If you’re looking to buy a condo, you’ll need to read up on the complete buying checklist we’ve provided in our previous blog. One of the major factors to consider is the financial health of the condo association, as it will determine a lot about how it’s run and managed. In this article, we’re going to take a closer look at the condo association budget, and other factors that indicate the association might be in trouble. If that’s the case, it’s best to steer clear and move elsewhere. Finally, protect your new dwelling with a Bergen County Condo Insurance policy.
Inquire about their financials.
Before officially buying a condo, you can request copies of their budget and their financials. This is called a resale package, and different states have different regulations about how long you have to review them.
Part of the resale package will include the financial statements (balance sheet, bank statements, profit/loss statements). If they don’t exist, RUN. If they do, check the operating and reserve account balances (basically, their savings accounts) and see if the amount they have is sufficient. What’s a sufficient amount? Good question. There are general guidelines based on building type and size, amenities in the building and number of units. A small building with little common space and no elevator doesn’t need as much in reserves as a building with elevators, a fitness center or a pool. These big-ticket items all require money to operate, and a lot of money to fix. Check to see if they have a recent reserve study. This is a third party report that inspects the common elements, estimates the rest of their useful life and their estimated repair value, says Huffington Post.
Ask about fees.
Condo association fees are expected when you move into this type of dwelling. However, the cost of them is just as important as the financial health of the association. Low fees are great, but that doesn’t mean its necessarily a great thing. Be sure to check their reserves and make sure there’s enough money to cover projected losses and unexpected projects. If you live in a new development, inquire whether the rates are going to go up after the association becomes more established. They usually want to charge less fees to attract new buyers, but that doesn’t mean that price will stay the same forever.
If you think the fees are too high, you might be right. To determine what’s fair, consider researching similar units in the area in relation to size, amenities and age.
About Tri-State Insurance Agency
At Tri-State Insurance Agency, we want to ensure your high-net-worth homes are protected during the holidays and year-round. Our homeowners’ insurance policies are designed specifically to protect affluent homes like yours. To learn more about our coverage options, contact our specialists today at (973) 579-6776.