A friend who recently signed a contract for a high-rise condo near downtown Dallas reached out after receiving their first HOA bill. The listing indicated a monthly fee of $380, but the actual bill included an additional one-time special assessment of $2,800. This charge was due to a lack of reserve funds for roof and parking garage waterproofing work, which was applied to all residents. When consulting with those looking for condos in Dallas, such cases often come up.

Monthly HOA fees for condos in the Dallas area generally range from $250 to $450 (source: IndexYard Dallas Living Guide, Bay Management Group Texas). However, this is just an average range, and the situation can vary significantly depending on the area. In luxury high-rise neighborhoods like Uptown or Oak Lawn, fees can rise to $700 or more, as they often include amenities like 24-hour concierge, valet parking, and fitness centers (source: Bray Real Estate Group Uptown Dallas Condo HOA Guide). In contrast, smaller low-rise condos in the outskirts may have fees in the low $200s.

• Maintenance of building exteriors and common structures
• Master insurance, covering the entire building
• Management of common facilities like pools, fitness centers, and lobbies
• Landscaping and trash collection
• Some utilities, such as water and heating
• Contributions to reserve funds for future major repairs

After the Surfside condo collapse in Florida in 2021, the SB 4-D law mandated reserve fund contributions, but Texas has different regulations. Texas Property Code Section 82 provides a basis for condo associations to establish reserve funds, but it does not require mandatory reserve studies or enforce minimum contribution rates (source: PropFusion Texas Reserve Study Guide, Gregg and Gregg Law Firm). This means that the level of reserve fund contributions can vary significantly based on the judgment of the association's board, which leads to the risk of special assessments.

When considering condos, many people only compare the listing price and monthly HOA fees, but it is crucial to also check the association's financial statements, recent reserve balances, and delinquency rates. Mortgage lenders also review the association's financial health during the condo purchase assessment. If the delinquency rate is high or the reserve fund is too low, the condo may be classified as a non-warrantable condo that does not meet Fannie Mae standards, leading to loan denials or stricter conditions (source: Fannie Mae Condo Project Guidelines, HUD.gov). Even condos near preferred school districts for Korean families can lead to difficulties if this financial check is overlooked.

Investors looking at condos for rental income must include HOA fees in their rental yield calculations. If they calculate yields based only on the listing price and expected rent without accounting for management fees, the actual net income could be significantly lower than expected. Additionally, if there are rental restrictions, it may not be possible to rent the unit at all, so it is advisable to check the rental regulations in the CC&R first.

During the contract process, you can request resale documents issued by the association, which include recent financial status and any planned special assessments. These documents often contain information about ongoing lawsuits or planned major construction, so it is essential to review them carefully before closing.

It is also important to review the CC&R and bylaws. Restrictions on the number of pets, prohibitions on short-term rentals, and limitations on balcony modifications vary by association. Particularly for families moving from California or the Northeast to Texas, it is important to consider the differences in property tax structures. Texas has no state income tax, but property tax rates are relatively high, so it is more accurate to budget for HOA fees and property taxes together.

When viewing condo listings, it is essential to develop the habit of looking at the overall financial health of the association rather than just the HOA fee number listed. By requesting and reviewing the results of reserve studies and the last three years of budgets, you can gauge the risk of special assessments to some extent. This article does not constitute investment or legal advice, and it is recommended to verify the association documents with a real estate professional before finalizing any contracts.