St. Thomas Condo Association Dues : Some Helpful Information

I get a lot of inquiries from buyers interested in the purchase of a vacation rental condominium for the purpose of income generation, along with personal usage. Some are just in the beginning stages of research, others have reasonable knowledge about the different resorts. The single biggest topic of discussion, however, tends to be COA (Condominium Owner Assocation) dues. As you may know, these are very high in the islands.

Why are they so high? Well, there are a lot of reasons:

1) Most people do not understand that insurance is typically included (for most of them, not all). And even if they understand this, they do not realize the cost of insurance in a hurricane zone area like the Virgin Islands. So, for some understanding on this, you need to know that a masonry home typically costs about 1.8% of the value per year for insurance, while a wood home is closer to 2.8%. Obviously, this is a substantial amount. So, for example, a $500K masonry home would cost about $9000 per year for insurance, or @ $750 per month.

2) there are many services performed by the COA that would cost an individual homeowner either a lot of money, or a lot of time. Examples of such are pool service, landscaping, waste treatment, and generator. For example, a landscaper for a private home would likely cost $300-$400 per month for twice a month service. A pool person coming weekly would cost about $200 per month, plus the cost of chemicals (@ 40 per month, depends upon size of pool). Generators are expensive, and monthly service checks are about $65 per month. Pump out of a septic is not needed often, but would cost several hundred dollars. So when you factor in these issues, there is considerable value there.

3) no COA's are identical, so you have to dig to see what else is included. But it is typical that the outside of the buildings, and the structures themselves, are the duty of the COA. That would typically include painting, walkways, railings, roof, etc... Painting a home can be quite expensive, as can be a new roof (or simply maintaining a roof). Even if you do your own work to your home, it takes a lot of time and money to do this work.

4) Security is common at many Condo Complexes, whether simply via electronic gate or with full time people 24X7. Mahogany Run and Sapphire Beach Resort are great examples. This extra "protection" costs money.

5) Management is typically part of COA dues. There are people that must oversee all of this, to assure the property is properly cared for. Sometimes, for smaller complexes, there may not be paid full time employees. But most associations have this extra expense.

This is not an exhaustive list, but it does include items that many people don't consider. And the costs really do add up. So let's use an example of Sapphire Beach Resort.

The studios at Sapphire have monthly dues of $920. I have seen people hyperventilate when they hear that number, but I understand why. They have insurance, pool, security, landscaping, waste treatment, and management. But that is far from everything. Sapphire includes some expensive items as part of their COA dues. The air conditioning systems are via the COA, so if you have a problem, they fix it!! Same with the hot water heaters. And even more important, the SLIDERS and WINDOWS !!! They recently replaced ALL sliders and windows at the entire resort !! So, when you consider these things, you will realize that the fees really are not that bad when you compare to what your expense would be for a private home.

This is not a "plug" for condos versus homes, they are two different beasts. With a condo, you play by the rules of the COA, not what you personally want. Pets are often a big issue, and a huge reason why I live in a home. But I do own condos for investment reasons, and it is nice to not have to worry about all of these things. I just assume pay my monthly dues and not have to worry about cleaning the pool or trimming the hedges.

Please, if you do have interest in purchasing a condo here in the Islands, think about these things. And feel free to send me an email with questions !!!