HOA fees cost renters pay or me?

Question

Hey hey! I’m looking at a property that has $250 a month in HOA fees, it covers the outside of the property, lawn maintenance, trash and water. I think $250 is a whole lot of money. Would the renters cover that or would it come out of my (hopefully soon Bigger) pockets?

Thanks!

Taylor L. · Answer

You pay it and it comes out of the rent, just like any other expense. It will be a big problem for you if the tenants don't pay it, which is almost guaranteed to happen eventually.

Theresa Harris · Answer

If you buy a place in a HOA make sure you give your tenants a copy of the rules and have them sign that they have read and will follow the rules.  If they fail to follow them, they are responsible for paying you the fine.

Nathan Gesner · Answer

It's normally built into the cost of the rent and then you pay it as an expense. You don't want to rely on the tenant to pay it because you can have some serious problems if they fail.

When you research a property as a potential investment, you should count all the expenses. $250 HOA fee is a pretty big one to miss.

Jeff Paterson · Answer

I manage ~30 homes spread across a dozen HOA's (in the same region). You absolutely need to pay the HOA monthlies yourself, and you will also need to pay the HOA fines that your tenants may/will incur--weeds, tall or brown grass, car on lawn, oil stain in driveway, garbage cans in wrong place at wrong time, etc.. Of course pass on the fines to your tenants, plus a processing add-on fee for your time. With the monthly assessment, if you're required to pay a monthly local tax on your gross rental income, consider the option of making that HOA assessment a passthru fee to your tenants vs. just incorporating it into the rent amount--could save you a few bucks monthly on local taxes.

Tim Herman · Answer

@Matthijs Pol when looking at a HOA make sure you study the documents. They can limit the number of rentals in a complex. What are the reserves like? Are they saving enough for future capex or are you going to get hit with special assessments? You have no control when the hoa determines when to do major capex( roof replacement). Yours could be fine for several more years but they will go ahead and replace all the roofs at one time. Especially bad when they hand out special assessments at the same time.

Matthijs Pol · Answer

Ok great that's what I thought! Thanks

Bruce Woodruff · Answer

It's just another cost for you. Figure it into your P&L and make sure the numbers still work......

Kevin Sobilo · Answer

@Matthijs Pol, I would think of it like any expense that will affect YOU and/or YOUR PROPERTY if unpaid. Property taxes, mortgage, utilities provided by the municipality are all good examples where if unpaid you could be looking at some kind of foreclosure or lien. The same idea is true of the HOA. If unpaid you are on the hook. So, from a practical standpoint you should be the one who makes sure these are paid.

Whether its "covered" by the tenant depends. I would look at comparable rentals and factor in amenities provided here such the ones you mentioned. I would also decide if there is a premium to be paid to live in this HOA? Is it a gated community for example?

After you have figured market rent, just factor this cost in like any other. Keep in mind your costs don't factor directly into what a tenant pays. If the tenants can get similar accommodations somewhere cheaper, they will!

HOA fees cost renters pay or me?

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