Should You Buy a Rental Property with an HOA?


Should You Buy a Rental Property with an HOA?

Can you make a profitable investment if your rental property has homeowners’ association (HOA) fees? In this video, I’ll explain what an HOA is, the purpose it serves, and how it can affect landlords.

If you’re looking to buy a property within an HOA, this video is for you! As with any real estate investment, you should be thoroughly informed when making your purchase. There are a few details about HOAs that you should know.

In this video, you’ll learn the pros and cons of an HOA. I’ll discuss what to expect from an HOA, and how to plug HOA fees into your ROI formula. I’ll also share how to maintain passive income and positive cash flow within your investment.

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13 Responses to Should You Buy a Rental Property with an HOA?

  1. Mag Kyt

    Oh,Hell No !!! I would stay far,far away from any HOA.

  2. Sean Gallagher

    Nothing but HOA's all over Florida I'm starting to get pissed lol

  3. Sean Gallagher

    Who would be searching this with no clue what an hoa even is lol

  4. AZDuffman

    HOA–JUST SAY NO!

    You touched on the same thing with assessments, but one more thing. If the HOA loses a lawsuit, guess who is on the hook?

    When you go for a mortgage, you will have to get the HOA to fill out a questionaire. HOAs love to charge for this, and love to take their time.

    Watch out for an "HOA of 2" which is where a patio home is titled as a HOA for builder conveniance. You are at the mercy of your neighbor. If you buy one of these, figure out how to get the HOA dissolved and the deed restrictions removed.

    I say never, ever, buy a single family detached home in a HOA. Good news is HOAs usually do not cover older stock at the lower end of the market, the $50K homes.

    Put another way, HOAs are for people for who federal, state, county, and local restrictions are not enough and need more rules to follow.

  5. Steven Van Densen

    no because they can raise the association fee lot more than you can even get for rent and mortgage and second of all they can change for you can not sublease rent the property so do not do it

  6. Dwight Franjul

    What do you consider kick ass return?on an apartment of 125000 with HOA of 300 per month if you pocket 400 would that make sense?

  7. Laurence Stewart

    Due Diligence! You can request a copy of HOA minuets prior to closing. Usually, any discussion of a special assessment is going to be in those minuets.

  8. My Nam

    I subscribed because you seem honest.
    Please keep that up.
    Good info on this vid.

  9. WiseSilverWolf

    3:55 The same thing happened to a friend of mine in Florida, he lost his job and the same month when he lost his job the HOA decided to do an assessment for some maintenance on his property and they charged every unit like $2,000 for the assessment and repairs just as he lost his job. HOA is the devil, they can demand money at any time for any reason and your obligated to give it to them, my friend said he has 2 dead people on the council membership for his HOA but their spouces are making all the decisions for the dead people too.

  10. Aaron

    Hey Clayton, this actually isn't regarding the video, although you've done a fantastic job with you channel! I've been devouring your podcasts lately and in a recent one you mentioned that some of the earliest episodes are the best, but for some reason the earliest ones keep disappearing from the feed whenever a new one gets uploaded. Any idea how I can access those? Thanks and keep up the amazing content!

  11. Sam gpa

    Not every HOA is extreme as you have explained in your video. I have known many HOAs that dont have any and all restrictions you have talked about. I get it. HOA fees are a pain. However, same thing applies when you own a SFH. it's not all walk in the park, when you have to do the lawn, clean the snow, fix the roof leak after a snow worst yet change the roof. And guess what? All these cost money. So it's not always hunky dory with SHF purchase.

  12. corice

    Good video. I would like to add that some HOA want to put restrictions on term of lease, and even approve tenant.

  13. Terry Pearson

    I would steer far away from homeowners associations in this case. I've known too many people that have gotten into very difficult situations when the HOA banned rentals. Another thing to consider is that some associations have bylaws that make it near impossible for the leadership to change. Even though you may have a vote, your vote may never matter. There are numerous parliamentary tricks that can be used to keep a select group in control.

    I've seen the opposite of your roof issue. I know of one HOA that failed to maintain the properties. The city actually came by and condemned every deck in the condo complex because the HOA would not fix structural issues (The money was being spent on unnecessary things). When residents sued the board, they lost (If you thought fighting city hall is hard, try fighting the HOA sometime).

    In the end, the units in the complex lost over half their value and put the owners in very difficult financial situations. There are better properties to be had and such associations give you a very large amount of risk for an at best, average reward.