INVESTOR RESOURCES
HOA
OwnerAssociations and Single-Family Rentals
ARE HOA NEIGHBORHOODS DEAL BREAKERS FOR PURCHASING RENTAL PROPERTY?
By Jeff Pepperney, Real Property Management
or some rental property investors, finding out that the
about the Association that is a true deal-breaker, you may also discover that the bargain property you want is still a great prospect, Owners Asso- ciation and all. With the increased number of developments being built and structured as Owner Associations, educating yourself on the way they run before investing is paramount. In some parts of the country, Own- ers Association neighborhoods are extremely common. For example, in Phoenix, one of the fastest-growing housing markets in the nation, Own- ers Associations comprise roughly 70% of all residential properties. However, Phoenix ranks just 10th nationwide for having the most, while Florida has long reigned at #1 in that department. With so many,
there is a great deal of variety in how restrictive the association rules are, how much they charge in owners as- sessments (and when those assess- ments are due [monthly, quarterly, semi-annually or annually]), and how often they resort to community special assessment fees for im- provements or reserves. Some take a very hands-off approach, simply ensuring trash is kept out of front yards and maintaining the roads. For such basic services, an Association like this might charge less than $100 per year. Of course, the more amenities the neighborhood offers, the higher the Owners Association fees tend to be. One recent trend that has proven popular in some areas is the growth of planned communities that feature
F
bargain property you want to buy is governed by an Owners’ Association is an automatic deal-breaker. But while buying single-family rental properties in neighborhoods with Owners’ Associations can present some unique challenges, it doesn’t necessarily need to disqualify an otherwise high-potential rental prop- erty. Owners Associations come in many different shapes and sizes, as do association fees. Because each situation is different, your research on prospective properties located in an Association neighborhood should include comprehensive data on association rules and fees, as well as first-hand experience, if possible. While you may find out something
52 | think realty magazine :: july 2020
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