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At what point is an HOA ( or equivalent) okay?2018-10-04T23:00:52+00:00

LandInvestors.com Forums **Ask A Question** At what point is an HOA ( or equivalent) okay?

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  • Britton Miller
    Participant
    Post count: 3

    I have a response on a parcel but it has an HOA with the annual fee. Does anyone have any guidance on how the fees affect the purchase price. Obviously its better to have none, but at what point does it actually affect people wanting to purchase the property and, more importantly, the purchase price?

    The parcel im considering is $100/yr which basically maintains the roads/gates into the area. This is for a 10ac parcel. Any thoughts? Thanks in advance.

    B.D. Jones
    Participant
    Post count: 49

    In my opinion it all comes down to comps and your buying price. For example, I’m selling an infill lot for $7,500 that I bought for $1k and had $500 in back HOA fees. It is in a flood zone so I walked back my initial offer of $3,200 to $1,000. The HOA issue obviously didn’t matter there (or the flood zone to this investor buyer) but I saw there was a lot of properties selling there. So in your case I’d wonder…Are there any properties selling there and if so at what price? Get it for the right price and sell it for a mark up. In my opinion $100 per year to maintain gates and road isn’t too bad. But comps and your buy price are key.

    Kevin Farrell
    Moderator
    Post count: 690

    Britton – The time to realize that there is an HOA is when you prepare your mailing list and offer amount. If you get one accepted offer with an HOA then you can expect more of them. You mailed to subdivisions with HOAs. That’s OK and $100 is not a deal killer. Now you know to check HOA back fees and back taxes. If money is owed you can put them at the bottom of the stack and get back to them. Go for the low hanging fruit. You want accepted offers with no back taxes or HOA fees. Grab all of those first. You will spend the least time and effort and make the most profit on them.

    Keep up the good work!

    Milan
    Participant
    Post count: 449

    10 acres for right price in attractive area with $100 per year HOA for road maintenance? I would buy that every time. That’s very reasonable HOA.

    Rod Hall
    Participant
    Post count: 231

    I agree. All good advice. Have experienced the same. The HOA can in some cases be a selling point.

    Neil H
    Participant
    Post count: 67

    Also, be aware that there may be a transfer fee (or conveyance processing fee) the HOA charges when ownership changes. For instance, the annual assessment fee may be $100 — but there may also be a one-time conveyance fee of $250 (that relates to the administrative paperwork of changing the name of the owner in their records). This happened to me recently on a property I purchased in Colorado. Unfortunately, it’s not always easy to determine before you buy. Try to contact the HOA in advance and see if these charges exist.

    Paul
    Participant
    Post count: 2

    Neil is right about the transfer fee. I live in a HOA and the HOA management company tries to get a $740 transfer fee for the sale or purchase of any property. I refuse to pay, the HOA will eventually figure out there was a transfer, I tell the new owner to just pay the monthly HOA fees to the old account number until the HOA manager figures out there was a transfer of ownership a year or two later. You need to pay with checks and keep a copy of the payments, since they always claim you didn’t pay. If you don’t have the account number or the amount due just call up the HOA and ask. I have been so successful in avoiding those HOA transfer fees that a few HOA board members have called me to ask how to avoid the fee when they sell their properties.

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