Pro’s and Con’s of Buying an Investment Property with a HOA

By Alan Rosenthal

For many who buy a single family residence for investment purposes, getting a letter from the HOA (Home Owners’ Association) can be a hassle. Let’s look at the pros and cons of purchasing within a HOA community.

Pros: Having a rental property within an HOA community is having another set of eyes on your property in addition to the property management company. If you’ve ever lived in a community with an HOA, you know that those eyes can be eagle-like. That can be comforting to many people, especially if the property is not near your residence.

It does seem, quite often, that the association does not do much more then patrol the area and play watch dog. This can be a hassle, if you live in the community, but with a rental property, you have another set of eyes policing your property as well as the neighborhood. This can be quite comforting when the property is out of town or out of state.

A few other benefits are:

You’re not going to have a neighbor paint their house an unpleasant color, since most HOAs have rules regarding changes to the outside of your house.
Your tenant or a neighbor will not be permitted to leave a car on blocks or have a junker car parked week after week in front of a house.
Some communities with HOAs have community parks, playgrounds, swimming pools or other nice amenities to help attract prospective tenants.

Cons: The biggest con to me is to have to deal with the HOA when a tenant does not comply with HOA rules. With my experience, most of the problems that I’ve encountered have been very minor:

The trash cans are not brought back within the proper time frame.
The tenant does not have the front lawn taken care of to the satisfaction of the HOA.
A tenant leaves a portable basketball hoop outside overnight.

If you’re going to purchase an investment property in a HOA community, just be ready to deal with minor hassles like these. In my opinion, the hassle is worth the benefits and I deal with any problems in the following fashion.

If and when a letter of complaint arrives from the HOA, I fax it to the property manager and send an email to let him know it’s on the way. Then put a hard copy in that property’s file and never worry about it again. If a second notice arrives for the same violation, I simply repeat the process. Now if the tenant does not remedy the situation, the next letter will accompany a fine, usually from $50 to $100. I pay the fine, as not to have a bigger problem and fax a copy of the letter along with a copy of the paid check to the property management company. Then they charge the tenant for the fine and the money has shown up on my next statement and check from the property management company. If the tenant does not pay the fine, they are in breach of the lease agreement and subject to eviction.

The biggest key with HOAs is to not let the letters bother you, if they arrive. Let the property management company deal with the tenant and always pay any small fine, if you receive one, so it does not escalate to a bigger problem.

I’ve owned many properties both within and outside of HOA communities. I let the deal speak for itself and will continue to purchase both ways.

To learn more about how Real Estate Investments can help secure your family's financial future, go to Dr. Alan Rosenthal's website at FinancialHealthRealEstate.com where you can find more great investment information. And while you're there, please sign up for your FREE Financial Health Real Estate Starter Package full of tips, newsletters and much more. Plus, you are cordially invited to attend one of his real estate investment workshops by visiting FinancialHealthRealEstate.com/UpcomingEvents.html. For additional information listen to one of Dr. Alan Rosenthal’s investment talks at FinancialHealthRealEstate.com/InvestmentTalks.html.


Home About Dr. Rosenthal Rave Reviews Upcoming Events Credit Repair Solutions Articles and Resources Products Ask Dr. Rosenthal Schedule an Appointment FAQs Blog Contact Us	Pro’s and Con’s of Buying an Investment Property with a HOA By Alan Rosenthal For many who buy a single family residence for investment purposes, getting a letter from the HOA (Home Owners’ Association) can be a hassle. Let’s look at the pros and cons of purchasing within a HOA community. Pros: Having a rental property within an HOA community is having another set of eyes on your property in addition to the property management company. If you’ve ever lived in a community with an HOA, you know that those eyes can be eagle-like. That can be comforting to many people, especially if the property is not near your residence. It does seem, quite often, that the association does not do much more then patrol the area and play watch dog. This can be a hassle, if you live in the community, but with a rental property, you have another set of eyes policing your property as well as the neighborhood. This can be quite comforting when the property is out of town or out of state. A few other benefits are: You’re not going to have a neighbor paint their house an unpleasant color, since most HOAs have rules regarding changes to the outside of your house. Your tenant or a neighbor will not be permitted to leave a car on blocks or have a junker car parked week after week in front of a house. Some communities with HOAs have community parks, playgrounds, swimming pools or other nice amenities to help attract prospective tenants. Cons: The biggest con to me is to have to deal with the HOA when a tenant does not comply with HOA rules. With my experience, most of the problems that I’ve encountered have been very minor: The trash cans are not brought back within the proper time frame. The tenant does not have the front lawn taken care of to the satisfaction of the HOA. A tenant leaves a portable basketball hoop outside overnight. If you’re going to purchase an investment property in a HOA community, just be ready to deal with minor hassles like these. In my opinion, the hassle is worth the benefits and I deal with any problems in the following fashion. If and when a letter of complaint arrives from the HOA, I fax it to the property manager and send an email to let him know it’s on the way. Then put a hard copy in that property’s file and never worry about it again. If a second notice arrives for the same violation, I simply repeat the process. Now if the tenant does not remedy the situation, the next letter will accompany a fine, usually from $50 to $100. I pay the fine, as not to have a bigger problem and fax a copy of the letter along with a copy of the paid check to the property management company. Then they charge the tenant for the fine and the money has shown up on my next statement and check from the property management company. If the tenant does not pay the fine, they are in breach of the lease agreement and subject to eviction. The biggest key with HOAs is to not let the letters bother you, if they arrive. Let the property management company deal with the tenant and always pay any small fine, if you receive one, so it does not escalate to a bigger problem. I’ve owned many properties both within and outside of HOA communities. I let the deal speak for itself and will continue to purchase both ways. To learn more about how Real Estate Investments can help secure your family's financial future, go to Dr. Alan Rosenthal's website at FinancialHealthRealEstate.com where you can find more great investment information. And while you're there, please sign up for your FREE Financial Health Real Estate Starter Package full of tips, newsletters and much more. Plus, you are cordially invited to attend one of his real estate investment workshops by visiting FinancialHealthRealEstate.com/UpcomingEvents.html. For additional information listen to one of Dr. Alan Rosenthal’s investment talks at FinancialHealthRealEstate.com/InvestmentTalks.html. ©2008 Financial Health Real Estate, Inc.