Recently, I assisted a family comparing two condos in the Phoenix area. The two properties were similar in size and location, but the difference in monthly HOA fees was nearly $100. Initially, I thought it was simply due to differences in amenities, but as we examined the governing documents (CC and Rs) and financial statements, it became clear that there was much more to that $100. One of the most commonly overlooked aspects by those looking to buy condos is the composition of these HOA fees and the financial health behind them.

HOA fees include maintenance of the building's exterior and roof, master insurance, management of common facilities like pools and gyms, landscaping and trash collection, and in some cases, utilities such as water or heating, as well as contributions to a reserve fund for future major repairs. The extent to which these items are managed effectively determines the real significance of the amount paid each month.

• Maintenance of common areas such as building exterior and roof
• Master insurance premiums
• Management of common facilities like pools, gyms, and lobbies
• Landscaping and trash collection
• Contributions to the reserve fund

In the Phoenix area, condo and townhome management fees generally range from $200 to $600 per month, with properties in golf communities or those with resort-level amenities often exceeding that range (according to Phoenix Urban Spaces data). Across Arizona, condo management fees are reported to be around $300 to $400 (HOAStart 2025 data). It's also worth noting that due to the desert climate, many areas incur higher costs for landscaping, irrigation, and maintaining resort-style amenities.

A critical point to emphasize is the reserve fund. If the reserve fund is not sufficiently built up, residents may face unexpected special assessments for large repairs, such as roof or plumbing work, when needed. Unlike Florida, Arizona does not legally mandate reserve fund contributions. Arizona condominium law grants HOAs the authority to establish reserve budgets, but there is no requirement to actually fund them (according to Empireworks data). This makes it even more important to directly verify the HOA's financial statements and reserve status before entering into a purchase agreement.

The two properties this family compared showed interesting differences. The property with the lower fees had a reserve fund that was less than half of the recommended level, while the property with slightly higher fees had a clear history of steadily increasing its reserve fund over the past few years in its financial statements. Ultimately, the family chose the option with more stable finances, even if it meant paying a bit more each month. In areas like Phoenix, where many condos built in the 1970s and 1980s are still on the market, the age of the building increases the likelihood that roof or plumbing replacements will be needed soon, making it even more crucial to check the reserve fund status. Conversely, newly constructed properties may not have built up sufficient initial reserve funds, so being newly built does not guarantee peace of mind.

Lending institutions also pay attention to this aspect. When underwriting condo loans, they review the HOA's delinquency rates, reserve fund ratios, ongoing litigation, and the proportion of commercial space, and if these do not meet their criteria, the property may be classified as a non-warrantable condo (according to Fannie Mae condo project guidelines). For families that prioritize school districts, it can be helpful to check the assigned schools for the condos of interest using ratings from GreatSchools or Niche, but since school district boundaries change frequently, it's advisable to verify the assigned school for the specific address before purchasing. For those coming from out of state, it can be easy to overlook aspects based on property tax or insurance rates from their previous state, so it's wise to calculate overall monthly expenses by considering HOA fees alongside property taxes and insurance premiums.

Ultimately, when evaluating HOA fees, it's important to look beyond just the numbers and consider how much of that amount is going into the reserve fund and whether there have been any recent special assessments. This article does not constitute investment or legal advice, and it is recommended to consult with real estate professionals, accountants, and, if necessary, attorneys before finalizing any contracts.