Underfunded HOA in fourplex community

2 Replies

Hello! First post in the BP forums, but longtime listener to the podcast. I’m currently under contract to purchase a fourplex that’s in an HOA community. After receiving the resale packet for the property from the property management company it was identified that the HOA was operating in a monthly deficit and the reserve fund was only at about 32% of what the recommended amount was. If the fourplex itself is a good deal is the underfunded HOA something to be overly concerned about? This property is in Las Vegas, NV and I’m still within my five day review period after receiving the resale packet. Thanks in advance for any input.

Why is it underfunded? If the HOA is not financially managed correctly, what else is mismanaged? I think my biggest concern would be a major expense occurring with no way to pay for it and requiring a special assessment. Read the HOA CC&R's.

As always, don't trust the internet, seek professional advice. Good luck!

Figure out how much they would have to raise the monthly fee to go from negative cash flow to positive cash flow and then to be safe I would double that amount and assume the Hoa fee will go up that month. 

If current Hoa fee plus double the increase monthly Hoa fee is a number you can live with, go for it. Remember that Hoa is is for the rest of your ownership and part of any sale to a future buyer. Almost worse than taxes.