What to look for in an HOAOct 21, 2021
The thought of having an HOA (especially in your rental portfolio) can seem like a bad thing at first. But in reality, an HOA in a build-to-rent community can be a very positive thing for all investors involved.
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Steve Olson: Any other thoughts on HOAs and the complexities of them and what to watch out for? Cause I know chase you're on a, you're on a board right now. Aren't you
Chase Leavitt: Tucker's row in Vineyard, Utah. Okay. Okay. So yeah, I have a couple of thoughts. So when looking into nature way, whether it's fig or a different potential investment that you're looking at.
A couple of things that come to mind, you want to look at, okay, who's in charge of that. HOA, the board, who's running the show, who's making the shots who's, who's voting and, and, and being able to make decisions. I think that's huge. And then also just looking under the hood a little bit, understanding what you're paying per month, understanding what's included in that if there's value that.
I know there's some hos where a builder or a developer or whoever is still getting paid a certain number. And so you gotta, you gotta see if that makes sense. Not all of them, we don't do that. So you gotta, you gotta really look into that and see, okay, I'm paying a hundred, 150, 200 per unit per month. What is that going to so understand the HOA fees, understand if there's value there?
A lot of times there will be, sometimes there's not. Understand if there's an HOA transfer fee transfer fees, aren't the worst, but understand what it is. We do a transfer fee and a lot of that transfer fee goes to building up the interest reserve account, which two it'll help to make it healthy. If we do have a roof that goes out or something that happens.
Right. And so just understand the HOA who's doing what who's running. How much control do you have. So hos they're, they're very important. Um, they can be key if they're set up correctly and they also can, can crush you as well. If they're not.
Steve Olson: Yeah. You have to have a good board of people that care and are going to take time, because, for the most part, most residents don't pay attention until they're mad, right.
About something, it's like politics. Right. We don't want to be involved, but we want to yell at everybody that. Right. So there are probably more good HOA boards than there are politicians...
Sherida Zenger: I think HOAs scare a lot of people, but I don't think it's something that you need to run away from, but as I said, just understand it. Yeah. Know what you're getting into. I think ours are actually really good in the sense of you're getting more bang for your buck. Some of them, you're not.
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