What's the RIGHT amount to have in a Condo's ReserveFund?

Question

I'm thinking of buying a second home (condo) so we can get away from the Maine winters for a few weeks. I started looking in FL, but I'm learning that there's a problem that apparently was uncovered after the Miami Surfside condo collapse in 2021, where 97 residents were confirmed dead.

The problem is that many FL condos have historically underfunded their reserves. The state is now requiring inspections on those over 3 stories and over 30 years old and enforcing "proper" reserve funds.

Owners in some places are being hit with low-mid 6-figure Special Assessments. With some owners on a fixed income, these units have flooded the market, making it a strong buyer's market.

That scared me away from Florida for the moment, so I'm thinking about Galveston, TX. Yes, I know the entire city is in AE flood zones or worse. I'm paying cash, so no lender worries. I don't yet know if the same problem exists there.

It raised the question for me. I can get a look at the reserve account to see how much is in there. But how do I know how much SHOULD be in there? I imagine that a high-rise will be vastly different than a 2-story. One with 300 owners will be vastly different from one with 60.

I have no idea as to how to evaluate this.

I know I can look at the condo association meeting minutes to see what special assessments were discussed, but that only answers part of the question.

Any ideas or advice would be greatly appreciated!

It raised the question for me.  I can get a look at the reserve account to see how much is in there.  But how do I know how much SHOULD be in there?  I imagine that a high-rise will be vastly different than a 2-story.  One with 300 owners will be vastly different from one with 60.

I have no idea as to how to evaluate this.

I know I can look at the condo association meeting minutes to see what special assessments were discussed, but that only answers part of the question.

Any ideas or advice would be greatly appreciated!

Matt Devincenzo · Answer

The best option would be to obtain a copy of the funds/reserve study for the association. Especially give the last few years rapid increase in costs, anything that was estimated or done years ago is out of date and could be underfunded just based on inflation. A new study should assign unit costs and remaining service life to all the items and then determine the cashflow required to provide for everything when it's needed.

I would consider a low cost condo with a high special assessment due to a well done reserve study. Half the battle is knowing what the pain is going to be, once you do then you can really consider the costs and whether you'd like to move ahead. Once the funding crunch is past, the value should rebound to 'market' especially since that community is now a low risk purchase.

Adrian Clapp · Answer

If you're only looking to get away for a few weeks each winter, why not just rent an airbnb in the area you want to be? You can even explore different cities and if you fall in love with an area then you can always purchase down the road.

Stephen David Smith Jr. · Answer

@Charlie MacPherson,

If you’re looking at a condo in Florida—especially one that’s over 30 years old and three or more stories tall—you need to request the Structural Integrity Reserve Study (SIRS) from the association. This report became mandatory after the Surfside condo collapse in 2021, and it’s meant to make sure buildings aren’t neglecting critical maintenance or underfunding reserves. The SIRS only covers structural and safety-related components that have a replacement cost of $10,000 or more. These typically include the roof, foundation, load-bearing walls, fire protection systems, plumbing, electrical systems, waterproofing (like exterior paint and sealants), windows and doors, elevators, stairwells, balconies, and railings. It does not include things like landscaping, amenities, or interior finishes.

The SIRS process involves inspecting each of these components, estimating how many years of life they have left, how much it will cost to replace them, and then calculating how much money needs to be set aside each year to cover that cost on time. The study will spell out the annual reserve contribution required to avoid future special assessments. In Florida, you can no longer vote to waive these contributions—HOAs are legally required to fund reserves based on the SIRS findings.

So when evaluating a condo, don’t just look at how much is currently in the reserve account. You need to compare that number to what the SIRS says should be there. Ask if the association is following the SIRS funding plan. Also check past meeting minutes to see if there have been special assessments, or if major repairs were deferred. A weak reserve account or ignored SIRS recommendations are red flags. That’s often how you end up with sudden six-figure bills.

Note on Galveston, TX: Texas does not currently require structural reserve studies like Florida does, so the burden is on you to ask the right questions. You should still request any reserve study the association has done (even if voluntary), review financials, ask about the reserve balance, deferred maintenance, and any recent or upcoming special assessments. Especially in coastal areas with wind and salt exposure, the risks are real—even without a law forcing inspections.

Feel free to reach out if you revisit Florida or discuss anything in more detail.

What's the RIGHT amount to have in a Condo's ReserveFund?

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