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Should You Buy a Rental Property with an HOA? - YouTube
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should I buy a rental property with an
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HOA fee that's today's video let's dive
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in hey there equate Morris the president
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of Morris invests longtime real estate
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investor and today we're going to talk
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about homeowners association or HOA
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should you buy a rental property with an
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HOA attached to it well first of all
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what is a homeowner's association well
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it's simply that it's an association a
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group of people that are voted in to
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this office and they basically will run
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an entire condo complex or a small maybe
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gated community you know it really
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depends about grouping of townhomes I
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lived in a single-family house in
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Florida that had a homeowners
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association they controlled you know
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what color the houses were painted they
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controlled whether or not you could put
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up a basketball hoop in the street they
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control whether or not you were able to
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hang flags they controlled who mowed the
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lawn all of that stuff usually is
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controlled by a homeowners association
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and in the condo complex they will be in
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charge of what color the outside of the
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building is they'll be in charge of roof
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maintenance those sorts of things on the
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outside of the property so you'll often
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pay a certain percentage every month for
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your homeowners association dues if you
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live in a condo complex for instance you
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might pay three hundred four hundred
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five hundred even higher I know people
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pay $700 a month or even higher for
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their homeowners association and
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unfortunately that doesn't do anything
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for your equity position you're just
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giving money to an association that's
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painting the outside of your building is
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probably having the lawn mowed it's
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probably maintaining the roof but at the
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end of the day that money is not going
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to serve you in any kind of equitable
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fashion but if the numbers work I still
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always come back to your ROI and I have
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a whole series of videos you can click
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right here and watch them after this
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video on return on investment and how
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you should figure your ROI but again
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that's eating into your ROI but if the
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numbers are so great and you find such a
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kick-ass deal then great who cares about
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the homeowners of
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then you can consider buying the
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property if your numbers still work out
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and you're still getting a great return
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on investment even with that added fee
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with the homeowners association fee so
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that's something to consider another
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downside of homeowners association
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though is the fact that they can change
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the bylaws at any time so for instance
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your condo complex may allow for you to
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buy a condo and rent it out but what
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happens if they change their mind and
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this happens all the time so you are in
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trouble bottom line is unless you
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probably have it rented before the
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bylaws were changed and you might be
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grandfathered in you are not going to if
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let's say that tenant moves out and now
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you have to sign a new lease they're not
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going to let you assign a new lease to a
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new tenant if they've changed the bylaws
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which are now forbidding that condo from
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becoming a rental property place you
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know at the end of the day condo
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complexes and associations they don't
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like to rent they don't want people
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renting it lowers the property value of
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their condo complex so it's something to
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consider if they change the bylaws you
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could be in trouble
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the fee is also pretty high and here is
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the third problem with homeowners
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association it's the assessment now this
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happened to me I bought my very first
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property when I moved to Florida it was
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a little one-bedroom condo that I bought
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my first house that I bought on a golf
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course and I was working in TV at the
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time in Orlando Florida and a great
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little place it was like a built in the
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1970s and I kind of did some renovations
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on the inside and whatnot but when I was
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living there I moved in and right after
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I moved in I didn't know this at all
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they did an assessment of the building
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and suddenly every homeowner in the
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condo complex now had to pay for a total
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roof replacement so I move in and then
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three or four weeks later I find out
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that I have to do they're doing an
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assessment and I'm going to be on the
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hook for like twenty five hundred
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dollars to help redo the whole roof
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great so I just got hit with this
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massive fee that I didn't even know of
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out and they can do that so you mean you
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might be plugging along just fine with a
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tenant your property and then the HOA
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might decide it's painting time we're
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going to paint the outside of the
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building and it's going to cost you
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$5,000 as the homeowner to do that well
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maybe I didn't want to paint it just yet
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maybe it looks just fine to me so HOAs I
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you know I always think that can be a
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little tricky so you need to weigh it on
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a case-by-case basis but again if the
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numbers still work out in your favor and
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you've got a really great deal then go
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for it but again we have to weigh it
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against all of these negatives with
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buying a home owners association those
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are my two cents on HOAs I got bit
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pretty hard by one so that's how I have
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these feelings about it
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please subscribe to our Channel right
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to do is go out there take action get
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off the couch stop hanging around
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buy your first rental property that's
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the way you build legacy well we'll see
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you back here in the next video everyone
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