Condo investing / HOA education
Good morning amazing people of BP!
I understand that there are a lot of negatives associated with investing in condos. You gotta play by HOA rules, you have to deal with special assessments, there might be limits to how many units are allowed to be non owner occupied etc etc etc.
There is a possibility that i might buy a condo as my next buy and hold, but i do not feel confident enough in my own level of education when it comes to things i need to be looking for in HOA. Do you guys know any books / podcasts that i should check out to further my understanding? Maybe there's a BP member that does a lot of condos and has a blog?
Essentially i am asking to be pointed in the right direction to do additional research. Anything helps!
Thank you very much!
-Pavel.
Most Popular Reply
The reason investors don't like condos is because there's one less lever in your control. To add to that, most HOA's have power to make rules that prevent rentals, add special assessments, raise fees etc. Basically, if they really wanted, they can be very landlord unfriendly. This varies by state and by development of course.
If you absolutely must go with HOA, then try to follow these guidelines:
1. >50 units for scale
2. Reserves over 75-80% (you will have to read their statements)
3. Review last 6-8 months of meeting minutes to understand what topics the HOA is debating and general sentiment
4. Speak to the HOA and explicitly ask "Are you aware of any special assessments or HOA fee increases on the horizon"
5. Review fee increase history
Lot of people do successful condo investing by understanding and navigating HOA rules. If the condo is in an area near to you, you could also run for a seat on the HOA! :)
Hope that helps,
Amit