Things to Review Before Buying a Condo

How well an HOA is run matters more than most buyers realize. Over the years, I’ve worked with many clients who were blindsided by large, unexpected HOA costs - sometimes up to six figures.

Here’s what I recommend reviewing before you move forward with a purchase:

▪️ Evaluate the HOA reserve account.

- At what percentage funded are the reserves?
- Has that number been increasing over time?
- If reserves were recently depleted because of a pluming issue, etc, what is the plan to rebuild them?

▪️ Look at the history of 'special assessments'.

Special assessments usually happen when monthly HOA fees were kept artificially low, maintenance was deferred too long, and reserves weren’t adequately funded.

And no, you typically can’t just sell to avoid it. Pending assessments must be disclosed, which doesn’t exactly make for a compelling listing -> buy this condo and immediately write a massive check.

▪️ Review prior HOA meeting minutes.

You will see how well organized the meeting is, any major projects being planned, if there is a lot of deferred maintenance, and any owner complaints.

I had a client once join an HOA meeting anonymously on a property they put an offer on. They learned that there was an outstanding issue with the unit they were looking to buy. This was not disclosed to them, even though it should have been.

▪️ How many delinquencies are there?

If other owners are not paying their HOA fees for whatever reason, the remaining owners will need to pick up the slack.

▪️ Professional management vs volunteer boards

I don't have a lot of experience with professional management. By far, most people seem to use volunteer boards.

While professional management costs more, it may save homeowners money long-term compared to rotating volunteer boards doing their best with limited time and expertise.

Curious if others have had good or bad experiences with professional management. And what else am I missing on this checklist? Let me know!

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout Virginia Beach, San Diego, and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning and ongoing impact-focused investment management in Virginia Beach, San Diego, and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.