This week I dug deep into the operations of a local homeowners association (HOA) and I wanted to share what I have learned. HOA’s are formed to help maintain the appearance, up-keep, and desired look of a neighborhood – but there is so much more to these organizations than flower boxes and fences.
I have a client who is trying to buy a townhome in the Des Moines area. Upon considering to make an offer on the home, we dug into the HOA policies. As a buyer of a home that has an HOA, you want to consider the following:
- What are the monthly (or annual) dues and what amenities do they cover?
- Are the dues paid up to date by the seller?
- What are the restrictions on renters (critical for buyers who are purchasing an investment property)!
- Are their any other restrictions that are important to you? Examples include restrictions on the size and number of pets, chain link fences, parking a boat or RV in your driveway (the list can go on, and on)…
- Does the HOA have a healthy reserve of funds on hand (to cover surprise expenses) or to reduce the likelihood of a special assessment (when the homeowners have to pay for a repair).
Many HOA’s are operated by professional management firms. I was fortunate enough to spend a lot of time on the phone with a few HOA managers who got me up to speed on the financial operations and policies of two big associations in Des Moines. I’m grateful I asked so many questions so my buyers feel confident to make an offer! My goal is to give my clients all the information they need to be informed and prepared.