Pros:
The fees paid to a Homeowners Association generally go towards services like security, landscaping, and grounds maintenance.
HOAs have rules to prevent property neglect which would lead to neighborhood decline. This helps maintain the value of your Rental Property.
Cons:
HOAs can limit your Properties’ Rental Potential by capping the amount of properties on site that are rentals, or having strict requirements for applicants. Others may have a minimum rental lease period or minimum years of ownership prior to renting.
The cost of a major repair or replacement would be passed along to all owners in the form of a special assessment. Each owner would be charged an additional fee per month to cover this cost. This would be in addition to the normal monthly HOA dues. For example, while Landscaping may be included in your HOA fees, the removal of a dangerous tree typically is not and would require a special assessment.
If you are a potential buyer, be sure to do your homework regarding the HOA. Speak to current owners about how well the HOA manages the community as well as community funds. Avoid older properties because there may be major maintenance costs down the road not covered by the HOA. If you have any questions about a potential rental property purchase, give us a call and we would be happy to assist you.
