HOAs on out of state rental
I'm looking to buy out of state due to home prices being so high in the city I live. I'm looking for a good place to get started and I have found a serious contender. Although, it is managed by an HOA with monthly dues. HOA covers Trash, Maintenance Grounds, Insurance, Water, Management. Are HOAs always a no no for rental properties? Out of state or not? I've personally had horrible experiences with HOAs in the past but I'm seeing what others think.
@Reed Lambier
I don't know what I dislike more these days, HOA's or the media. You are at their mercy, and their rules can change. I'll give you an example, I live in a condo personally, and after my 1st year they raised my fee by $50 per month, gave me a $6 000 special assessment for a new roof/siding that needed repaid over 3 years, and they just now stopped allowing anyone from renting their units.
@Reed Lambier My rental property has an HOA. There are pros and cons. The cons are they can be a little uptight with the rules. The pro for me is that mine in particular is well managed (healthy reserves) and keeps the property values from decreasing. I would say do your research and talk to the neighbors and get their opinions on the HOA.
@CJ M. That is horrifying and exactly what I'm afraid of. I spoke with the manager of the HOA for an hour today on the phone. They said they don't want to increase the HOA for at least another 3-5 years. I've had awful experiences with HOAs in the past as well but I'm not sure where else to look since the market seems to be saturated with nothing but townhouses and condos in my price range.
@Carleton C. that's what I'm curious about. If you are renting out of state is it ever worth it as an investor? This would be studs in policy and a lot is covered under the HOA, including water (it's in the desert). I'm just so paranoid about getting involved with them again.
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#5 Multi-Family and Apartment Investing Contributor
- Investor
- Shelton, WA
@Reed Lambier I don't buy properties if there is an HOA period.
As a long time out of state investor (I live in CA and invest in Nash., Tampa, Orlando, Dallas, KC, ATL, OKC, and more . . .)
First I want to see how much is the HOA monthly and what do I get for it (and are there any rent restrictions!)
Second, if HOA is not too high, biting into my CF, I have to say that when I need to deal w/ the HOA as an owner - I'm annoyed and don't like it BUT the HOA many time tell me if there is an issue w/ my house, w/ the tenant trashing the yard, etc.
Plus all in all HOA takes care of the community and a good one will tend to make sure it looks good.
So overall I, as a OOS investor I likie having the HOA as it's another "eye" watching over my property.
Most of the cash flowing properties in my market don't have HOAs but I've never had problems with those that do!
I have SFR properties in Tomball TX and with HOAs. As others mentioned, there are pros and cons. As long as the fee does not drain your cash flow and the management team does a good job of protecting the value of the community and your property, then go for it. HOA does not automatically mean bad. Research the reputation of the HOA management company and/or interview homeowners in the community.