Advice on petitioning increased HOA fees
3 Replies
Matthew Lee
New to Real Estate from Los Angeles, CA
posted about 2 months ago
Advice on creating a petition for reducing HOA fees? Fee went up 7.2% ($555 to $595) and it's hard to justify the spike. Our HOA fee and % increase YoY is significantly high compared to neighboring communities, which average around $400-430 with avg 2.5% YoY fee increase.
Also, in the past few years, our property prices have remained stagnant. While neighboring communities have went up. I have a strong feeling it's related to the high HOA fees? I presume higher HOA = increased rent to offset costs = higher vacancy rate = decrease in value. Plus lower fees from neighboring homes make our community less appealing to buyers. I'm thinking of adding this argument to the petition but would be nice to confirm with experts.
Any general thoughts / advice would also help, thanks!
Context: This is in South Bay Los Angeles California
Uneeq Khan
from Bound Brook, NJ
replied about 2 months ago
Have you been to any of the meetings or read the minutes? They should explain why it has gone up. Maybe they are preparing for a capital expenditures or a big upcoming cost. No one likes fees going up but sometimes it's needed in order to maintain the property. Higher HOA fees may repel some buyers but what will repel buyers more is an under funded HOA. Many HOA becomes very under funded because they try to keep everyone happy by making it affordable. But then down the line when a big expense comes up (roofs, patios, sidewalk, etc) then they are screwed and forced to do an immediate special assessment where each owner has to cough up a few thousands.
Linda Weygant
Investor and CPA from Arvada, Colorado
replied about 2 months ago
Increasing fees aren't always a bad thing. I've sat on the boards of HOAs and there are always those die hards who think only of the short term without focusing on the long term at all. One board I sat on they had refused to raise dues for 10 years. Then, when I went to the annual meeting as an owner, I asked the sitting board "Why did you pull so much money from the Reserve Account this year, but you did no major improvements?" and the response was - literally -
"We don't know. Every month, there's just not enough money to pay all the bills. We can't even do small repairs any more and we have to pull from reserves every month just to pay the regular bills"
It was a real WTF moment as I stood up and educated the board and the other homeowners as to this HUGE deriliction of duty from the board. I was elected to the board that night and served the next five years as treasurer. Once I got my hands on the full financial statements instead of the abridged version they gave to the homeowners, I realized that they only had about six more months worth of expenses in the bank and they would be out of money in month seven.
I lobbied not just to raise the dues, but to double them and reluctantly got the rest of the members on board. We then gave the homeowners a two month warning about the increase. The next monthly meeting, I was met with torches and pitchforks from the homeowners. I carefully presented charts, graphs, equations and facts and figures and by the end of the meeting, there were still a lot of angry homeowners, but it was no longer directed at me - it was directed at the former board.
It took me two and half years to turn the financial condition of that HOA around and they are now putting money into Reserves every month AND taking care of current needs. I've been off that board for a year now.
So before you get out your torch and pitchfork and decide the HOA is evil, take a look at what's going on and educate yourself. The cost of EVERYTHING goes up every year - water, electricity, labor for all the services the HOA uses, etc.
When you starve your HOA of money, it WILL cause your property to deteriorate as corners constantly get cut and bandaids get used instead of real fixes. Be smart, not reactive
Uneeq Khan
from Bound Brook, NJ
replied about 2 months ago
I feel like Your story is almost exactly like mine. Not an easy position to be in. Don't underestimate the power of dumb people in large groups.
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