A homeowner’s association (HOA) is an organization created by a real estate developer to maintain the shared areas of a housing development, such as pools or landscaping.
How is a Homeowner’s Association Funded?
A HOA is typically funded by the payments of dues known as homeowner’s association fees, which are typically collected on a monthly or annual basis. These fees are used to pay for community upkeep and improvements, such as community landscaping, common area maintenance, and other amenities that may be offered in the community including the enforcement of certain neighborhood rules and regulations.
How does a HOA effect Real Estate Investors?
As a real estate investor HOA fees are something you have to account for in your holding cost estimates and there may be additional regulations you have to follow when rehabbing the property.
HOA’s can be beneficial for real estate investors because they can provide important services for the community and can make neighborhoods more desirable for prospective tenants. However, HOAs can be costly and may require investors to pay additional fees, so investors should research the HOA thoroughly before investing in a property governed by a HOA. For example, some HOAs set regulations for exterior property maintenance and may even enforce an architectural style or color palette for homes in the community. Furthermore, HOAs may impose restrictions on how investors can use the property, so investors should be aware of any rules or regulations related to the HOA before investing.
Disclaimer:
These documents and information contained herein are designed to provide accurate and authoritative information with regard to the subject matter being covered. It is given with the understanding that the authors and distributors are not engaged in providing legal, accounting, real estate or other professional advice.
If legal advice or other expert or professional assistance is required,
the services of a competent professional person licensed in your area should be sought.