Is it bad if a co-op with 20 units has no reserve fund?
This one’s from Streeteasy where a first-time buyer was trying to figure out if “no reserve” should act as a red-flag to prevent them from buying.
Here’s my answer:
1 day ago
It’s really just a style of governance that you have to be comfortable with. As Kylewest has pointed out, a co-op with no reserves is running on a “pay-as-you-go” basis, so everything big that comes up will require a special assessment. (Make sure, as part of that tradeoff, that your maintenance is lower than in a comparable building with a reserve fund.)
The usual suspects for special assessments will be a new roof, heating/boilers, and compliance with Local Law 11 — which requires regular facade maintenance.
You should be able to find out from the co-op when each of these things were last done, and that will help you a little. You should, however, have $10K tucked under the mattress after you buy no matter what, because leaks always come when you least expect them.