Pros and Cons of buying 4plex in HOA

2 Replies

Hey guys,

I'm currently looking at some 4plexes that are part of an HOA. What are the pros and cons of doing that? I feel like your ability to add value or raise rents would be limited by the other units within that same HOA. Thanks!

Hello, Pablo. I know there are differing opinions on this one....I'll share my experience. 

Most of my 8 properties are townhomes within an HOA. I like this niche because it limits my risk on several major expenses - exterior and roof. The HOA manages both of those areas, and the very reasonable monthly fees cover it completely. We are lucky to have a strong HOA board (that my husband and I now serve on, as well) so it's been a great set up for us.

I know if you're buying in a development prone to assessments, this can have exactly the opposite impact on your risk, so I would recommend doing a little research on the HOA:

 - who is president / serves on board?

 - what is their authority to level assessments on homeowners?

 - when was the last time they did that?

 - monthly dues / trajectory - how often increased?

A thorough review of the HOA covenants should help you make the decision as that will lay out duties and responsibilities and the homeowners' potential risks. Depending on your availability, if you purchase these units, it may be worth your time to serve in leadership for the HOA to ensure you are in a position to protect your investment.

Best of luck to you!