Recently, there was a case where a client looking to contract a condo near downtown Jacksonville changed their plans just before closing. They liked the property itself, but after receiving the HOA financial statement, they discovered that the reserve funds were less than half of the recommended level. Such cases are not uncommon in the Jacksonville condo market.

The average HOA fee for Jacksonville condos is reported to be around $465 per month (hoacosts.com, based on 171 resident reports). However, this figure is skewed by some buildings with high management fees, and the actual median is closer to $300 per month. When calculated annually, depending on the age of the building, facilities, and reserve fund levels, the range is between $2,400 and $7,200, or about $200 to $600 per month. Waterfront or coastal condos often have flood insurance and hurricane preparedness costs added, which can increase fees by 25 to 50 percent.

It is also important to note the regulations that apply throughout Florida. Under the SB 4-D law established after the Surfside condo collapse in 2021, condos with three or more stories must conduct a Structural Integrity Reserve Study, and starting from the end of 2024, it will be prohibited to decide not to collect reserve funds. The deadline for completing the study is December 31, 2025. Jacksonville is subject to this law, so older buildings may face increased management fees as they must now fill their reserve funds all at once.

Here are some items to check before signing a contract:

• History of HOA fee increases over the past few years
• Whether a Structural Integrity Reserve Study has been conducted
• Balance of reserve funds and the ratio compared to the recommended level
• Percentage of delinquent units and any ongoing lawsuits
• Rental restrictions and pet policies

If you are preparing for a mortgage loan, these items are directly related to loan approval. Lenders assess the financial health of the HOA, and buildings with low reserve fund ratios or ongoing lawsuits may be classified as non-warrantable condos, making loan conditions more stringent.

If you are a family looking for condos in a school district preferred by the Korean community, it is advisable to check the financial status of the building alongside the school district rating. School district boundaries change frequently, so be sure to verify the assigned school for the address before purchasing. If you are moving to Jacksonville from another state, it may be helpful to factor in Florida's unique property tax and insurance structure for a stable home purchase.

In some cases I reviewed, there were also instances where buyers confidently completed contracts after selecting buildings with solid financial status. That building had reserve funds filled to over 90 percent of the recommended level and had not had any special assessments in the past five years. Although the management fees were slightly above average, it was considered a stable choice due to the lower likelihood of sudden special assessments in the future.

Such differences cannot be discerned from property photos or floor plans alone. Ultimately, obtaining the HOA financial statements directly and, if necessary, having them reviewed by a professional familiar with accounting is just as important as examining the property itself when purchasing a condo.

Investors expecting rental income should also consider the unique characteristics of Jacksonville as a port city. Areas near downtown and Riverside are undergoing active redevelopment, leading to an increase in new condo supply. While new buildings may have low initial management fees, it is important to keep in mind that the increase in fees can be significant as they build up their reserve funds over time. This trend should not be viewed negatively, but when comparing properties, it is safer to consider not only the current management fees but also the expected future increases.

This article is not investment or legal advice, and it is recommended to consult with a professional before finalizing any contracts.