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I'm purchasing a condo and trying to evaluate if the association is financially healthy. Are there any red flags in this balance sheet or income statement? There are 200 units and utilities are included in the monthly assessment (around $600 - $900 per unit, depending on size). The numbers below are in all thousands.

What does it mean if unappropriated members' equity is negative but reserves are positive? Is this like robbing Peter to pay Paul? Doesn't the money for maintenance/repairs/improvements come from both of these accounts anyway (depending on the amount or nature of the work)?

balance sheet

income statement

quietmint
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The first thing That I would require is that the HOA provide the 2018 numbers. Many will also have quarterly numbers to cover some of 2019. The quarterly numbers are harder to judge because some items like snow removal don't happen every month, but they will give you some idea of the status.

Ask for the reserve study, and more details on the reserve funds. Without a list of common property and where each item is in their lifetime, there is no way to know if the amount listed is enough. The fact that the balance of the reserve fund is only about double the annual contribution means the fund is either new or it is rebuilding after a major expense.

A comment on the numbers. If it is assumed that there should be three zeros added to the numbers quoted, then a back of the envelope calculation means that assessment income of $1,514,000 from 200 units means a monthly charge of ~$631 per unit. Is that correct?

It does list a large amount for utilities, so that must mean that the monthly fee includes utilities. If that is true the $100 plus per unit per month for the utilities makes things more reasonable.

I would ask about the Unappropriated members equity. I would like to know what that means.

mhoran_psprep
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