Title: Reserve Funds: The Hidden Landmine in Home Buying
Couldn’t agree more with digging into those meeting minutes. I’ve seen too many buyers get burned by a “healthy” reserve fund on paper, only to find out there’s a laundry list of deferred projects waiting in the wings. It’s wild how often the glossy sales packets gloss right over the ugly stuff—like that elevator that’s been limping along for years or the roof patch jobs that are just buying time.
One thing I’d add—don’t just look at the numbers, look at the trends. If you see a reserve fund that’s slowly draining year after year, but assessments haven’t gone up, that’s a red flag. Boards sometimes avoid raising dues because they’re worried about scaring off buyers or upsetting current owners... but that just kicks the can down the road. Next thing you know, there’s a “special assessment” and everyone’s scrambling.
I get why people stash extra cash under the mattress (figuratively or literally). There’s just so much that can pop up, especially in older buildings. But I’ve also seen some folks talk themselves out of great places because they got spooked by one or two line items in the minutes. Not every leak is a disaster in disguise—sometimes it really was just a one-off and they fixed it right.
At the end of the day, you want to see transparency and proactive management. If the board is open about issues and has a plan (and budget) to tackle them, that’s worth its weight in gold. If they’re dodging questions or acting defensive? That’s when my alarm bells go off.
Funny enough, my own first condo had a “mystery” leak for months—turned out to be a neighbor overwatering their plants on the balcony above me. Sometimes it really is something simple... but man, those sleepless nights waiting for answers taught me to read every document twice.
Trust your gut, but don’t let fear keep you from moving forward if everything else checks out. There’s always going to be some risk—just make sure you know what you’re signing up for.
Couldn’t agree more about the importance of reading between the lines with reserve funds and meeting minutes. I’ve seen those “healthy” numbers too, only to realize later that the board was basically using the fund as a stopgap for years of deferred maintenance. It’s easy to get caught up in the surface-level figures, but if you dig into the actual expenditures and upcoming projects, you get a much clearer picture of what’s really going on.
One thing I’d add—sometimes the age of the building doesn’t tell the whole story. I’ve toured places from the 70s that were meticulously maintained, with boards that budgeted for every eventuality, and then newer buildings where the reserve fund was already stretched thin because of poor planning or unexpected issues. It’s not always about how old the place is, but how proactive the management is about long-term costs.
I do think there’s a balance to be struck, though. I’ve definitely gotten spooked by a few line items in the past—like a mention of “foundation inspection” or “HVAC replacement”—and almost walked away. But after talking to a few board members and seeing their plan, it turned out they were just being thorough, not reacting to a crisis. Sometimes transparency can look scary if you’re not used to seeing all the details laid out.
One thing that’s helped me is looking at the reserve study, if they have one. Not every building does, but when they do, it’s a goldmine. You can see what big-ticket items are coming up, how much they’ve budgeted, and whether their projections are realistic. If the numbers don’t add up, or if there’s a big gap between what’s needed and what’s saved, that’s usually a dealbreaker for me.
I guess at the end of the day, I’d rather see a board that’s honest about problems and has a plan—even if it means higher dues—than one that’s trying to keep everything looking rosy on paper. The surprise special assessment is way worse than paying a little more each month, at least in my experience.
I’d rather see a board that’s honest about problems and has a plan—even if it means higher dues—than one that’s trying to keep everything looking rosy on paper.
Couldn’t agree more with this. I once bought into a building where the board kept dues low for years, but then a massive roof repair hit and everyone got slammed with a special assessment. Ever since, I always ask to see the last few years of meeting minutes and the reserve study, if they have one. Do you ever worry about boards being too optimistic in their projections? Sometimes I wonder if they’re underestimating just to keep things looking good...
Do you ever worry about boards being too optimistic in their projections? Sometimes I wonder if they’re underestimating just to keep things looking good...
Yeah, that’s a real concern. I’ve seen it happen more than once—boards want to avoid rocking the boat, so they paint a rosier picture than reality. One place I looked at had a reserve study that was almost five years old, and the numbers just didn’t add up when I compared them to recent repairs. When I pressed the board president about it, he admitted they were “hoping” nothing major would break for a while. That’s not really a plan.
I’d rather pay higher dues and know there’s a cushion for emergencies than get hit with a surprise assessment. But sometimes I wonder if boards are even aware of how much things can really cost. Ever notice how some buildings seem to have the same low dues year after year, even as everything else gets more expensive? Makes me nervous every time.
Curious if anyone here has actually walked away from a deal because the board’s numbers seemed off... or am I just being overly cautious?
You’re not being too cautious at all. I’ve actually advised clients to walk away when the numbers just didn’t make sense—especially when reserve studies are outdated or maintenance is getting deferred. Boards sometimes mean well, but wishful thinking isn’t a strategy. Low dues look nice on paper, but they’re almost always a red flag in the long run. It’s wild how often people overlook that just to get into a building with “affordable” fees...
