[Bill14564]

Originally Posted by Maker

One year of interest percentage = interest / principal (x100)
Looking at the next few years' numbers shows nonsense. Interest percentage value is changing yearly.
Oddly, the admin fee changes slightly every year. So does the total payment amount. This must be some sort of new math.

1252.40 / 30318.37 = 4.13083%
1234.64/29780.71 = 4.14577%
1216.28/29225.45 = 4.16172%
1195.63/28650.99 = 4.17308%

and in 2031... 1010.5 / 23968.9 = 4.2158%
and in 2049... 113.34 / 3429.17 3.30517%

The admin fee appears to be a fixed percentage of the payment (principal+interest). It comes out to 7.07% for unit 20V but the percentage on my bond is less.

You would expect the fee to be a fixed amount because you would expect the payment to be a fixed amount. But as you show here, the effective interest rate varies, the payment varies, and therefore the admin fee varies.

[RRGuyNJ]

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

[Bill14564]

Originally Posted by RRGuyNJ

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

While there is a monthly amenity fee, the Villages CDDs are significantly different from an HOA.

The bond is simply a way for the Developer to keep the list price of a home lower while still collecting the cost of infrastructure. You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees. The home is "affordable," the infrastructure gets paid for, and the Developer makes a profit both on the home and on the Admin fees.

The same costs are there in other developments, they are just rolled into the price of the home (and likely affect the total profit).

At 3,000 to 4,000 new home sales per year, the bond has not been much of a hindrance to home sales.

[Stu from NYC]

Originally Posted by Bill14564

Other than a monthly amenity fee, the Villages is nothing like an HOA.

The bond is simply a way for the Developer to keep the list price of a home lower while still collecting the cost of infrastructure. You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees. The home is "affordable," the infrastructure gets paid for, and the Developer makes a profit both on the home and on the Admin fees.

The same costs are there in other developments, they are just rolled into the price of the home (and likely affect the total profit).

At 3,000 to 4,000 new home sales per year, the bond has not been much of a hindrance to home sales.

They did find a very clever way to sell homes, that is for sure.

[Brwne]

Originally Posted by Bill14564

While there is a monthly amenity fee, the Villages CDDs are significantly different from an HOA.

The bond is simply a way for the Developer to keep the list price of a home lower while still collecting the cost of infrastructure. You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees. The home is "affordable," the infrastructure gets paid for, and the Developer makes a profit both on the home and on the Admin fees.

The same costs are there in other developments, they are just rolled into the price of the home (and likely affect the total profit).

In a state that allows Special Districts, Developers recoup their infrastructure costs through bonds.

At 3,000 to 4,000 new home sales per year, the bond has not been much of a hindrance to home sales.

In Colorado (and many other states), the developer advances the costs to the district, the district floats the bond and levy's a property tax on the house. Said property tax millage can be increased or decreased in the future.

Here in The Villages, the developer advances the infrastructure costs and floats bonds - individually on each property - for recouping those costs. The bond payment is fixed and doesn't change over the life of the Bond.

The Villages bond on the house can be paid off anytime. The Colorado property tax levy will stay in place until the district pays off the bond - sometime in the future and mostly out of the control of the homeowner.

[Bogie Shooter]

Originally Posted by Brwne

In Colorado (and many other states), the developer advances the costs to the district, the district floats the bond and levy's a property tax on the house. Said property tax millage can be increased or decreased in the future.

Here in The Villages, the developer advances the infrastructure costs and floats bonds - individually on each property - for recouping those costs. The bond payment is fixed and doesn't change over the life of the Bond.

The Villages bond on the house can be paid off anytime. The Colorado property tax levy will stay in place until the district pays off the bond - sometime in the future and mostly out of the control of the homeowner.

Not individually but by district, then distributed by acre to unit, then equally to homesites in the unit..

[villagetinker]

Originally Posted by RRGuyNJ

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

There are plenty of resales with "bond paid off", so you can look at those if you are looking to move here. Also, we found it advantageous to pay off the bond early, this is highly dependent on current interest rates, investments returns, taxes, etc. NOTE: the bond payments cannot be written off on your income taxes.

[smcmahon2002]

My assumption is no.

[Stu from NYC]

Originally Posted by villagetinker

There are plenty of resales with "bond paid off", so you can look at those if you are looking to move here. Also, we found it advantageous to pay off the bond early, this is highly dependent on current interest rates, investments returns, taxes, etc. NOTE: the bond payments cannot be written off on your income taxes.

Thought long and hard when we moved here about paying off the bond immediately. Consulted two prominent real estate agents and their opinion that if we sell within a few years we would not recover the cost of the bond to the people we would sell too.

As a result for now we are not paying off the rest of the bond. In a year or two will reconsider.

[CoachKandSportsguy]

Originally Posted by Stu from NYC

Thought long and hard when we moved here about paying off the bond immediately. Consulted two prominent real estate agents and their opinion that if we sell within a few years we would not recover the cost of the bond to the people we would sell too.

As a result for now we are not paying off the rest of the bond. In a year or two will reconsider.

Correct, if you are considering moving within the first 5-10 years, its best to not pay off the bond.

However, there is a behavioral economics question about how houses are priced to resell with or without a bond, based on total cost of ownership and the naiveness of the buyers.

[Bilyclub]

Originally Posted by RRGuyNJ

The more I read about this bond nonsense, the more I see it as a deal breaker. I'm not a fan of HOA environments any way, but then add this bond to the mix and I don't see how they sell any homes at all. What am I missing? Other HOA communities don't have this set up. Yeah Yeah I know it's not technically an HOA but everyone knows it pretty much is.

I hear it can be pretty cheap to buy a house with no bond in rural Alabama.

[Nevinator]

Originally Posted by Bill14564

You feel good about paying $450K for the home but you end up paying that $450K plus $50K for the bond plus another $4K for Admin fees.

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

[Stu from NYC]

Originally Posted by CoachKandSportsguy

Correct, if you are considering moving within the first 5-10 years, its best to not pay off the bond.

However, there is a behavioral economics question about how houses are priced to resell with or without a bond, based on total cost of ownership and the naiveness of the buyers.

Unfortunately it would appear that many buyers do not understand total real cost of buying a house. As a result they do not factor in cost of bond in purchase

[BlueStarAirlines]

Originally Posted by Nevinator

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

The bond is specific for a specific set section of houses, so is not one set price for a length of time (ie: Its not $40k for the month of September, etc.). The cost of the bond is correlated to the cost of the land prep, so houses across from each other could have a different bond. For example, my house is on a preserve next to a wall where the house across from me is an interior lot. My bond is higher than his. The second variable to the bond price is the interest rate. This is generally the same for a village.

For example, compare the bonds for my CDD: Amortization Schedules - Sumter

[Bill14564]

Originally Posted by Nevinator

Has the bond amount been increased to $50k? The last I heard it was $30k. I’m planning on purchasing a lot within the next 60 days and if this fee has increased that will factor into my decision as to whether to buy new or used. Thanks.

The bond amount differs for every "unit" that is built (there are 177 homes in my unit but only 101 in the unit S12.20V discussed in the original post)
- The cost of the infrastructure changes from area to area ($21.4M for my unit, $30.3M for S12.20V)
- The amount of land belonging to a unit changes (38.8 acres for mine, 23 acres for S12.20V)
- The number of homes built within the unit changes (177 vs 101)

All together, this means that the 101 homes from the original post all pay the same amount ($57K over 30 years) but the homes in a different unit will pay a different amount ($44K over 30 years for mine)

Originally Posted by BlueStarAirlines

The bond is specific for a specific set section of houses, so is not one set price for a length of time (ie: Its not $40k for the month of September, etc.). The cost of the bond is correlated to the cost of the land prep, so houses across from each other could have a different bond. For example, my house is on a preserve next to a wall where the house across from me is an interior lot. My bond is higher than his. The second variable to the bond price is the interest rate. This is generally the same for a village.

For example, compare the bonds for my CDD: Amortization Schedules - Sumter

Houses across the street from one another should only have a different bond amount if they were in a different "unit." This map shows unit numbering, at least for my district.