LandInvestors.com Forums **Ask A Question** Things to consider when dealing with HOA properties?

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    Moli Langi
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    Post count: 11

    I recently sent out over 4000 letters on my first batch of mailers to Mohave county and Lake county, OR. I finally started getting calls and I have one offer accepted and another offer we are negotiating price. Both are in the same HOA, and pay $47 yearly fee for it. Is that fee going to make it hard to sell if I buy these lots? they are both 5 acres and i am buying one for 868 and the other guy wants 1500. and both of their land values are at 3000. What should I be looking for in my due diligence in general to justify purchasing a property with HOA?

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  • Kevin Farrell
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    Post count: 1645
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    Moli – that is a typical HOA fee and it is reasonable. For due diligence you should ask the seller if they have paid all the fees and contact the HOA to verify. Prior to listing the property you should know what the restrictions are because that is what everyone will ask you. Get a copy of the rules from the HOA. Many HOAs now have a website with docs that you can download. Good luck.

    Kevin Farrell - Moderator
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    Moli Langi
    Participant
    Post count: 11
    Pro

    Kevin, thank you! How much harder is it to sell HOA properties typically? Like, should I avoid purchasing these for my first properties?

    Kevin Farrell
    Moderator
    Post count: 1645
    ProAdvanced

    Moli – I think the number of possible buyers is smaller and it can take longer to sell. If they allow mobile homes, then go for it and don’t even hesitate.

    Kevin Farrell - Moderator
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    Moli Langi
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    Post count: 11
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    Kevin, perfect thank you! I’m getting a few more calls and more people sending me their purchase agreements! I’m noticing that some of the lots are valued super cheap (2000) what is the best way to tell them that I don’t want to go thru with purchasing their property?

    Kevin Farrell
    Moderator
    Post count: 1645
    ProAdvanced

    ” . . . I have researched your property and it does not meet our investment criteria because (Reason).”

    Reasons:
    No access
    No legal access
    Flood Zone
    Building setbacks
    Zoning type
    Slope
    etc

    Or you don’t even need a reason. Be very particular which deals you accept on your first couple of mailers. Take the very best ones and let the other ones go. Skip anything that is not owned by the person you are talking to. If they don’t own it, they can’t sell it to you.

    Kevin Farrell - Moderator
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    Schedule a 30 minute call - https://calendly.com/kevin-629

    Moli Langi
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    Post count: 11
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    Kevin, okay thank you so much for answering my questions! I just have one more for now. How important is the land value in making the decision to buy it? For example, if the value is 3000 and I’m buying it for 860 but the market value for properties around the area are a lot higher. Would I list the property after I buy it to be higher or would I list it as 75% of the land value?

    Laurie Phillips
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    Post count: 105
    Pro

    Hi Moli,

    First about the HOA, let me add a few more reasons not to buy.

    – Assessments where they send out an unscheduled bill to all homeowners when they want to spend more money than they have, for instance to repave an existing private road or when the pump goes out on the association swimming pool and they have to dig the whole thing up to fix it.
    – Crazy restrictions on buildings such as limiting paint colors, requiring the gas lamp in front of the house to be lit at all times, mailbox post must be white and a specific shape, the architectural committee has to approve the appearance and placement of backyard play sets, etc. I’m not kidding. All of these restrictions and more apply in the HOA where I live and an employee walks around once a quarter to make sure you comply.

    At least where I live, the buyer has to get a copy of the HOA covenants within three days of making an offer and can cancel the contract if they don’t like what they read. If your buyer is planning to build, they may not want to be restricted to one of three colors for their garage door. So yes, HOAs put off some buyers for good reason. And while you own it, you are obligated to pay the fees and all assessments.

    Second, when you say “land value” are you talking about assessed value or taxed value? If you mean either of these, it’s irrelevant to what the land is worth and we don’t use it for offers or pricing to sell. If you mean something else, tell us more.

    Cheers,
    Laurie

    Kevin Farrell
    Moderator
    Post count: 1645
    ProAdvanced

    Moli – As Laurie mentioned – there is only one value that we are concerned with. That is the Comp value based on what similar land actually sells for in that area. Ignore the Assessor data. I would list for no more than 60% of comp value.

    Kevin Farrell - Moderator
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    Schedule a 30 minute call - https://calendly.com/kevin-629

    Moli Langi
    Participant
    Post count: 11
    Pro

    Kevin and Laurie,

    Thank you both for your wisdom! And I was just talking about the assessed value. So both of your answers helped! Thank you both so much

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