Let's follow a case where someone started looking for rental condos in Victorville with a budget of $250,000. The purchase price fell within the budget, but it was only after requesting a reserve study from the homeowners association that they discovered the reserve fund was less than 10% of the budget. Fortunately, this realization came before they put down a deposit, allowing them to avoid a potential issue.

In the Victorville condo market, the median price for a two-bedroom unit is $198,500, while the overall median price for condos is around $272,500. The investor's budget of $250,000 falls within this median range. The price range for listings is distributed between $277,800 and $370,000. Compared to Los Angeles or Orange County, the entry prices are significantly lower, making it an attractive area for investors looking for rental income with a smaller investment. However, rushing into a contract just because the prices are low can lead to situations like this one, where the financial status of the homeowners association is discovered too late.

The lack of reserve funds mentioned earlier is a common issue. If the reserve fund is less than 10% of the budget based on Fannie Mae standards, it can be classified as a non-warrantable condo, and starting January 2027, this threshold will increase to 15%. The percentage of delinquent units and ongoing lawsuits are also part of the same evaluation criteria, so it's safer to request the entire financial statement rather than just checking the reserve fund. Condos with insufficient reserves often need to cover large repairs, like roofing or plumbing, with special assessments, which can lead to higher expenses later, even if the initial purchase price is low. If you rush into a contract just because the entry price is low, you might face special assessment bills in the thousands of dollars per unit when it comes time for roof replacement or plumbing work in a few years.

In such situations, the next step is to request the homeowners association meeting minutes to check for any recent lawsuits and the percentage of delinquent units. If the percentage of delinquent units exceeds 15% or if there are ongoing lawsuits, the chances of loan denial during Fannie Mae review increase. Starting August 3, 2026, Fannie Mae will eliminate the streamlined review previously applied to existing complexes and switch to a detailed review, making this document verification a necessary step rather than an option.

If the building has three or more units, you should also check the structural inspection history according to SB326. Inspections of external structures, such as balconies, must be completed by January 2025, and the results should be reflected in the reserve study. If the inspection and repair costs have not yet been included in the budget, there is a possibility that management fees will increase in the future.

For investors moving from Los Angeles or Orange County to Victorville, the property tax system follows the same Proposition 13 framework, but the lower purchase prices also mean lower absolute tax amounts. However, due to the small size of many condo associations in the area, the ability to accumulate reserve funds is often less than that of larger complexes, which is a detail that can be overlooked when judged by standards from other states.

While Victorville may seem advantageous for rental yield calculations due to its low entry prices, if you contract a property with insufficient reserve funds based solely on the low price, you may end up spending more on special assessments than you initially saved. Victorville has seen an increase in commuting rental demand due to the growth of nearby warehouses and distribution centers, so the rental demand itself is not bad. The investor we discussed ultimately turned to another complex, finding one where the reserve fund was about 12% of the budget and proceeded with the contract. However, it's important to check not only the purchase price and management fees but also the results of the reserve study. This article is not investment or legal advice, and it is safer to consult with a professional before entering into a contract.