Thinking about buying a condo in Washington? While a condo can be a great option, monthly dues can be significant concern. Here is a guide a buyer can use to help evaluate the association and the impact that will have if they become an owner.
How to Choose a Financially Stable Condo Community
Let’s focus on factors beyond amenities that indicate a healthy condo association, ensuring predictable maintenance costs and a strong resale value:
Healthy Board of Directors is Key
A well-functioning Board is crucial. Look for a Board that holds regular meetings (monthly preferably) and achieves a quorum (enough residents to vote on decisions). Read all available meeting minutes. Avoid Boards with high turnover or those that rely on volunteers for critical tasks like accounting or maintenance.
Construction Matters: Durability Impacts Costs
Washington State prioritizes building safety. Look for condos with fire-resistant construction materials like masonry or concrete. These materials are more durable and lead to lower insurance costs, reducing your HOA dues.
Building Insurance: Consider Coverage and Cost
Full replacement cost coverage for the building is essential. “Loss Limits” that cap payouts can be risky, so ensure the policy offers adequate protection. Ask the association about what it insures and what is an owner responsibility.
Building Size: Sharing the Burden
Larger buildings (25-100 units) often have economies of scale, meaning you share maintenance costs like elevators across more units, lowering your individual assessment.
Age and Condition of Building Systems
The age of major systems like roofs, elevators, and mechanical equipment significantly impacts future costs. Buildings around 15 years old might be nearing the time for major replacements, potentially leading to special assessments.
Reserves and Long-Term Planning
Healthy associations maintain strong reserves for future repairs. Look for a current reserve study. Reserve studies provide a 30 year picture. In Washington State the annual reserve disclosure will show whether the association can fund the future projects without going into a deficit. The reserve study and the board minutes will give a buyer a good picture of the financial health of the association. If the board has a history of deferring maintenance due to lack of budget, that is a red flag.
Financial Health: Budget and Delinquencies
A balanced budget with consistent contributions to reserves is ideal. High delinquency rates indicate financial instability and potential future assessments.
Professional Management for Peace of Mind
Consider a condo with professional management. Professional managers provide valuable expertise, manage finances, and oversee maintenance, ensuring a smooth-running community. Professional managers can be a big expense but there guidance and expertise can be the difference between a dysfunctional association and a smooth running association
Rental Ratios: Finding the Right Balance
A healthy community has a mix of owner-occupants and responsible renters. Ideally, less than 50% of units should be rentals. Our experience has been that association’s with a high percentage of investors/ renters tend to avoid dues increases and frequently vote to defer maintenance to save money. Since they don’t live in the community they don’t care about landscaping or that the paint is peeling.
A Washington State condominium can be a great home for someone but one has to take a critical look at the association as it can make the difference in quality of life at the complex.
