Condo HOA's -finding the fees and rental rules

8 Replies

Hi, I've been researching condos in my area. It's seems that I could cash-flow some deals, especially foreclosures.... BUT it does depend some on HOA dues. Other than calling an agent is there a way to find that info online? I assume it's in the MLS?

Also, I've read that some HOA's don't allow rentals. Is this common? Regional?

Thanks!

Originally posted by @Scott Babcock :

Hi, I've been researching condos in my area. It's seems that I could cash-flow some deals, especially foreclosures.... BUT it does depend some on HOA dues. Other than calling an agent is there a way to find that info online? I assume it's in the MLS?

Also, I've read that some HOA's don't allow rentals. Is this common? Regional?

Thanks!

 Scott, I have heard from folks on here that there are HOAs that don't allow rentals. I have never experienced this and is likely very rare in the real world.

HOA dues can always be found on the MLS. Alternatively, you can just call the HOA and they'll probably tell you. Takes action on your part and costs

Rental restrictions are actually very common. This is for several reasons, such as an association keeping its FHA status (has to be under 50% rentals), as well as buildings often don't want renters since we all know tenants don't take pride in places they rent. Some restrictions are simply on the number of rentals in a building, some are that owners cannot rent until they've owned their unit for a certain period of time, some are that tenants have to be approved by the board. Some buildings also implement rental surcharges to discourage rentals, equal anywhere from 10% to 100% of the monthly assessments. Good luck cash flowing with paying double condo fees. Also, you need to do your due diligence because there may be more than one HOA fee, such as when there is a master association or separately declared rec center/pool/clubhouse/etc. These are usually separate fees and agents don't always know about them. That could put a dent in your bottom line. Let me know if you have any other questions.

@Marc M. Wow, Marc, thanks so much for that answer. Many more potential issues than I realized! Some great points I will keep top of mind when investigating HOA properties.

Having managed condos for investors, I can attest that they can be a major pain. One of the biggest risks that you take when owning a condo is you are at the complete mercy of the HOA. If they get a bad association manager assigned to your property, then you could be in for a very long and bumpy ride. Assessments, unpaid bills that lead to utility shutoffs, owners not paying dues which in turn results in poor services are all factors that are completely beyond your control, but they have a huge impact on the value and livability of your condo. It's also not uncommon for HOAs to completely mismanage funds, which results in even more assessments in order to take care of basic maintenance items on the property.

There are lots of condos that appear to be cheap, and appear to cash flow well. However, keep in mind that well run HOAs and cooperative owner/neighbors will play a big role in the success of your investment there. 

HOA by-laws are usually recorded against the property and are public record.

We review them during the due diligence period and contact the manager with any specific questions.

Upcoming capital improvements and deferred maintenance are things to pay attention to.

Also, we always look at pet policies.

Wm

the best way is to call or speak to someone living there by doing a drive by.

it is VERY common for alot of HOA's not to allow rentals for a certain period of time. usually 1 year after purchase. Renters dont usually care about the appearance of the neighborhood and they destroy alot because they have no actual investment or skin in the game. HOA's protect their values against investors because most of them simply want to grab a unit, rent it out, and turn the neighborhood into "renterville" which lowers values.

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