Following the case of a family that moved to Nashville illustrates why this issue is important. After purchasing a condo near downtown and living there for a while, they intended to rent it out due to a job transfer, only to discover late that the HOA bylaws included rental restrictions that made renting impossible for a certain period. Before signing the contract, they only checked the management fees and school district, not the rental restrictions.

Management fees for Nashville condos generally range from $150 to $500 per month (according to nashvillehomeagents.com). Condos in entry-level areas like East Nashville and Midtown typically have fees between $250 and $450 per month, mid-range condos with many amenities range from $400 to $700, and luxury condos with pools, fitness centers, and concierge services exceed $600 per month. In recent years, management fees have been rising overall due to increased insurance costs and general inflation.

This aspect can be advantageous, but it's essential to consider both sides, as this is a characteristic of the Nashville condo market. Buildings with lower management fees may have fewer immediate burdens but can have strict limitations on rentals or renovations, while buildings with higher fees may impose a greater burden but offer more flexible rules for investors seeking rental income. Which option is better depends on the buyer's purpose.

Starting January 1, 2024, Tennessee will require condo associations with replacement costs for common elements exceeding $10,000 to conduct a reserve study (according to FirstService Residential). While this law does not mandate the accumulation of a reserve fund, it does require associations to review the adequacy of their reserve levels annually, which increases transparency compared to before. It remains true that if a reserve fund is neglected, special assessments may suddenly be imposed when repairs to roofs or plumbing are needed.

As seen in cases where rental restrictions caused difficulties, the items to check before signing a contract go beyond just the management fee numbers. It's advisable to directly verify the number of pets allowed, distinctions between short-term and long-term rentals, and the approval process for renovations as outlined in the HOA regulations for each property. Especially for investors aiming for rental income or capital gains, rental restrictions should be the first item to check.

It's also important to consider school districts. Condos in downtown or Midtown often belong to Davidson County, while many Korean families focus on areas in Williamson County due to school district considerations. If purchasing a condo for school district purposes, it's wise to recognize this difference first, and the final decision should be made by checking the assigned schools based on the property address along with ratings from GreatSchools or Niche.

This family also checked the history of management fee increases while looking for other buildings. Buildings that have seen gradual increases over the past few years often have well-managed reserve funds, while those with sudden spikes may signal an impending special assessment. This trend can be confirmed by contacting the management company.

Returning to this family's case, rental restrictions are often not clearly stated in the management fee guide. This is why it's necessary to request and review the original HOA regulations or board meeting minutes. Buildings with strict rental restrictions may not be suitable options for investors seeking rental income from the start.

Buildings with low delinquency rates and reserve fund ratios may be classified as non-warrantable condos by mortgage lenders (according to Fannie Mae condo project guidelines), which can block loan approvals. Families moving from out of state should also consider that Tennessee's property tax and insurance structures may differ from their previous residences. This article is not investment or legal advice, and consulting a professional before making any contracts is recommended.