While comparing properties in Savoy, I once faced a dilemma between two condos that had similar sale prices but nearly double the monthly management fees. One had a slightly lower sale price but much higher fees, while the other was the opposite. So, where does this difference come from? The first question to ask is what is included in the management fees.

Savoy is a small city within the Champaign-Urbana metro area, which has many small condo and townhome complexes driven by demand from the nearby university. Research shows that HOA management fees in the Champaign-Urbana area can range from $150 to $600 annually for some communities (topchampaignproperties.com), but this is primarily for single-family home HOAs, and the monthly management fees for condo buildings are often higher. It is difficult to find specific data on condo management fees in Savoy, so it is necessary to refer to the overall average for the state of Illinois. The average condo management fee in Illinois ranges from $80 to $660 per month, with an average of $364 (according to hoacosts.com). In smaller markets like Savoy, directly comparing the recent three-year budgets of actual listings is much more accurate than relying on state averages.

So, what exactly is included in the management fees? Typical items include maintenance of the building's exterior and roof, master insurance, landscaping and snow removal, management of common hallways and lobbies, and contributions to the reserve fund. This is why one should not overlook management fees based solely on the sale price. A lower sale price with high management fees can lead to a greater monthly burden, while a building with lower fees may lack sufficient reserve contributions, potentially leading to larger costs later on.

Why is the reserve fund important? The Illinois Common Interest Community Association Act requires the board to disclose reserve allocations in the budget but does not set a minimum contribution rate. A bill (HB 2563) has been proposed to mandate reserve studies every five years, but it is still under consideration. This means that the level of reserve contributions can vary from building to building, and buildings with insufficient reserves may face sudden special assessments when repairs like roof or plumbing replacements are needed. It is also worth noting that in smaller complexes, fewer units mean that when a special assessment occurs, the burden per unit can be higher.

There is one more aspect to consider. Condos near the university tend to have steady rental demand, so many buyers approach them as investments. It is essential to check whether the management regulations limit short-term rentals or the rental ratio compared to the number of units. There are not infrequent cases in the university condo market where plans go awry due to regulations after purchasing with rental income in mind. So, what should you check?

• Recent HOA financial statements and reserve contribution status
• History of special assessments over the last three years
• Rental restrictions and pet policies
• Delinquency rates and ongoing lawsuits

Mortgage lenders also review this financial status. If the delinquency rate is high or the percentage of commercial space exceeds the threshold, the condo may be classified as non-warrantable, making loan conditions stricter. If you are moving to Savoy from another state, it is advisable to consider not only management fees but also the property tax burden in Illinois. For school districts, refer to GreatSchools ratings, but be sure to verify the assigned school for the specific address before purchasing.

For reference, condo management fees may include some utilities like water or heating, in addition to landscaping, trash collection, master insurance, and exterior maintenance, depending on the building. Therefore, rather than simply comparing the management fees of the two listings by numbers, it is more practical to request a breakdown of what is included in the management fee guide and compare them side by side. In smaller markets like Savoy, such detailed checks can also be advantageous in negotiations.

This article is not investment or legal advice, and it is recommended to review HOA documents with a real estate professional before finalizing any contracts.