Homeowner · Everett, WA · Member since 2018 · 1 post · 0 votes
I'm looking to buy a condo or townhome outright and then renting it out sometime in the future. How does everyone feel about paying HOA ($300-$400/ month) for their rental?
HOA dues can definitely eat into cash flow, so it really comes down to what you're getting in return. If the HOA covers things like exterior maintenance, roof, landscaping, sometimes even water/sewer, that can offset costs and make management easier. On the flip side, HOAs can raise fees or impose rental restrictions, so it's important to read the bylaws and look at their financials. Personally, I wouldn't rule out a condo/townhome, but I'd make sure the numbers still cash flow after HOA and that the rules won't impact my exit strategy.
I don't feel good about it. I max out at $250 unless utilities are included. HOA dues only go up. Also review their rules on rentals and whether there is a current rent cap.
What are the reasons those properties would make an attractive investment to you? I tend to avoid condos due to the fees and potential difficulty selling if multiple similar units are for sale however it depends on the area, amenities included, taxes and rent you can command. In beach areas condos can be profitable although Florida for example is taking a beating right now on fees and insurance. My personal home is in a desirable HOA neighborhood and the fee hasn't changed in 5 years- knock on wood.
HOA dues can definitely eat into cash flow, so it really comes down to what you're getting in return. If the HOA covers things like exterior maintenance, roof, landscaping, sometimes even water/sewer, that can offset costs and make management easier. On the flip side, HOAs can raise fees or impose rental restrictions, so it's important to read the bylaws and look at their financials. Personally, I wouldn't rule out a condo/townhome, but I'd make sure the numbers still cash flow after HOA and that the rules won't impact my exit strategy.
Beyond the HOA fees, there's often a misalignment of interest between the landlord and owner occupant member of the HOA. Owner occupants may want to make certain cosmetic improvements such as an updated lobby or halls, new mailroom, increase the number of doormen etc. Normally these types of changes require assessments or at minimum an increase the HOA annual budget. Also, in many instances HOA's have approved vendor lists meaning you're obligated to use vendors off a short list. They know they are the only options and use that leverage to overcharge for services. Smaller self-managed HOA's tend to have more leniency and better alignment than larger HOA's but these are important considerations.