All Forum Posts by: Moses Moreno

@Chris Seveney

They do, but as @Carlos Ptriawan mentioned it takes someone that knows finances to fully understand the numbers and trends.

Here’s how things progressed over the years.

Year-HOA Mo. Fee-Reserve % funded

2015 - $295 - 45%

2016 - $295 - 35%

2017 - $310 - 15% (which triggered⬆️)

2018 - $335 - 17.5% (which triggered⬆️)

2019 - $370 - 27%

2020 - $400

***Enter CA Senate Bill SB-326***

2020 - Quotes received and mid-year increase to $480 was implemented to cover costs - 27%

****unplanned railing work begins***

2021- Current - $480 - 3-5%

Board send multiple votes out for special assessment. Neither meet quorum requirements.

This recent vote included the options that started this thread.

Two things happened around the same time. New Senate Bill requirement causing the railings to be inspected. They are not per current CA code so they needed to be updated for compliance and to maintain our insurance coverage. Second thing was the City stopped recognizing our complex for trash disposal. Since 1970 the city covered the trash & recycle pickup. Last year this abruptly ended and all of our bins were collected by the city. HOA scrambled to get trash service and has since added an additional $100K to our annual budget. Not sure why the HOA is covering this expense and not each homeowner??? Still looking into that.

I’m sure we can trim costs here and there, but these 2 costly unexpected events is the primary reason we’re in this predicament. After reading all the other comments, I’m hoping this loan will get us back on track🙏🏼

@Nathan Gesner

I hear you and it’s going to be interesting to see how this all plays out. I’ve heard rumblings of that from some of the owners, followed by…

“I wish I could sell, but where would I move to? It would cost me more to move.”

The CA exodus is real and I’m sure many wish they could pick up and move to other states with better quality of life…especially when watching HGTV. But for those of us that love this city. It will be another thing we need to suck up, until it reaches the breaking point.

⬆️ taxes

⬆️ homeless

⬆️ energy costs (with the mildest weather)

⬆️ cost of living

Our complex has 166 units and we’ve only had a handful of sales over the past 2-3 years, with nothing on the market for over a year. It’s going to be interesting to see if that trend shifts at all.

@Richard F.

Aloha Richard. Couldn’t have said it better myself🤙🏼

@Scott E.

To answer your question. Due to the urgency and HOA powers within the CC&R. There were two voting options.

1. Vote yes to getting a $4mil loan & each owner to pay $24k ($35k if paid to full term)

2. Vote no to loan and each homeowner will need to pay $24k special assessment with 6 months. OUCH!

HOA liens would be in play as you mentioned.

@Brett Deas

Being on the board is the way to go to protect your interest and community!

As much as I’m being pulled to step up, the image of Jerry Springer keeps popping into mind and I’d rather be in the stands with some popcorn.

@Mark Frattini

Where in the same boat Mark, but with limited supply and increased interest rates. It makes it very tough to walk away from a sub 3% loan. The San Diego market is still crazy! At least in the areas (OB, PL & PB) & price range we’re looking at.

@Scott E.

We sold a couple of condos in the Ciento complex (Old Town Scottsdale) a couple years ago. Loved the location and potential but it was slow drip of issues including a couple of smaller special assessments…a couple thousand here and there, but nothing like $24/$35k!!! We purchased those in 2017 so there was some great appreciation, which added to the reserves, and which is why I wouldn't shy away from purchasing into an HOA again. You just have to go into it with your eyes (and sometimes pockets) wide open!

We had a pleasant emergency HOA special assessment meeting this week. Due to updated CA codes & regulations, coupled with the lack of foresight & planning by the HOA Management & Board, our complex has to update 400+ balcony railings in order to maintain our insurance policy.

The railings are integrated into the stucco and balcony weatherproofing, so it’s not an easy remove & replace project.

HOA board received 5 bids and started using Capital Reserves to start this process. 1 year in and the HOA has nearly depleted all reserves! We're now in-line for a $4mil loan to complete the project and replenish the reserves. This equates to a $24k special assessment for each owner ($35k after interest on a 15 year loan).

The clubhouse chaos would have made Jerry Springer blush! The room was packed with people from every demographic - first time home buyers, RE investor, seniors living off SS & families struggling to make ends meet…especially with inflation and the always increasing San Diego Sunshine tax/costs. $24/$35k is a lot of money for anyone, but it will be a crippling financial blow to a lot of people!

This is our primary residence, but we having invested in Condos in the past & I was left thinking, what if this happened to us back then? It would have wiped out any/all cash flow & reserves for those investments. Wanted to put this out there for first time home buyer’s and new investors as a heads up and offer up some tips that have been shared on several other forums.

1. Have plenty of cash reserves!

2. Due diligence. Review the overall complex & financial status of the HOA prior to purchase. (Ours was solid up until a year ago)

3. Be conservative when evaluating properties & always include vacancy & capex allowances

Would I ever buy into a HOA again? Yes, they have been very good to us with tax benefits & appreciation (Not so much with cash flow).

Just throwing out my 2 cents into the BP world. Hope it helps someone✌🏼

@Vincent Plant

We used Exeter 1031Exchange and everything went seamless! It was our first 1031 so we had some of the same concerns. We did plenty of due diligence and landed on Exeter and they delivered!

@Abby Shemesh

I appreciate the heads up on the reporting tip! That’s a big factor for us, so we reached out to Madison Management Services and are working to get set up with them now. Thanks for taking the time to respond👊🏻