Friday, December 07, 2007

The Real Estate Investor’s Guide To Understanding The Homeowners Association Community

Investment property comes in all shapes and sizes, but what happens when it comes within an HOA community? HOA communities are neighborhoods regulated by a Home Owners Association. The organization is run by members of the community who enforce the neighborhoods rules.

The nice thing about HOAs is they serve as a watchdog for the community and thus your property. They make sure lawns are mowed and trash cans aren’t left on the curb. But with the pros come the cons, such as laws that may be more restrictive then you as an investor care to worry about. Here is a quick breakdown of some reasons why HOAs are nice to be involved with.

1)HOAs provide an additional way to monitor your investment property.
2)Neighbors to your investment property are also monitored. You won’t have to worry about cars on blocks and trash piles popping up around the neighborhood thus driving down the equity of your investment.
3)The majority of HOAs have regulations regarding home elevations and changing them. This makes it harder for other homeowners in the community to change the exterior of their house to a distasteful color.
4)Some HOA communities come with amenities such as pools, ponds, walking paths, parks, club houses, fitness centers, and other attractions.
5)HOAs can foster a sense of community which you can use to your advantage when finding that perfect tenant to fill your investment property.

Of course, HOAs are like a double-edged sword. They come with rules for both your tenant and the neighbors to follow. When you have an investment property in an HOA community, you have to worry about your tenant complying with these rules.

1)Large recreational items, like portable basketball hoops, can’t be left out at night.
2)Trash cans are required to be put up in a timely manner after trash pickup for the week.
3)Landscaping and lawn care needs maintained per HOA guidelines.
4)HOAs have been known for developing rules that make the city’s laws look meek in comparison.
5)Some HOA restrict the amount and type of animals community members can own. This could limit your potential renter list.
6)HOAs can regulate the amount of investment property within a community and even make it near impossible for you to lease a home.

Because HOA rules differ based on the community, it is hard to determine if investing within a regulated neighborhood is right for you. If you are thinking about investing in a piece of real estate, find out if it is part of an HOA. If it is, inquire about the HOAs rules. Are they investor friendly? What are the rules? How often are they enforced? What happens if your tenant breaks the rules?


Post a Comment