What HOA Fees Cover: Homeowners Association Expenses Explained
What is an HOA?
Are you confused about the meaning of an HOA? HOA is the abbreviation for an association of owners. Many people ask real estate agents how a HOA works and what is it for. Once they understand the purpose of a homeowner’s association, they ask what the HOA fees cover.
An HOA is a group or organization in a neighborhood that establishes and enforces rules and regulations for homes or condos for the benefit of its owners.
Buyers who buy from an HOA become members and must pay membership fees to the association, known as HOA fees.
Before buying from an HOA, it is essential to understand the rules and regulations. You may find that some rules are not the ones you are used to. In fact, if the rules and regulations are overbearing, you might find yourself in the position of not wanting to live in the neighborhood.
On the other hand, you might like the idea of having guidance and consistency. Some of the biggest benefits of living in an HOA are the preservation and maintenance of the homes and neighborhood of the homeowners association.
One of the most common questions home buyers ask themselves is what does HOA cover cover? Let’s take an in-depth look at what you need to know about homeowner association spending.
What are HOA fees?
Homeowners Association Fees are paid to maintain common areas and shared spaces in your home and neighborhood. Being part of a homeowners association makes life a lot simpler than having a house where you are responsible for all maintenance.
So if you have a costly emergency in your house, you need to find the money to fix it. In the HOA, expenses are shared among all members of the community.
An elected committee governs HOA fees in your neighborhood. All expenses must be approved by those residing in the community.
In large HOAs, there is often a paid office team that organizes contractors and pays the bills. Other HOAs can be staffed using external contractors. Sometimes it can be a problem when the job is not finished satisfactorily.
HOA costs depend on the neighborhood and the type of project. It’s not uncommon for HOA fees to vary from a few hundred dollars to $ 1,000 in some upscale environments.
Homeowners Association fees are heavily influenced by the type of benefits offered for living in the community. For example, neighborhoods that offer community pools, gyms, and tennis courts would naturally cost more to maintain and operate.
However, a lower cost townhouse without a pool, gym, or other amenities could be much cheaper. Costs can be as low as $ 100 per month in some parts of the country.
HOA expenses in an upscale downtown area can include a concierge, spa, and gym, making them much more expensive to live in. You could potentially see fees of up to $ 3,000 to $ 4,000 per month. Think of the rich and famous.
How are HOA expenses allocated?
If you live in an HOA within a condo or townhouse complex, you may have underground parking, with one parking space allocated to each apartment in the building. Part of the maintenance with this lifestyle is safety, because we all feel more secure in a secure building.
Garbage collection is another cost, as the garbage has to be taken down to the basement and removed from the building. Companies are often hired to fill this role.
The swimming pool must be maintained, the ground maintained, the plants trimmed and the gym equipment cleaned. While these perks are likely the reasons you bought, the cost may be a bit steep for some retirees. Benefits like these are often standard in retirement communities. It is often a important reason seniors are downsizing in a neighborhood that has an HOA.
Are HOA Homeowners Fees Going Up?
Of course, everything goes up with inflation, and there will always be new projects or remediation work to be done on homes and the neighborhood.
Some HOAs provide for annual increases. Therefore, if you are budgeting for five years, you may want to factor in the cost. This will help you determine what your expenses will be projected for in the future.
It will be essential before buying to take a look at the statutes, rules and regulations of the homeowners association, as well as the latest financial situation. You should make sure you have a contingency for document review in your offer.
What if you can’t afford the HOA fees?
You can be fined or sued, and a lien could be placed on your property. It can also be embarrassing not to pay because in committee meetings they often have non-paying homes on the agenda and discuss strategies for collecting the funds.
HOA expenses are definitely worth paying because in most cases, you get what you pay for. Because the number is powerful, you often get better value with more people paying to get the best deal for your HOA.
Before you move into a condo, townhouse, or house, check how your HOA costs will be allocated and make sure there are no special assessments pending.
Special assessments would mean that you would have to find an additional lump sum to pay for an unforeseen expense. No one likes financial surprises, so it’s essential to research any major expense on the horizon.
How to choose the right HOA neighborhood?
Establish a working relationship with a high level local agent. Once they know what you’re looking for, they’ll help you find your perfect HOA.
The best buying agents will know most of the communities in the city or region. Realtors listen and often hear positive or negative things about a particular neighborhood and the homeowner’s association that goes with it.
Moving into an HOA is a great idea when it comes to a well-oiled machine. Living in an association of owners can make your life easier, especially from a maintenance point of view. If you’re the type of person who travels a lot, this really makes a lot of sense.
First-time home buyers who travel on business might find living in an HOA to be the ideal situation.
Final thoughts on HOAs
In the area you plan to live in, there will hopefully be a wide range of suitable HOAs to choose from. As long as you choose a HOA neighborhood that doesn’t have any weird bylaws or bossy rules, you’ll likely enjoy the living situation.
The key is to do your due diligence. Without it, you could be making a big mistake that you will regret. Take the time and do the appropriate research. Hope you found this HOA guide useful. Now you should know a bit more about what HOA fees cover.