Last week, a client looking for a downtown condo in Boise called just before signing a purchase agreement. The listing for the unit they liked mentioned a special assessment of $8,000 per unit due to recent roof repairs, which was noted in small print. This case illustrates that when buying a condo, it's important to consider not only the purchase price and monthly management fees but also the financial condition of the building.

To start with the numbers, HOA fees for condos or townhomes in the Boise area typically range from about $250 to $500 per month. Compared to the national average of $300 to $700 per month for condos, Boise is positioned in the middle. However, the situation can vary significantly depending on whether it's a new high-rise building downtown or a small townhome community in the suburbs. Buildings with elevators, lobbies, and underground parking tend to have higher maintenance costs, which results in higher management fees.

HOA fees cover exterior maintenance, master insurance, landscaping and trash collection, common area operating costs, and contributions to the reserve fund. This reserve fund is directly related to the special assessments mentioned earlier. Buildings that do not have a sufficient reserve fund may charge residents a large sum all at once when significant expenses arise, such as for roofs, plumbing, or elevators. Idaho does not have specific laws mandating reserve studies or reserve fund contributions. This means that how well the building's board has managed the reserve fund is entirely dependent on the individual building's circumstances.

So, to summarize the items to check before signing a contract:

• History of special assessments over the past 3-5 years
• Balance of the reserve fund and its ratio to the overall budget
• Items included in the management fee and separately billed utilities

These three items can usually be verified by requesting the HOA financial statements and copies of board meeting minutes through a real estate agent. Additionally, mortgage lenders will review the same items. Buildings with high delinquency rates or low reserve fund ratios, or those involved in ongoing litigation, may be classified as non-warrantable condos, making loan conditions more stringent. For investors looking for rental income, it's crucial to check this aspect first, as it could affect loan approval.

Boise has seen a steady influx of residents in recent years, leading to an increase in new condo construction. While new buildings may initially have lower management fees, they often do not have sufficient reserve funds built up, which could lead to management fee increases or special assessment risks in a few years. Conversely, older buildings downtown may have higher management fees but could have accumulated reserve funds over time, resulting in a more predictable expenditure structure.

If you are moving to Boise from another state, it's important to note that the tax structure may differ from where you previously lived. Idaho is known for having relatively low property tax burdens compared to other western states, but when it comes to condos, you need to factor in both property taxes and monthly management fees to accurately gauge your actual living costs. Families considering school districts should be aware that school ratings can vary by neighborhood within Boise, so it's advisable to refer to ratings from GreatSchools or Niche. However, since school district boundaries can change frequently, it's best to verify the assigned school for any addresses of interest before making a purchase. For those who have just moved from Korea and are preparing to settle in, it's also helpful to know that the HOA regulations for condos may impose more detailed restrictions on rentals and renovations compared to apartment management regulations in Korea.

When viewing properties, don't just look at a single management fee bill; also request the trend of management fee increases over the past few years. If a building has seen significant annual increases in fees, it may be an attempt to catch up on the reserve fund, while a building that hasn't raised fees in a long time may have neglected its reserve fund. In either case, it's wise to review the board meeting minutes as well, as numbers alone may not tell the whole story.

This article is not investment or legal advice, and it is recommended to consult with a professional before making any actual contracts.