Investing in a Condo: Good Cash Flow but Poor HOA

[Kevin Br]

Hey BiggerPockets! What an awesome community you've built up here. Newbie at real estate investing, but I'm hoping to close on my first rental property soon. In search of some advice. I recently went under contract for a condo unit (in a 4-unit brick bldg) in an "A" neighborhood of Chicago that would cash flow handsomely (20.34% CoC ROI). Got a solid deal on the unit ($3k less than appraised), and budgeting about $5k for cosmetic refreshes.

Today I got the HOA "records" and I was taken aback by what I saw. The HOA was registered in 1994, yet they have a whopping $2,900 in reserves! There are no pending special assessments, however the self-managed HOA was unable to produce any meeting minutes to my attorney (as in, none, since apparently they don't have a Secretary or regular HOA meetings). My inspection report revealed a small water leak at the building's basement main water line (which is made of lead)--so eventually that will have to be replaced with a copper line. Roof appears to be OK though I wasn't able to get a complete roof inspection.

Considering the strong cash flow vs. HOA reserves, I'm curious what others thoughts are on whether or not I should bail on this deal?