Whats up guys,
I am brand new to this space, I just finished reading the BP book on investing along with a few others. I do not own any realestate yet, but starting to learn my market (South Florida: Boca Raton).
This is my game plan so far: Find a 2bed 2bath apartment for around 130k or less which can rent out for $1400/month. The issue is my market is infested with HOA's. The cheapest is $277 a month up to $450 a month. Some include water, cable and insurance. Although its ideal to not have a property with an HOA (as ive heard), I may have to bite that bullet to grow in my area. (Boca Raton FL)
Just reaching out if anyone has advice or guidance when looking at these types of properties!
Thank you in advance!
I own one property with an HOA. Read the whole agreement, get a copy of the financials and make sure they are in a healthy position, with reserves and good collection rates. Make sure you'll be able to rent the property out based on the association rules. I'd also look at how well other properties in the same HOA sell. How long does it take compared to the rest of your market, etc.
Not an exhaustive list, but those are things I ran across with my HOA property. I think folks are overly critical of properties with HOAs. There are absolutely potential downsides to it, but an HOA in and of itself shouldn't be a deal killer in my opinion. The devil is in the details (as it so often is in real estate).
Definitely get on the board if you do end up buying a property with an HOA. My experience has been that most people are not involved in the slightest and the bar is set exceptionally low. If you're willing to put in a little bit of work and time you can have a lot of influence and add a lot of value.
Thats some great advice! I will look into the details. Thank you for your response!
Hey @Nico Kavlakian ,
I am a realtor/investor in Palm Beach County. Unfortunately, if you are looking for a condo, townhome or villa in palm beach county, 99% of them are going to have an HOA. When I conduct my search I usually filter for a max of 300 HOA. For there are some that are more expensive than $1000/month in Boca. I really look for the HOA's that include insurance and exterior maintenance which will help you Minimize operating cost for you as a landlord.
Like Taylor said you want to make sure to get a copy of the HOA guidelines and make sure to clarify the rental restrictions. HOA's can restrict you from renting more than once a year, which mean if you evict someone two months into the contract you have to wait another 10 months to rent it back out. They also restrict who you can rent to and usually interview all tenants. Some don't allow pets or trucks which limit your rental market.
Also watch out for HOPA’s (55+) communities. Some allow you to buy but not occupy the property unless one person is over 55+. This will greatly limit who you can rent to. Especially if you buy in Boca which has a large student population in their rental market.
Let me know if you need any further assistance. I am happy to help.
Kyle Funnell, Realtor
I own property up in New York as well as down in Palm Beach County and I will say that an HOA is just awful for investing. My property down in Florida has no HOA and cash-flows great. The HOA on my property up here in New York just completely drowns us. That being said I would take the advise given to you in the previous comments because I am sure there are some HOA's that are not so detrimental to investors. For me, I stay away from HOA, I don't have the time to make sure I am getting a good deal with an association plus I only trust myself with my money.
I hear your pain, @Nico Kavlakian . I'm in Boca and I run into the same issue. For me personally, I try to avoid HOAs as much as possible, but sometimes the deal is too good to let go. I'm not yet into buy and hold, I currently flip houses, and still very hesitant when it comes to HOAs.