any labor or expense responsibilities for your home.
This maintenance fee, however, is crucial to primary users and investors, alike, as it plays a significant role in overall monthly expenses. Keep in mind, many owners are also on the hook for mortgage payments, property taxes, personal insurance and personal utilities.
Many real estate agents say it is better to buy than rent as ownership provides an opportunity to build equity.
Renting, the argument goes, is “throwing your money away” as it pays for the use of a unit for a period of time much like a hotel room. Once the term is over, the user has nothing to show for their money.
The difficulty has always been trying to figure out the real numbers for a condo project and how it compares to other projects. Without the statistics, how would you know if are secretly being overcharged?
FirstService Residential, a property management company that runs 9,000 associations with about 1.7 million units in 15 markets in North America, has taken a step toward providing some clarity.
In a newly released 40-page report entitled “Benchmark: The Guide To Residential Association Operating Costs And Budgets,” FirstService breaks down the costs of 122 highrise condo associations that it manages in Miami-Dade County.
“The data presented contains averages from a sample of properties managed by FirstService Residential and does not represent industry standards or ideal ratios,” according to the report. “Every community association is unique, and this guide is not exhaustive but may be used as a tool to assist boards in their community evaluations and in communication with their residents.”
The report compares expenses for highrise projects with less than 300 units and more than 300 units.
The analysis provides benchmark rates for administration, insurance, utilities, operations and reserves.
Reserves are increasingly an issue for Miami condo owners with Florida’s looming 2025 Condo Association Financial Cliff, according to a recent report.
In less than five months, condo associations in the state are required to start collecting money from unit owners to place into reserve accounts that will be used exclusively to fix, maintain and improve the structural integrity of residential buildings that are at least three-stories tall.
The reserve funds - and all accrued interest - that will begin to be collected in 2025 must be used by the association boards to address specific issues with their respective condo buildings.
This is expected to lead to a surge in overall monthly expenses - both maintenance fees and special assessments - for condo owners.
These new reserve account requirements are part of an ongoing effort by the Florida legislature in the aftermath of the Champlain Towers South condo collapse in the barrier island town of Surfside on June 24, 2021, to bring more transparency to condo associations, which have a reputation for being shrouded in secrecy, intimidation and corruption.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until now, the state’s measures were being implemented slowly but that all changes in 2025.
An analysis with charts of the Miami-Dade County findings from the “Benchmark” report is available behind this paywall for members of the Miami Condo Market Investing Club™. We have also created a video using AI audio of the report.