Generally speaking, I am not a fan of HOAs. You may have heard me mention in the past to steer clear of investment properties with an HOA. They can be costly, they can cut into your return, and even make you want to pull your hair out.
But should you always turn down a great deal if the property belongs to an HOA? On this episode of Investing in Real Estate, I’m sharing my general philosophy on HOAs and how investors should approach them. Press play to learn more!
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Let’s take a step back really quickly – what is an HOA and what is its purpose? An HOA is a homeowners’ association. If your home belongs to an HOA, you pay a monthly fee to the association that takes care of the community.
When would an HOA make sense for you as an investor? I personally would not be too keen on investing in a property that has a very large HOA monthly fee that pays for the residents cable service or internet service. That is when an HOA does not make sense as an investor.
However, let’s think about a minimal HOA fee, say $30 to $50 a month, that covers maintenance on the surrounding grounds, landscaping, possibly maintaining a park or a pool. You bet I would invest in that. Think about it, wouldn’t that type of community or property attract more tenants? Wouldn’t that entice them to stay longer and be proud of their home and community? Typically this type of community is also in the top school districts and is surrounded by higher priced homes increasing the appreciation on your property. That is when a small HOA fee on an investment property makes sense. Don’t be scared of an HOA, just learn about it and do your due diligence.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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