What You Need To Know About HOA Fees When Buying A Home

Posted On Thursday, 13 May 2021 19:49

A Homeowners Association(HOA) is an organization that enforces rules in a certain neighborhood. These rules include homeowners keeping up with the appearance of the neighborhood. The HOA may also take care of common spaces.

A volunteer-led board will usually govern the HOA. The board enforces the rules and restrictions. Residents of the neighborhood that break these rules may be subject to fines, or even legal action. HOAs are becoming more and more common. In fact, the Foundation for Community Association Research found that a quarter of homeowners live in some kind of community association.

Close to 60% of newly built single-family homes are in HOAs. Of the homes that are in subdivisions, 80% of them are a part of an HOA. Homes in HOAs are valued 4% higher than homes that are not in HOAs. A real estate agent in Dayton Ohio is aware of the growing popularity of HOAs.

What Are The Benefits Of An HOA?

A neighborhood that is run by an HOA is usually well maintained. The HOA keeps up the common areas in the neighborhood. They also enforce rules for the residents to maintain the look of the neighborhood. This aspect is going to preserve the property values in the neighborhood.

Another benefit of the HOA is you may not need to do yard work. An HOA can hire a lawn service to mow your lawn for you. They will also take care of any snow that needs to be shoveled. When you think of the time spent to do yard upkeep, you may find the HOA fee worth paying.

HOAs sometimes offer amenities. Your neighborhood may offer exclusive access to a gym or pool. Another amenity is living in a gated community. A gated community offers added security for your home and property.

What Are The Downsides Of An HOA?

HOAs are restrictive. If you don't like someone to dictate what color you can paint your house, an HOA may not be for you. Sometimes the HOA can be very aggressive in its enforcement of rules and regulations. The HOA fees could be too expensive for your budget. There may be another HOA that has more affordable fees. The HOA may not be running properly.

What About HOA Fees?

Buying a home in an HOA means that you will have to pay fees to the association on a monthly basis. The fees are used for amenities in the neighborhood as well as any maintenance that needs to be done.

Fees usually cover basic upkeep. The HOA maintains common areas like lawns in between townhomes. They also maintain parks and other amenities within the neighborhood. They usually hire a lawn service to keep the grass cut.

Your HOA could also cover the maintenance of buildings in a townhouse community. Maintenance can involve the roof and gutters. HOAs will also put aside some money to cover any major projects that may come upon the horizon. An HOA will save money for years to take care of these big projects.

If your neighborhood has security, a pool, or a clubhouse, you will have to cover these costs through your HOA fees. You may also have to pay for the HOA's insurance policy as a way to cover common areas.

HOA fees can cost two hundred to a few thousand dollars a month. HOA fees, on average, are $300 a month. In certain states, the fees are higher. For example, in New York, the average is close to $600 a month. HOA fees can increase every year or every few years.

If you are considering buying a home in an HOA, have a good look at all the documents before closing on the deal. These documents include financial disclosures. Reviewing the board meeting minutes are also a good way to gain some insight into the finances of the HOA. You can find out how much money the HOA has in reserves. The reserve money indicates whether or not the HOA can take care of planned and unplanned repairs. It is also good to find out if the HOA has some legal issues. You can also find out how often the HOA raises fees.

Before signing on the dotted line, you also want to review any rules or restrictions the HOA has should you choose to purchase the house. These rules are referred to as Covenants, Conditions & Restrictions (CC&R).

The regulations may include your house's exterior. Most HOAs require that the exterior of your home matches the rest of the neighborhood. The HOA may specify the type of shingles and paint colors that are allowed for the exterior of your home. The HOA may also have rules about the kind of fence you can get for your yard.

Some of the restrictions can also include landscaping. HOAs can also limit the number of vehicles you can park outside your house. There may also be rules about how many pets you can have and limits on their sizes. If you want to purchase an investment property to rent out in an HOA, there may be restrictions on that.

Can HOA Fees Be Circumvented?

If the home you are seeking to purchase is in an HOA, you will have to pay the fees. You may be able to avoid them if the HOA is voluntary. So, if you can opt-out of using certain amenities like the pool or the gym, you may not have to pay HOA fees.

Financial hardships happen everyday. If after buying your home in an HOA you lose your job, you can negotiate with the HOA. However, they may enforce late fees or put a lien on your house. The lien will force you to pay the HOA fees before you can sell the house.

Can HOA Fees Be Deducted From Taxes?

HOA fees are not tax exempt for primary residences. However, if you have a rental property, the HOA fees can be tax deducted. The amount that is tax-deductible depends on if you are renting out the property for the whole year or for a part of the year.

The Wrap Up

Homeowners Associations are becoming more and more common. They offer amenities and services that improve the quality of life of residents. They also have rules and restrictions that you have to follow. You also have to consider the fees that come with living in an HOA neighborhood. A real estate agent in Dayton Ohio can help you find an HOA neighborhood that suits your needs.

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