amenities like a large and luxurious community center, exercise equip- ment, and a large community pool. For access to these amenities, resi- dents often pay anywhere from $100 to $1000 per month in dues. While Owners Association assessments in single-family neighborhoods tend to be fairly reasonable and based on how many common area maintenance and other services the association provides, there are cases where fees have reached $2,500 a month or more. While such extremes are rare, an- other important piece of information to check for is how often the Owners Association imposes special assess- ment fees. Most have the power to charge property owners additional fees for neighborhood improvements or emergencies. In such cases, the costs of sewer upgrades, a new park, or other elements are passed on to property owners in the neighbor- hood. While there’s no sure way to know if or when an Owners Association will charge additional fees, by asking specifically about the amount and fre - quency of assessment fees, you can get a sense of whether such fees will
become an issue for your cash flows. One great way to get a clear sense of the relationship between the Own- ers Association and the neighbor- hood they monitor is to read through the association’s governing docu- ments, and obtain the Owners Asso- ciation financial documents. While it may not be fun, reading through an Owners Association Covenants, Conditions & Restrictions (CC&R’s) can help you determine how restric- tive it will be about issues of property maintenance, resident behavior, and other matters, such as who is able to use the Association’s facilities, etc. You should also learn as much as you can about how it is run and how board members are elected. Infight - ing in Owners Association boards is not uncommon, and dealing with a dysfunctional board can be extreme- ly difficult. Finally, look through the Association’s financial documents for any unusual expenditures and their money management patterns. A well-run Owners Association should be able to fund itself and all required services with regular monthly fees. If cash outflows are exceeding the inflows, that might be a sign of trouble.
Finally, don’t forget to talk to the neighbors themselves. The property owners are your best source of infor- mation about how easy (or difficult) dealing with the Association will be. While not everyone in the same neighborhood will have identical experiences, a large number of com- plaints or negative interactions may be a sign of an Association that is not handling themselves very well. The last thing a rental property investor needs is to get sucked into a drawn- out battle with the neighborhood Association. In the end, otherwise solid rent- al properties with a neighborhood Owners Association don’t need to be automatically crossed off your prospects list. But each situation is different, and so before making any purchase decisions, it’s important to have all the facts. Gathering infor- mation is one thing that Real Proper- ty Management can help you with. We offer rental property investors up-to-date market data and local expertise to help make your deci- sion process more efficient. To learn more about what we can offer you, contact your nearest Real Property Management office. •
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