Buying a Condo? Why Reserves Aren’t the Whole Story

By Brian Maser, Founder of The Condo Experts

Ask most condo buyers how they judge a building, and you’ll hear the same thing: “Check the reserves.”

It’s smart advice — but here’s the truth: reserves are only part of the story. A building with low reserves isn’t automatically risky, and a building with high reserves isn’t always safe. The real question is whether you understand the financial system the HOA is running — and whether you’re prepared to play by its rules.

I’ve spent over 20 years helping buyers purchase condos across the Westside of Los Angeles — from Santa Monica and Brentwood to Marina del Rey, Venice, Westwood, and West LA. And I can tell you with certainty: the balance sheet alone doesn’t determine whether a building is a good investment.

Two Models of Condo Finance

Every HOA has to decide how to fund the upkeep of the building. There are two common approaches:

The High-Reserve Model

The HOA builds up a large savings account (reserves). Monthly dues are higher, but when big repairs come up, the money is ready.

• Looks safe, but means owners are holding a lot of capital that sits static.

The Lean-Reserve Model

• The HOA keeps reserves lower and funds projects with periodic assessments.
• Monthly dues are lower, and owners keep more money in their own accounts.
• Looks risky, but if you’re prepared, it can be efficient.

Neither model is “right” or “wrong.” They’re simply different operating systems. The key is knowing which one you’re buying into.

The Real Question Buyers Should Ask

The right question isn’t: “Are reserves high or low?”

The right question is:
 “Do I understand the rules of the game this HOA is playing — and am I prepared to play by them?”

If you know the system, you can plan ahead. If you don’t, you’ll feel blindsided when dues rise or assessments hit.

Case in Point

One of our recent buyers was looking at a two-bedroom condo in Brentwood. On paper, the HOA looked shaky: reserves were only about $80,000 for a 20-unit building. At first glance, our buyer was ready to walk away.

But when we dug into the HOA meeting minutes and financials, the story changed. The board had just completed a full roof replacement and plumbing upgrades — all funded through a temporary assessment that was fully paid off. The reserves looked “low” only because the major projects were already handled. The board was also proactive, with detailed communication about upcoming maintenance and a clear plan for building improvements.

By understanding the governance and financial strategy — not just the reserve balance — our buyer realized this was a well-run building with predictable costs. They moved forward confidently and now own one of the best-located units in the complex.

Governance Matters More Than Numbers

This is why HOA health is about governance, foresight, and planning — not just a balance sheet. A well-run board with clear communication can make either model work.

At The Condo Experts, we go deeper than a single reserve number. We:

• Review HOA budgets and meeting minutes for red flags.
• Forecast the true cost of ownership.
• Translate 400+ pages of documents into a 4-page Buyer Summary you can trust.

Because buying a condo isn’t just about four walls. It’s about the financial system you’re buying into.

Want to know what buyers should really look for in HOA docs? [Request your free Buyer Summary today]

Why This Matters on the Westside

The condo markets in Santa Monica, Brentwood, Marina del Rey, Venice, and Westwood are competitive — and the best units move quickly. Buyers who rely on simple “rules of thumb” like “high reserves = good” risk missing great opportunities or overpaying for a building that isn’t run well.

We regularly see buyers discount otherwise strong buildings because they don’t understand the financial model. We also see buyers jump into “safe” buildings that later surprise them with poor planning or unexpected costs.

That’s why governance — not just numbers — is the real lens you need when buying a condo in Los Angeles.

Take Control of Your Condo Purchase

Don’t fall into the trap of thinking “low reserves = bad” or “high reserves = safe.” Both can be smart investments — if you understand the governance behind them.

That’s why we offer a free Condo Buyer Summary on your top choice building. We’ll show you the real risks and long-term costs so you can buy with confidence.

[Request Your Free Buyer Summary]

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Brian Maser is the founder of The Condo Experts, a Westside brokerage specializing in condos and townhomes. With over 700 transactions closed and 20+ years of experience, Brian and his team help buyers and sellers navigate the complexities of condo ownership with clarity and confidence.