A friend who purchased a condo in Rockville once contacted me after receiving their first management fee bill. They were surprised by the higher amount. Upon checking, I found that the building was a relatively new development with amenities like an underground parking garage, gym, and concierge service. In contrast, there are many older low-rise condos in Rockville that have much lower management fees without such facilities. Rather than declaring one option better than the other, I want to highlight that both have their own pros and cons.

In Maryland, condo management fees generally range from $200 to $300 per month. However, Montgomery County, which includes Rockville, has a wide spectrum from older low-rise condos to amenity-rich new buildings, with complexes like Plymouth Gardens averaging $387 per month, according to spacerentguide.com. While newer buildings tend to have higher management fees, if they also have a substantial reserve fund, it can lead to predictable expenses in the long run. Conversely, older buildings with lower fees may seem less burdensome initially, but if they lack reserves, they could face special assessments later on.

Management fees cover building maintenance, master insurance, common area management, landscaping, trash collection, and contributions to the reserve fund. The exact amount allocated to the reserve fund can only be determined by reviewing the financial statements. This aspect is often overlooked and not clearly presented in property descriptions.

Maryland is addressing this issue through legislation. In 2022, HB 107 mandated reserve studies to be updated every five years, and in 2025, HB 292 will require boards to adopt funding plans based on reserve study results and make annual contributions to reach target reserve levels within five fiscal years. This regulation will take effect on October 1, 2025. When viewing properties in Rockville, it is useful to check whether a recent reserve study and funding plan have been adopted.

Mortgage lenders also assess the financial health of associations. Associations with high delinquency rates or insufficient reserves, as well as those involved in ongoing litigation, may be classified as non-warrantable condos, leading to loan denials or unfavorable terms. Fannie Mae's condo project standards set these criteria. Whether a building is new or old, it is worth verifying this aspect before entering into a contract.

I advised my friend to do two things. One was to request the last three years of financial statements and the reserve study from the management office to directly check the reserve fund ratio. The other was to read the HOA regulations to ensure that rental restrictions or pet policies align with their lifestyle plans. Just because a building is new doesn't mean its financial status is good, and just because a building is old doesn't mean it's necessarily poor. You can't know for sure without checking.

Given the variety of condos available in Montgomery County, including Rockville, it's more practical to compare what is included in the management fees, how much reserve is accumulated, and whether there have been recent special assessments, rather than just comparing fees alone. Investors aiming for rental income should also verify rental restriction clauses. Pet regulations and renovation approval processes vary by complex, so families planning to live there should check if they align with their lifestyle in advance.

Rockville has many areas with good school district ratings, making it a consistently sought-after location for Korean families. School district boundaries change frequently, so I recommend checking the assigned school for your desired address before purchasing. Families relocating from other states should also consider that property tax and insurance assessment criteria may differ from their previous residence. This article is not investment or legal advice, and I recommend consulting a professional before making any actual contracts.