A few years ago, a friend who bought a condo in Jersey City called me after receiving their first management fee bill. It was significantly higher than the amount they were quoted at the time of the contract. I was reminded then that even within Jersey City, the situation varies depending on the area.

In high-rise waterfront buildings like Exchange Place or Sinatra Drive, management fees can range from $800 to $1,200 a month, and sometimes even higher. In contrast, typical condos and townhomes in other areas usually have fees between $200 and $600 a month. Luxury buildings with many amenities can exceed $1,000. This means that even within the same city, there can be more than double the difference in management fees depending on whether it's waterfront or not.

This difference mostly comes from the size of the building and the level of service provided. Waterfront high-rises need to maintain doormen, concierges, swimming pools, gyms, and large lobbies, and the master insurance premiums also increase in proportion to the building's value. On the other hand, smaller low-rise buildings often lack such staff and facilities, resulting in lower management fees.

For investors looking for rental income, it's important to consider that while waterfront high-rises have steady rental demand, their high management fees can lower net returns. Conversely, smaller buildings in inner neighborhoods may have lower management fees but could also face longer vacancy periods.

Families moving to Jersey City from out of state should look at not only management fees but also property taxes. New Jersey is known for having high property tax rates, so even if management fees are manageable, overall housing costs may be higher than in their previous location.

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

Jersey City often has new waterfront developments alongside older buildings, so even within the same block, the financial status of each building can vary greatly. When comparing properties, it's helpful to check the year of construction and any recent major renovations.

One area to be cautious about is buildings that have kept management fees low for a long time. Buildings that have deferred major repairs like roof replacements or elevator upgrades to maintain low fees may have inadequate reserves, and in such cases, special assessments ranging from $15,000 to $40,000 per unit can be imposed without prior notice.

If you are newly relocated from Korea and looking for your first condo in Jersey City, it's easy to think of waterfront properties based solely on their proximity to Manhattan. However, it's safer to also compare properties in inner neighborhoods that fit your budget and request recent board meeting minutes and reserve balances for both options.

To address these issues, New Jersey has recently mandated reserve studies by law. The law enacted in 2023 will take effect in January 2024, with additional amendments applying in August 2025. Condos and co-ops must have reserve studies prepared by a professional engineer or certified expert every five years, and they must manage their funds to ensure that the balance does not fall into the negative over a 30-year plan.

Here's a summary of items to check before signing a contract:

• Recent reserve study results and funding ratios
• History of special assessments over the past three years
• Rental restrictions and pet policies
• Delinquency rates and ongoing litigation

Banks also review the same items during loan assessments. Buildings with insufficient reserves or ongoing lawsuits may be classified as non-warrantable condos, making loans more difficult to obtain. Whether it's waterfront or in the inner neighborhoods, it's safer to look at the financial status behind the management fee numbers first. Just like the management fee increase my friend experienced, remember that the amount quoted at the time of the contract is only the budget for the first year, and there's no guarantee it will remain the same in subsequent years. This article is not investment or legal advice, and it's recommended to consult with professionals before finalizing any contracts.