Calculating the Obvious

When you look at those open house handouts that detail the monthly cost of TIC ownership, think again. They usually only show the cost of your mortgage payment. To get a true idea of what your monthly carrying costs will be, get numbers for everything on this list:

- mortgage payment
- property taxes
- building insurance
- common area dues
- parking fees

While the mortgage interest deduction is a significant benefit, I don't usually count that when evaluating my monthly morgage costs. My calculations are simply what is my monthly cash intake versus the monthly bills I will be required to pay. The costs beyond your mortgage payment can easily add up to a third more outlay.

Other costs to consider:

- "walls in" insurance for the personal property in your unit
- a rainy day fund for special assessments

Regarding the latter, if unexpected capital improvements are needed on your building then all owners can be charged over and above their monthly dues. For example, my building has a decorative plaster facade that has its own roof. Four years into owning the building the plaster started falling off and an inspection revealed that this little roof had completely degraded. (None of our pre-purchase inspections had made note of this.) This roof cost our group about $25,000 to replace, because of the difficulty of access and the fragility of the plaster. I had to write a check for about $4,000 that month - my 15% share of the total bill.