Hello! I am considering purchasing a townhouse as a rental investment property. All townhouses in my area have HOA fees each month. My question is this:
How much can I rely on the HOA (it says it includes professional property management) to "manage" my property?
When purchasing a townhouse with HOAs as an investment property, do people still hire a property management company?
Hiring a property management company seems like it costs a decent amount of money (10-11%) so ideally, I'd like to not have that expense. Thoughts?
I'm sure someone else will weigh in here that knows more but unless they say otherwise, most HOA "property management" is for the property complex (landscaping, snow removal, sometimes roofing and siding maintenance, trash removal, sometimes water/sewer, amenities like a pool or weight room). They aren't typically talking about property management of individual units for their owners. Is that what you mean? Most property management is roughly 10% of the monthly rent and on top of that you may have a % of the first months rent to secure a tenant. I hope that helps.
Some HOA managers also manage individual units for owners, finding & managing tenants.
Some are great at the two totally different functions, but many won't be great at managing rentals.
You should interview several PMC's and pick the one you feel best meets your expectations.
You might want to read our series about how to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes
The others have already answered the question about PM for the condo vs your unit. If you don't want to pay for a PM to handle your unit (you still have the one for the complex as that is different), then manage it yourself. You will have more control and a better idea of what is going on if that is what you want. If you have a good PM, they do everything for you.
The HOA management typically manages finances, contracts for common areas/facilities, collection of HOA fees, and HOA Board responsibilities. They may also manage rentals within the HOA, but that's not very common in my experience. I used to manage two HOAs with a total of 60 units and I managed a couple of the units as rentals. Two separate skill sets so just vet the company to see what kind of services they provide as a property manager and compare that to other agencies. It may be beneficial, or it may be they suck at it.
Brandon as a property manager I'll be completely honest. Some HOA's are really good, and some are awful. It really depends on the Hoa and you won't know how they are until your use them.
In this instance I’d try out the Hoa and only use a property manager to find a good resident to live in your rental
This will keep the cost down tremendously. Let me know what you think about this