There was an investor who intended to buy a condo in Cresskill and rent it out, but was taken aback after reading the regulations again post-contract. The community regulations, commonly referred to as CC&Rs, stated that the rental cap had already been reached, making it impossible to register for rental for several years. In simpler terms, they signed the contract based solely on the HOA fees, only to find out they couldn't rent it out as they had planned.

This rental restriction is not unique to Cresskill. Most condo communities specify a rental cap in their regulations, and this ratio varies from community to community. If you're investing, it's more prudent to check this ratio before looking at management fees or purchase prices.

Cresskill has a high proportion of single-family homes, so there aren't many condos available. Therefore, it's more realistic to refer to the overall statistics for Bergen County. The median management fee for condos in Bergen County is $490 per month, while the average in New Jersey is $423 per month. If the terminology is unfamiliar, think of management fees as a monthly fee that covers building maintenance, insurance, common facilities, and reserve funds all in one.

Management fees generally include the following items:

• Maintenance of building exteriors, roofs, and common plumbing
• Master insurance covering the entire community
• Lawn care, trash collection, and some utilities
• Reserve funds for future major repairs

Cresskill is also a neighborhood of interest for Korean families moving from other states. For these families, it's important to consider not only management fees but also property tax burdens. New Jersey has relatively high property taxes, so even if management fees seem low, the total housing costs may be higher than their previous residence.

If families prioritize school districts, they should refer to ratings from GreatSchools or Niche, but keep in mind that school district boundaries change frequently, so it's advisable to verify the assigned school based on the property address.

Rental restriction regulations should be checked separately from management fees. Many communities set a rental cap based on the total number of units, and once this cap is reached, you must be placed on a waiting list. If you are purchasing with the intention of generating rental income, it's essential to confirm the number of rental units available and your position on the waiting list before signing a contract.

It's also good to know that New Jersey has recently strengthened regulations regarding reserve funds. A law enacted in 2023 will take effect in January 2024, and a supplementary bill will be implemented in August 2025. Now, New Jersey condos and co-ops must have a reserve study prepared by a qualified engineer or certified professional, and they must manage their finances to ensure the balance does not fall into the negative over a 30-year funding plan. The study must be updated every five years.

To put the importance of this regulation simply, a community with insufficient reserves may impose special assessments ranging from thousands to tens of thousands of dollars when major repairs like roofs, plumbing, or elevators are needed. Banks also review this aspect during loan assessments, and communities with poor financial health are classified as non-warrantable condos, making loan conditions stricter.

If families are moving to Cresskill from another state, it might be a good idea to rent first to get a feel for the community before purchasing. In this case, it's also helpful to check who is responsible for the management fees as stated in the rental agreement, as this can assist in future purchase considerations. Unlike Korea's jeonse or monthly rent contracts, U.S. rental agreements may require tenants to comply with HOA regulations as well.

Even if a rental cap is already full, placing your name on the waiting list can sometimes lead to your turn coming up in a few years. Rather than giving up on purchasing just because renting is currently difficult, it's more realistic to inquire with the management company about your waiting position and expected waiting time.

Ultimately, you need to consider the management fee numbers, rental regulations, and reserve status together to get a complete picture. This article is not investment or legal advice, and it's recommended to consult with a professional before finalizing any contracts.