Many people wonder why condo management fees, or HOA fees, vary so much between facilities. Simply put, the more shared amenities like pools, gyms, and lobbies there are, the higher the costs to maintain them. This difference is particularly noticeable in areas like Hilo, where resort-style condos mix with modest low-rise buildings.

Statewide in Hawaii, the median monthly management fee for condos or HOAs is $470 as of 2024, making it the third highest in the U.S. The Big Island, especially the Hilo area, has relatively lower real estate costs compared to other parts of Hawaii, so management fees tend to be lower than on other islands, but they still range widely from $400 to $1,500 per month.

If the terminology is unfamiliar, think of it this way: management fees include maintenance costs for repairing building exteriors and roofs, master insurance premiums that protect the entire building, operating costs for shared amenities like pools and gyms, landscaping and trash collection fees, and a reserve fund set aside for future major repairs.

Hawaii has much stricter laws regarding reserve funds than other states. In simple terms, condo associations must undergo a professional reserve study every three years, and they are required by law to set aside at least half of the recommended reserve amount from that study, or the full amount if using a 30-year cash flow method. If an association has not conducted a reserve study since 2023, they must start the study by January 2024 at the latest, and then update it every five years thereafter.

Residents can sue associations that do not comply with these regulations to enforce them, and in such cases, the burden of proof lies with the association's board, not the residents. This indicates that Hawaii takes reserve fund issues very seriously.

So, if you're looking at condos in Hilo, it's wise to not only consider the sale price or the amount of the management fee but also to ask about the most recent reserve study results and whether the reserve ratio exceeds 50%, as well as if there are any plans for special assessments.

In summary, a high management fee isn't necessarily bad, and a low one isn't automatically good. If a complex has a high management fee but diligently follows through with reserve studies and saves adequately, it may reduce the risk of sudden special assessments. Conversely, if the management fee is low but the reserve study shows that the savings rate is well below half, it may seem manageable now but could lead to a large bill in a few years.

Investors considering rental income should pay extra attention to this aspect. Even if the visible rental yield looks good, if the reserve fund is weak, special assessments could offset those gains within a few years. In markets like Hilo, where resort-style condos are mixed in, some complexes have restrictions on short-term rentals aimed at tourists, so if you have rental plans, be sure to check the CC&Rs first.

If you're looking at condos near school districts that Korean families are interested in, refer to ratings from GreatSchools or Niche, but keep in mind that school district boundaries can change frequently, so verify the actual assigned school for the address before purchasing. If you're newly relocating from Korea to Hawaii, the condo buying process and unfamiliar documents like reserve studies may take some time to get used to, but you can go through them one by one at your own pace.

Mortgage lenders also consider the association's reserve status in their assessments, so if it falls short, it may be classified as a non-warrantable condo, making it difficult to secure a loan. This article is not investment or legal advice, and it's advisable to review association documents with a professional before finalizing any contracts.