Self-Managed Condos and HOAs: They Look Like Big Bargains, but Beware

If you're looking to buy a house or condo but are balking at the steep monthly HOA or condo fees, one budget-friendly alternative is to find a self-managed condo or HOA instead. That means rather than paying a management company to maintain common areas like lawns or a community pool, you and your neighbors take care of these tasks yourselves, thus saving money.

While statistics on the number of such homes aren't officially tracked, I stumbled across a self-managed condo during my house hunt in Brooklyn, NY—and, after hearing how they worked, I decided to buy in and see what it was all about.

"To save money, I can put my own trash cans on the curb," I reasoned. How hard could it be? Well, I found out that there are definitely pros and cons to this budget-saving option that all should know before they move in.

Pro: Self-managed condos and HOAs are cheaper

First, the biggie: Not having to pay for a super or maintenance means lower monthly expenditure for the building, says Susan Little, a Realtor® in Brooklyn. For the six-unit building my condo was in, the individual common fees were only $250 a month—a far cry from the $1,000-plus I was being quoted elsewhere. For me, that meant a savings of $750 a month!

Con: They're also a lot more work

Most people are unaware of how much time and effort it takes to run a building. Some complain that self-managed condos and HOAs feel like a second job. Even with regular rotations for things like trash, snow, and leaf removal, new maintenance issues constantly cropped up. We were once issued a ticket for failing to have our fire sprinklers inspected every six months, a task nobody had realized was legally required. And when something broke, someone had to step up and figure out whom to call to fix it.

Pro: You have more control over your space

"The great things about living in a self-managed condo were that we could control what projects got done," says Hollis Glaser, one of my former neighbors.

With six units in the building, every family got one vote on how we spent our common charge money. It was relatively easy to start projects like a community garden or a rain catchment barrel. If someone didn't like how something was being done, all it took was a conversation to change it. For example, in my first year living there, we went from coin-operated laundry to free laundry.

Con: It's hard to make sure everyone is doing their share

Often, people who worked from home or who were more available during the day took on more responsibility on the building maintenance front. It was difficult to ensure that everyone took equal responsibility, particularly when some people had busier schedules, sublet their units, or traveled often. Quantifying the work was also difficult. Was taking on a major regrading project equal to calling a handyman when a dryer broke? Did volunteering to plant a garden count as a task, because it wasn't necessary? It was much more complicated than just making a chore wheel.

Pro: There are fewer rules

While condos managed by a management company and co-ops often have strict rules about things like pets, subletting, doing construction, quiet hours, and even whom you can sell your unit to, you and your neighbors in a self-managed complex make the rules. Without formalities like an elected co-op board and the common ownership structure of a co-op, any rules we did make were difficult to legally enforce.

Con: It's tough to get stuff done and resolve disputes

"A lot of us were drawn to the condo situation because there were so few rules we had to abide by," says Glaser. "But we thought we needed some rules and couldn't institute them.

"Coming to a consensus on a contentious issue could be difficult," Glaser adds. "Feelings were very passionate, and a simple 'majority rules' approach didn't always cut it. Patience and compromise were all necessary components and could occasionally end up in short supply."

Pro: There's a sense of community

This was actually a big plus for me: Dividing up the chores to keep a building functioning meant that I met and got to know all the people in my building. Since we had to work together to maintain common spaces, clear snow, keep the laundry room functioning, and take out the trash, we built a real community.

Con: Self-managed condos and homes can be harder to sell

Since not everyone wants to live in a self-managed community, homes here can be harder to sell.

Also, according to Little, "During the due diligence process, the buyer's attorney will ask for the last two years of financials and something that can come up is that, though self-managed buildings are required to keep financial records, many have not had them formally audited. This can hold up the process, but I have found that as long as the tax returns have been filed, the attorneys will forgo the insistence on audited financials."

I loved the years I spent living in a self-managed condo, but would I do it again now? Probably not.

As Glaser said, "When we left Brooklyn, we looked at a condominium building, saw a bunch of notes in the garbage area about problems with people putting out their garbage in the wrong way and immediately said, 'No thanks.' We bought a house and are totally in charge. No more coordinating basics with our neighbors."