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Understanding Homeowner Associations (HOA)

Do you own a condo or plan to buy one soon? You’ve got to deal with HOA and their monthly or annual fees that they want you to pay for their services. But first, let’s do a small research and see who are these people and why you should pay them those fees.

Before you start your relationships with HOA, we offer you to start from the basics. Do you actually know what Homeowner Association means? Paying the fees blindly just because you have to is not an option if you are a responsible homeowner who knows how hard the money is earned.

What Is The Homeowner(s) Association?

The planned development is quite popular these days. Whenever you find yourself a home of your dreams in the planned development area, you’ll know for sure that the area, in general, will have its own design standards. PUD can also ensure that you’ll have a well-prepared infrastructure including recreational areas, parks, and commuting options.

Choosing a condo, townhouse or single-family house in a planned development area will obligate you to work side-by-side with the HOA (Homeowner Association). They usually take care of the adjacent territories, lawns and yards. When we talk about condos, you can also be sure that most of the top-notch amenities like gyms, swimming pools, etc. will be well-maintained and available at your disposal thanks to HOA.

So if you’d ask us to shorten the answer to one sentence, we’d say that: HOAs are taking care of house surrounding territories and amenities for a small annual or monthly fee.

HOAs Benefits

What’s good about HOAs? Usually, it depends on how friendly and fair a particular association is doing its business. But in general, the services that they provide are quite important. Dealing with HOA means that:

  • You don’t need to worry about the surrounding territories and their maintenance
  • You can enjoy public amenities like gyms or swimming pools which makes you feel like you own a home in a hotel
  • They will control the architectural standards to ensure that your house will not lose its value by poor design decisions
  • They will make sure that all the homeowners are following the general rules and guidelines
  • Some of HOAs will deal with neighbor-related conflicts to help the sides resolve them

Let’s admit that it’s quite an attractive model. Even though it sounds perfect, it’s time to talk about the fees you’ll have to pay.

What Kind of Fees Are We Talking About?

So you’re now trying to figure out whether it’s actually worth it, and we’re on board with you on that. To help you clear the air, we have a few real-life examples and numbers to give you a brief understanding of the HOA fees.

HOA fees breakdown

Since HOAs tend to determine the fee amount depending on the type and size of the property, so it’s only possible to calculate the so-called ‘average fee amount.’ On average, an owner of the single-family house will pay around $150-$300 on a monthly basis.

Of course, the price can go up or down depending on the amenities HOA offers and, of course, depending on the reserve funding program that they run.

What’s The HOA Fees Reserve Fund?

Your monthly payment towards HOA will be divided into two parts:

  • The first part of this amount will be used for regular maintenance.
  • The other part will be directed to the reserve fund for long-term renovations.

A smart thing to do will be to discuss the renovation plans, the reserve fund vs. monthly maintenance percentage. This will give you a perfect understanding of what you’re actually paying for.

Questions You Should Ask Your HOA Before Investment

We’ve prepared a list of crucial questions to discuss with your HOA before you decide to invest in a property in their development.

  • What Do Current Fees Cover?

You need to understand clearly what you’ll be paying for. You should definitely request a full list of maintenance works and amenities that HOAs currently support.

  • What If I Don’t Pay HOA Fees?

Learn what kind of policies they have about late payments or payment refusals. Some of them may be pretty tough, and the conflict you’ll have to deal with maybe really unpleasant.

  • Are Future Increases Planned?

Learn in advance whether they plan to increase the fees in the nearest future. Some people forget to ask that and find themselves in a situation where their budget gets completely messed up because of unexpected fee increases.

  • Do You Actually Need All of These Amenities?

Some HOAs offer many attractive amenities and charge you a pretty big amount of money for that. While choosing a property for investment, make sure you entirely understand whether you or your potential tenants will need all of these amenities. Evaluate the price vs. value you get.

  • What Are Their General Rules and Restrictions?

All HOAs have their restrictions and rules that you’ll have to follow. It’s smart to research them and request a copy of their guidelines before you make up your mind.

  • What Are The Violation Penalties?

Depending on the restrictions they have, HOA will mention the penalties that you may face if you do not comply with those rules. In case their guidelines do not have this section, request it from them to know your fundamental rights and obligations.

  • Are You Ready to Follow The Exterior Design Guidelines?

That’s more of a question to you rather than to HOA itself. You’ve got to dive deeper into the exterior design guidelines and do a small reality-check with yourself. Are you ready to comply with these rules or are more of a renovation-fan? This really depends on how much you love to customize your house exterior.

Disadvantages of Homeowner Associations

  • Not all of us love monthly fees. Owning a house is great, cause you don’t need to pay anyone a monthly rent. Some HOAs may charge you up to $500; it’s quite tough. However, you can obligate your tenant to be responsible for the HOA fees or split them together.
  • HOA imposes its own rules and regulations. Having too complicated restrictions may really be overwhelming.
  • Defaulting on HOA fees may result in a foreclosure of your mortgage. However, not every state has these rules, so you’ll have to really learn your rights and pay fees on time.

Research the HOA Reputation

So let’s say you already know how much you have to pay, whether they plan to increase the fees and what kind of maintenance jobs they perform. What’s next?

Research the HOA reputation and main guidelines

Your final quest before you make the decision to give it a go is to research this particular HOA reputation. Depending on the HOA board and people working there, they may have a reputation of bad managers loving conflicts.


HOA has its own benefits and flaws. They will charge you monthly fees, provide you with amenities and maintain your surrounding territories. This is a very convenient relationship model that might work for those who want to have a fancy lifestyle with no additional maintenance-related hassle.

The bottom line is you should always make a very deep research prior to investing in a property that has the HOA. Since you’ll be dealing with them in so many ways, you have to be sure that this team will not let you down and will provide good services for their money.

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