Is it good to buy in a HOA?

A HOA, or Homeowners Association, is essentially the neighborhood’s gatekeeper—and it can be a mixed bag. 

Roughly ⅓ of the U.S. lives in an HOA, and that number is even larger in states like Florida, Colorado, and California. And, if you’re interested in a newer home, there’s a very high chance it’ll be in an HOA—83% of new construction homes in 2023 were part of an HOA community. 

So, they’re popular—and as development expands in the U.S. in the coming years, they’ll likely be even more popular. And if you’re looking to buy a condo with low interest rates, HOA fees are a given.

What does an HOA do, exactly?

HOAs are in charge of keeping your community looking sharp. They handle shared spaces like parks and pools, and make sure everyone’s property meets certain standards. Sounds good, right? But remember, their idea of “standards” can sometimes be pretty restrictive.

Buy a home in an HOA-controlled area, and you’re automatically signed up—along with the obligation to pay HOA fees. No opting out. 

They collect those fees, oversee common areas, and enforce the neighborhood rules. HOAs set the rules for everything from lawn care to exterior home changes. Want to paint your house a bold color or build a new shed? You’ll likely need their approval, which can sometimes feel like a hassle.

In short, while HOAs aim to keep the community in good shape, they also come with a set of rules and fees that can feel intrusive. It’s worth considering how their control might impact your homeownership experience.

How much are HOA fees?

HOA fees are your regular payments to the Homeowners Association, and they can hit your wallet hard. They can range from a few dollars to several hundred bucks a month, and you’ll typically be billed monthly, quarterly, or annually. The kicker? These fees are non-negotiable. 

If you’re looking at how much home you can afford, you’ll want to factor the HOA fees into the overall cost of ownership (along with the high standards of maintenance, like lawn care, which could be an extra few hundred dollars every month). 

You’re also paying for routine maintenance, but don’t be surprised if you’re slapped with additional costs like special assessments for major repairs. 

Bottom line: HOA fees are a hefty investment in maintaining the community, and they can feel like a constant financial strain with a lot of strings attached.

What’s wrong with HOAs?

HOAs can be a real pain for a few reasons. First off, they’re notorious for their nitpicky rules about everything from lawn care to the color of your front door. If you like having a say in how your property looks and functions, an HOA might feel like a big intrusion on your freedom.

Then there’s the issue of those regular fees. They can be pretty hefty and there’s no wiggle room. Even if you’re not happy with what you’re getting for your money, you’re still shelling out those payments. Miss a payment and you could face penalties or even foreclosure, which is a whole other nightmare.

Another beef homeowner’s take up with HOA’s is the inconsistency in how rules are enforced. What one neighbor gets away with might not fly for you, and the whole process for dealing with disputes can be a slow, bureaucratic mess.

Who are HOAs a good option for? 

HOAs can be a solid choice for certain folks. If you’re elderly or simply don’t have the time or inclination for physical upkeep, an HOA can be a lifesaver. They take care of landscaping, maintenance, and other chores, letting you enjoy your home without the hassle. It’s also a great option for a second residence or vacation home—one less thing to manage when you’re not around.

However, be cautious if you’re considering renting out the property. Many HOAs have strict rules about rentals, so check the regulations before you buy. 

Are condos the only home type that have HOAs? 

Nope, condos aren’t the only homes with HOAs. While you often see HOAs tied to condos, they’re also common in single-family neighborhoods, townhomes, and even brand-new constructions. These days, many new developments come with their own HOA, so don’t assume you’re off the hook just because you’re not buying a condo.

What services or amenities do HOA fees cover?

Here’s a rundown of what those fees might include:

1. Maintenance and Repairs: This includes upkeep of common areas, lawn care, and repairs. Think of it as the cost of keeping the community looking sharp and functioning smoothly.
2. Amenities: Fees often grant access to community features like pools, fitness centers, clubhouses, and tennis courts. These amenities can enhance your lifestyle and offer added convenience.
3. Security: If your community has gated access, security patrols, or surveillance cameras, your fees may cover these safety features. It’s all about ensuring your neighborhood is secure and well-monitored.
4. Utilities: Some HOAs include utilities like water, trash removal, or even basic cable in their fees. This can simplify your monthly budgeting by consolidating some of your household expenses.
5. Insurance: HOA fees often cover insurance for common areas and exterior elements of homes, though not individual home insurance. This can protect shared spaces and keep things running smoothly.
6. Management and Administration: This covers the costs of managing the HOA, including property management, administrative tasks, and legal fees. It’s essential for the day-to-day operations and decision-making within the community.

Not all HOA fees go towards the stuff you’d expect. Sometimes, your money might be spent on things you didn’t sign up for. For example, some HOAs blow cash on community parties that might not interest you or on pet waste stations that seem unnecessary. Fees could also fund holiday decorations, homeowner workshops, or community gardens—nice, but not everyone’s cup of tea. In some cases, your money might cover shuttle services or quirky perks like tool libraries. So, while some expenses are useful, others might just seem like wasted cash.

What is the process for appealing or changing HOA rules?

Appealing or changing HOA rules isn’t a quick fix, but here’s how to get it done. First, dive into the HOA’s governing documents—know the rules and the procedure for changes. Then, get other homeowners on your side; a solid group makes a bigger impact. Next, draft a clear, detailed proposal outlining what you want to change and why it’s beneficial. Submit this proposal according to the HOA’s process and show up at meetings to pitch your case. Be ready to answer questions and deal with objections. If you face resistance, keep pushing—rally more support and keep the pressure on. Understand the voting process and make sure you’re prepared for it. Persistence is key—stay focused and don’t let setbacks derail your efforts.

If the HOA board’s decision isn’t favorable, you might have to escalate the issue. This could involve mediation or arbitration, which are less formal than court and can be a quicker way to resolve disputes. In some cases, you might need to take legal action, especially if the dispute involves significant legal or financial issues. Throughout the process, keep detailed records of all communications and decisions. It’s crucial to follow the HOA’s procedures to avoid further complications and get the issue resolved efficiently.

Can HOA fees increase, and if so, how often?

Yes, HOA fees can increase, and they often do. The frequency and extent of increases depend on the HOA’s governing documents, but many associations review fees every year. 

Look at your HOA’s budget and financial statements to see how fees have changed in the past and get a sense of potential future hikes. Keep in mind that while some increases are reasonable to cover inflation or unexpected costs, frequent or steep hikes can be a red flag. Always stay informed and involved to avoid surprises.

What should I review in the HOA’s financial statements before buying?

Before you commit to an HOA, dive into their financial statements with a sharp eye. Start by checking the budget—see where the money’s going and if they’re spending it wisely. The reserve fund is crucial; make sure it’s not just a token amount but a solid cushion for future big-ticket repairs. Scan the income and expenses for any sketchy patterns or high admin costs. Watch out for high delinquency rates—lots of unpaid fees can spell trouble and lead to unexpected hikes. Look for recent special assessments, which could mean big, sudden costs. And if there’s an audit report available, dig into it for any financial red flags. This will give you a clear picture of the HOA’s financial health and help you avoid getting stuck with unpleasant surprises.

If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.