Even within downtown Minneapolis, and even on the same block, there can be significant differences in management fees depending on the building. When comparing an older walk-up building to a recently constructed high-rise tower, the differences become particularly evident. It's not uncommon for the purchase prices to be similar while the management fees are more than double.

Looking at the recent market, small walk-up or historically renovated condos often have management fees below $300 per month. Mid-sized elevator buildings typically range from $300 to $600 per month, depending on the level of management and facilities, while high-rise towers with abundant amenities can exceed $600 and reach around $1,000. For instance, individual buildings in downtown show that Sable has a fee of $558, Riverwalk Lofts at $641, The Crossings at $693, and Bassett Creek Lofts at $998. The average across Minnesota is around $269, with a range of 25 to 75 cents per square foot, which is significantly higher than the national median of $135.

What does this difference mean? It's not simply a matter of whether a building is old or new. Walk-up buildings with lower management fees may have fewer amenities and a smaller number of units, which can limit their ability to build reserve funds. Conversely, high-rise towers with higher management fees have significant costs for maintaining amenities, but the larger number of units allows for a more distributed reserve accumulation. Whether one option is more advantageous than the other varies by building, so it's safer to check the actual financial statements rather than making simple comparisons. Lower management fees are not always advantageous, nor are higher fees always a disadvantage.

The Minnesota Common Interest Ownership Act (MCIOA) requires that the board reflects reserve accumulation plans in the annual budget and reassesses reserve adequacy at least every three years. Reserve funds must be kept in a separate account from operating expenses and cannot be used for operating costs. However, the law does not mandate a professional reserve study. While the reassessment cycle provides a relatively safer measure compared to other states, it cannot be assumed that all buildings will faithfully carry out these reassessments.

Comparing building types is also an important reference for families considering school districts. Areas with clusters of walk-up buildings and those with new towers often have different assigned school districts, and differences in management fees can lead to differences in living conditions. Therefore, it's practical to compare not just management fees but also school districts, commuting distances, and the financial status of the buildings. When comparing two types of condos, the following items should be checked:

• Recent reserve reassessment results and accumulation status
• Separation of operating expense and reserve accounts
• Potential burden of special assessments relative to the number of units
• Rental restrictions and pet-related regulations

Mortgage lenders also review these financial statuses, so if reserves are inadequate, the condo may be classified as non-warrantable, making loans more difficult to obtain. Given Minnesota's long winters, the aging of roofs, exteriors, and heating systems may occur faster than in other regions, which should also be considered when assessing reserve adequacy. Families moving from other states to Minneapolis should also check that the property tax system differs from their previous state of residence.

When comparing walk-ups and high-rise towers within the same budget, it's important to look not only at the management fee numbers but also at whether that fee structure can be maintained in the next 5 or 10 years. If a building has not recently updated its reserve reassessment results, it may be prudent to approach with the understanding that the current management fee could be set lower than what is actually needed.

This article is not investment or legal advice, and it is recommended to carefully compare the reserve statuses of both buildings with a real estate professional before making any contracts.