Last month I walked a first-time buyer through two condos in the Locale building on Camino de la Reina. Same floor plan. Same square footage. One had the upgraded kitchen with the waterfall quartz island, the other had builder-grade cabinets and laminate counters. She wanted the pretty one. Of course she did.
The pretty one was listed £40k higher. Sorry, force of habit. $40,000 higher. And it sat in a building where the HOA reserves were funded at about 38%, according to the most recent reserve study. The less glamorous unit was in a complex funded north of 70%.
I told her to buy the ugly kitchen.
This is the thing first-time buyers get wrong more than anything else I see. They obsess over finishes. Countertops, fixtures, paint colours (yes, I spell it that way, can't help it). And they sleepwalk past the HOA's financial health like it doesn't exist.
Here's why that matters. A poorly funded reserve means a special assessment is coming. Could be $5,000. Could be $25,000. I've seen both in Mission Valley in the last two years alone. That gorgeous waterfall island doesn't feel so gorgeous when you're writing a cheque to replace the building's roof six months after closing.
My years as a financial planner before I got into real estate left me with one reflex I can't shake. I read the balance sheet before I look at the brochure. Twenty years in this business has only made that reflex stronger.
So what should you actually do? Before you even tour a condo, ask the listing agent for the HOA's reserve study and the last two years of meeting minutes. Read them. If the reserve funding is below 50%, that's a red flag. If there's language about deferred maintenance or upcoming assessments, pay attention.
A new kitchen costs you $15,000 to $25,000 if you want to upgrade later. A special assessment you didn't plan for costs you that plus the stress of having no choice in the timing.
You can always change the countertops. You can't change the HOA's bank account.
Next time you're touring a place in Civita or over by Friars Road and the finishes make your heart race, do me a favour. Ask about the reserves first.