Those who are members of an HOA often pay close attention to following the rules, especially if they are currently living in the home. However, if you invest in property that is under the governance of an HOA, it can be more difficult to keep up with the regulations and make sure your tenants are keeping up with the rules so you don’t get in trouble. After all, it’s the homeowner who is responsible for making sure the HOA regulations are followed precisely. In addition, it’s important to make sure you understand what’s required if you intend to make any changes to the property.
Keep a Record of the Rules
When you first purchase a property, you should get a copy of the HOA rules to read through so you understand what’s expected of you. It’s important to always keep a copy of this list on hand so you can reference it and determine if there is an issue that needs to be addressed with your property. This is especially important if you purchase the property with the intent to flip it and resell it. In this situation, it’s important to know whether you are allowed to park a dumpster at the property for your demolition needs and what types of changes you can make, as well as whether approval is needed before you proceed. If you do intend to rent out the property, be sure you supply your tenants with a copy of the HOA terms, so they are more likely to follow them.
Understand the Fees
Every HOA operates differently so you’ll need to carefully read the terms to ensure you understand how often the fees should be paid and how much they are. Some homeowner’s associations charge the fees once per year, making it easy to pay them and forget about it until the bill comes the following year. However, others may charge on a quarterly or even monthly basis. If you intend to flip and sell the property, you may end up not having to pay much in terms of the HOA, but if you will be renting out the property, this is an obligation you’ll have to meet, whether you require your tenants to pay it or you pay it yourself. It’s important to determine how you will handle this aspect before you make the purchase and begin the process of investing in property.
Make Sure the Home Meets Codes
In many situations, the codes set forth in the HOA guidelines vary from the safety codes put in place by the government when it comes to building a home. This is why it’s critical to read through the HOA documents so you know what you are capable of doing to change the home. In fact, it’s important to remember just because you purchased a home that falls under an HOA doesn’t mean it is currently fully compliant with the regulations. Sometimes homeowners make changes that aren’t approved by the HOA, but they haven’t been uncovered at the time. If the HOA determines the house is outside their regulations while you are in possession of the home, you are the one who will get in trouble, not the previous owner. Therefore, in addition to making sure any future changes you intend to make are in compliance, you should go through the home with a checklist to ensure everything is up to the proper standard, making note of any changes you must make to achieve that goal.
Purchasing an investment property that is covered under an HOA has plenty of advantages, but it can also be difficult to make sure it remains under compliance, especially if you plan to make changes or you will be renting out the property. Be sure you read through your copy of the HOA terms carefully and ask any questions before you buy the property, so you don’t face any surprises later down the road.