She was ready to buy her dream condo — but discovered the HOA had just 1% in cash reserves
You may be able to choose your house or condo, but you can’t always choose your homeowners association.
A recent report highlights the importance of thoroughly researching a homeowners association (HOA) before making a purchase, particularly when it comes to their financial health. In this case, a potential homebuyer was surprised to discover that the HOA of her desired condo had a staggeringly low 1% in cash reserves. This revelation likely raised concerns about the HOA's ability to cover unexpected expenses, maintain the property, and pay for necessary repairs.
Low cash reserves in an HOA can have significant implications for homeowners. If the HOA is unable to cover expenses, it may lead to special assessments, which can be costly and unexpected for homeowners. Additionally, a lack of reserves can also impact property values, as a well-maintained property with a healthy HOA is often a key selling point. Industry experts stress the importance of reviewing an HOA's financial statements, including their reserve fund, before making a purchase.
For those in the market for a new home or condo, it's essential to do your due diligence on the HOA's financials. Review the HOA's budget, reserve fund, and any recent meeting minutes to get a sense of their financial health. Additionally, consider speaking with current homeowners or a real estate expert to gain a better understanding of the HOA's management and any potential concerns. By doing your research, you can make a more informed decision and avoid potential pitfalls down the line.
Originally reported by marketwatch.com. ExpoNews adds analysis for finance & markets readers.