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The HOA Reality Check · Military Real Estate Rookie Show

• 0:00
  SPEAKER_00: Hello everyone.
• 0:01
  SPEAKER_00: Welcome to the Military Real Estate Rookie Show.
• 0:04
  SPEAKER_00: I'm your host, Freena.
• 0:05
  SPEAKER_00: Today's topic is a very good topic.
• 0:08
  SPEAKER_00: It's called What They Don't Tell You Before You Buy in HOA.
• 0:14
  SPEAKER_00: This is a really good topic because a lot of folks just think about, you know, how much the HOP costs a month or a year.
• 0:24
  SPEAKER_00: But you really should dig a little detail when it comes to HOA because sometimes it can be a blessing and also be a curse at the same time.
• 0:33
  SPEAKER_00: So you found the house, the kitchen is beautiful, the backyard is perfect, the neighborhood looks amazing.
• 0:41
  SPEAKER_00: And then you hear those three-letter words, HOA.
• 0:45
  SPEAKER_00: And suddenly you're thinking, wait, how much is the HOA?
• 0:50
  SPEAKER_00: But here's the bigger question, as I said before.
• 0:53
  SPEAKER_00: What does the HOA actually control?
• 0:57
  SPEAKER_00: Because an HOA isn't just about paying a monthly fee, depending on the community.
• 1:04
  SPEAKER_00: There can be rules about what you can do at your house, what can you do with your yard, parking, pets, rentals, exterior changes, fences, paint colors, short-term rentals, and much more.
• 1:20
  SPEAKER_00: So there's a lot that goes on regarding the HOA.
• 1:24
  SPEAKER_00: And then there's the phrase every homeowner hopes they never hear special assessments.
• 1:31
  SPEAKER_00: So welcome back to the Military Real Estate Rookie Show, the podcast where we break down real estate in the plain language from military members, veterans, first-time homebuyers, investors, and anyone trying to understand this crazy world of real estate.
• 1:46
  SPEAKER_00: I'm your host, Rena Barron, and today we're talking about HOAs.
• 1:50
  SPEAKER_00: And I'm going to tell you what you should investigate before you buy into an HOA property.
• 1:57
  SPEAKER_00: Let's get into it.
• 1:58
  SPEAKER_00: All right.
• 1:59
  SPEAKER_00: So what is an HOA?
• 2:01
  SPEAKER_00: So an HOA stands for Home Association.
• 2:05
  SPEAKER_00: And this can generally stand for an HOA, is generally an organization created to manage and govern a residential community according to its governing documents.
• 2:17
  SPEAKER_00: And homeowners in the community may be required to pay assessments or dues.
• 2:24
  SPEAKER_00: Those funds can help pay for things such as common area maintenance, landscaping, amenities, community facilities, insurance for certain common areas, maintenance and repairs, and administrative expenses.
• 2:42
  SPEAKER_00: But here's where home buyers need to pay attention.
• 2:46
  SPEAKER_00: Every HOA is different.
• 2:48
  SPEAKER_00: Yes, every HOA is very different.
• 2:51
  SPEAKER_00: Don't assume the HOA at one neighborhood operates the same as across the world because no, every home resident community is very different.
• 3:02
  SPEAKER_00: Read your documents, know the bylaws, ask questions, understand what you're buying into.
• 3:08
  SPEAKER_00: You know, you can even go on social media.
• 3:11
  SPEAKER_00: They have Facebook pages where the home association has created.
• 3:15
  SPEAKER_00: You know, how much is the HOA?
• 3:19
  SPEAKER_00: Now, this is usually the first question the buyer asks, what is the HOA fee?
• 3:24
  SPEAKER_00: Let's say the HO fee is$50 a month.
• 3:28
  SPEAKER_00: You're thinking, that's nothing.
• 3:30
  SPEAKER_00: Okay, but what if another community is$250 a month?
• 3:34
  SPEAKER_00: Now you're thinking that's expensive, right?
• 3:38
  SPEAKER_00: But wait, what does an HOA provide?
• 3:41
  SPEAKER_00: The HOA for the$50 may provide something very little, but the$250 may include everything: landscaping, pool, fitness center, clubhouse, security features, exterior maintenance, uh, community amenities, gym.
• 3:58
  SPEAKER_00: So don't judge an HOA strictly by the monthly number as what you're getting for that number.
• 4:06
  SPEAKER_00: Now, the HOA fees can change.
• 4:08
  SPEAKER_00: Here's something buyers need to understand.
• 4:11
  SPEAKER_00: Today's HOA fee may not be tomorrow's HOA fee.
• 4:17
  SPEAKER_00: An association expenses can change.
• 4:21
  SPEAKER_00: Insurance costs may change, you know, it could be a random uh maintenance cost change.
• 4:26
  SPEAKER_00: Reserve needs can change, right?
• 4:29
  SPEAKER_00: Your reserve needs of the HOA may change.
• 4:32
  SPEAKER_00: And the association may increase assessments when permitting under its governing documents and applicable loss.
• 4:39
  SPEAKER_00: So don't just ask how much is the HOA.
• 4:44
  SPEAKER_00: You need to ask, what has the HOA charged historically?
• 4:48
  SPEAKER_00: Then are they in any anticipated increases?
• 4:52
  SPEAKER_00: And that goes into the special assessments for the HOA.
• 4:57
  SPEAKER_00: Now let's talk about the phrase that can make homeowners a little nervous: special assessments.
• 5:03
  SPEAKER_00: Imagine you buy your beautiful home, you move in, you're enjoying your new kitchen, then you get a letter.
• 5:11
  SPEAKER_00: Dear homeowner, the community needs a new roof for the clubhouse and major repairs to the pool.
• 5:18
  SPEAKER_00: And then you see your share would be$4,500.
• 5:22
  SPEAKER_00: And you're like, what?
• 5:24
  SPEAKER_00: Or$8,000 or$10,000, depending on the association and its project.
• 5:31
  SPEAKER_00: Now you're saying, wait a minute, I agree only to$250 a month.
• 5:35
  SPEAKER_00: Now you're raising it to like all those$10,000.
• 5:38
  SPEAKER_00: I'm just, it's exaggerating, but it's true, it can change.
• 5:42
  SPEAKER_00: Wait a minute.
• 5:43
  SPEAKER_00: This is why buyers should investigate whether there are current or anticipated special assessments and review the association financial information and governing documents.
• 5:55
  SPEAKER_00: You can request this.
• 5:56
  SPEAKER_00: That's why it's important to ask for this because once you sign and you own the property, you have to go again with their bylaws.
• 6:05
  SPEAKER_00: Don't just ask about the monthly HOA.
• 6:08
  SPEAKER_00: You ask about the bylaws and the documentation that goes along with the HOA.
• 6:13
  SPEAKER_00: Are there special assessments?
• 6:16
  SPEAKER_00: You know, what other assessments that may be included in this monthly fee?
• 6:21
  SPEAKER_00: Do you see any changes happening in the next three to six months?
• 6:24
  SPEAKER_00: You know, so read the HOA documents and your realtor, or they could also request that from the listening agent and they can give it to you.
• 6:34
  SPEAKER_00: Now, here's where I know I'm going to lose some people, okay?
• 6:38
  SPEAKER_00: Reading the HOA documents because somebody is going to say, Rena, that's a lot of paperwork.
• 6:46
  SPEAKER_00: Yes, it is.
• 6:47
  SPEAKER_00: But at the end of the day, it may save you hundreds of millions of dollars.
• 6:52
  SPEAKER_00: You know, yes, it is.
• 6:53
  SPEAKER_00: It is.
• 6:54
  SPEAKER_00: But you are potentially making one of the biggest purchases of your life.
• 6:59
  SPEAKER_00: Read the documents, understand them, reach out to the home association.
• 7:04
  SPEAKER_00: You know, those are some things that you may you may want to do.
• 7:07
  SPEAKER_00: Do not reach out to the seller, but I would reach out to the HOA to get the actual real deal.
• 7:13
  SPEAKER_00: You know, depending on the community, documents may include declaration, covenants, conditions, restrictions, you know, bylaws, rules and regulations, budget, financial obligations, financial statements, meeting information, board assessments, board information, assessment information, other association documents that may be uh valuable to you when you're trying to buy this property.
• 7:37
  SPEAKER_00: You don't have to become an HOA attorney overnight, but you need to understand the rules that could affect your home ownership.
• 7:46
  SPEAKER_00: And if something is legally confusing or concerning, ask a qualified attorney.
• 7:52
  SPEAKER_00: You know, so those are some tips that you may want to have when it comes to reading those documents.
• 7:58
  SPEAKER_00: Now, another interest, can I rent out my house?
• 8:02
  SPEAKER_00: Now we're getting to something very important for my investors.
• 8:07
  SPEAKER_00: Let's say you're buying a property today and you think I lived there for a few years and just rented out.
• 8:13
  SPEAKER_00: You know, sounds like a plan, but then you discover the HOA has rental restrictions.
• 8:19
  SPEAKER_00: Uh-huh.
• 8:20
  SPEAKER_00: Yeah.
• 8:21
  SPEAKER_00: So associations may have restrictions concerning rentals, including limits, approval requirements, minimal lease terms, and other rules.
• 8:29
  SPEAKER_00: But it's good to read that HOA document so you won't get surprised that you can't or you have these rental restrictions that you were not, you know, told.
• 8:38
  SPEAKER_00: So if you're thinking about a short-term rental, you definitely need to investigate these rules.
• 8:43
  SPEAKER_00: Don't assume it's my house, I can Airbnb it.
• 8:46
  SPEAKER_00: No, it doesn't work like that, especially in associate home associations.
• 8:50
  SPEAKER_00: They have rental restrictions, and you have to read those papers.
• 8:53
  SPEAKER_00: And that's not necessarily how it works.
• 8:55
  SPEAKER_00: You have to look at the HOR rules.
• 8:57
  SPEAKER_00: Like I said, local regulation, zoning laws.
• 9:00
  SPEAKER_00: Call the local zoning department in the county and lease restrictions and other requirements before you assume that you can go ahead and rent this out.
• 9:12
  SPEAKER_00: Do your homework before you buy.
• 9:14
  SPEAKER_00: Okay?
• 9:16
  SPEAKER_00: So pet rules.
• 9:17
  SPEAKER_00: Now let's talk about something people don't think about until they get in the house.
• 9:23
  SPEAKER_00: Now we know we love our pets.
• 9:25
  SPEAKER_00: Maybe you have a dog, maybe you have two, maybe you have a big dog, maybe have a breed that's subject to restrictions under the association.
• 9:34
  SPEAKER_00: Maybe there is a limit on the number of pets that you may have.
• 9:38
  SPEAKER_00: Maybe there are rules about where pets can be walked.
• 9:43
  SPEAKER_00: Yeah, it's really serious.
• 9:45
  SPEAKER_00: And maybe there are lease requirements if you're bringing up your four-legged family member with you.
• 9:52
  SPEAKER_00: Check the HOA rules because your dog don't doesn't because your dog doesn't care about the HOA, the HOA cares about your dogs.
• 10:02
  SPEAKER_00: Now that's because the HOA might care about how big your dog is, the size, and have those restrictions on pets.
• 10:12
  SPEAKER_00: So you have to read the HOA documents by laws.
• 10:16
  SPEAKER_00: Now let's talk about parking.
• 10:17
  SPEAKER_00: Parking is a big one because most homeowners have more than one car.
• 10:22
  SPEAKER_00: So they may not allow you to park on the side of the street, or you have to park a certain way in your driveway.
• 10:29
  SPEAKER_00: Like it gets crazy.
• 10:30
  SPEAKER_00: You know, parking, I would say you need to know what the HOA requires.
• 10:35
  SPEAKER_00: Two cars, a truck, a motorcycle, do allow boats, an RV.
• 10:40
  SPEAKER_00: Like if you're thinking I got plenty of room, no, you need to know those restrictions regarding your parking and your cars.
• 10:47
  SPEAKER_00: So some communities may have rules concerning street parking, like I said, guest parking.
• 10:52
  SPEAKER_00: You might have to park somewhere else, you know, because you can't park on the the side of the road.
• 10:58
  SPEAKER_00: Commercial vehicles, boats, RVs, are they allowed?
• 11:01
  SPEAKER_00: Trailers, you know, garage uses, driving, driveway parking, you know.
• 11:06
  SPEAKER_00: How how do you supposed to drive your park it park away?
• 11:09
  SPEAKER_00: You know, if you're supposed to just drive into the garage, you know.
• 11:12
  SPEAKER_00: So if you have a big truck or RV, ask before you buy.
• 11:16
  SPEAKER_00: That is very good.
• 11:17
  SPEAKER_00: Now, can I paint my house?
• 11:19
  SPEAKER_00: You finally buy the house, you decide it.
• 11:21
  SPEAKER_00: I'm gonna paint my house.
• 11:23
  SPEAKER_00: I'm gonna paint the front door purple.
• 11:25
  SPEAKER_00: Okay, excuse me.
• 11:27
  SPEAKER_00: Now you're confused.
• 11:28
  SPEAKER_00: But depending on the community, there may be architectural or exterior changes uh requirements.
• 11:34
  SPEAKER_00: You get this letter in the mail and it says you're in violation because you painted your house purple.
• 11:39
  SPEAKER_00: There are there may be approval procedures for such things.
• 11:43
  SPEAKER_00: You may not be aware of it.
• 11:44
  SPEAKER_00: That's why it's good to read your HLA documents, okay?
• 11:48
  SPEAKER_00: And it may concern the exterior painting, fences, sheds, landscaping, solar installations, additions to home, knock, knock, additions to homes, and exterior structures, driveways, windows.
• 12:04
  SPEAKER_00: You may want to build a patio outside, and you still got to ask the HOA about the patio, and you decide to build it on your own, you may be fine, thousands of dollars.
• 12:13
  SPEAKER_00: Okay.
• 12:14
  SPEAKER_00: The point is that HOAs are not automatically bad, but you just need to check to make sure that this is a good fit for you and know the rules before you buy the home in an HOA.
• 12:28
  SPEAKER_00: Now, who runs the HOA?
• 12:30
  SPEAKER_00: There, this is another question buyers should ask.
• 12:33
  SPEAKER_00: Who's exactly running the HOA?
• 12:36
  SPEAKER_00: Who actually managed the association?
• 12:39
  SPEAKER_00: Volunteer homeowners, a professional management company, a board, some combination of both.
• 12:47
  SPEAKER_00: And here's another question: how financially healthy is this association?
• 12:52
  SPEAKER_00: Because I found that a lot of HOA drama concerns is mostly financial.
• 12:59
  SPEAKER_00: Look at the association financial information and reserves when available, because an HOA can have a beautiful landscape and a gorgeous interest, but that doesn't necessarily tell you that the association is financially healthy.
• 13:15
  SPEAKER_00: So you need to read it, you need to discuss it, you know, and figure out if they are truly a financial healthy HOA.
• 13:23
  SPEAKER_00: Now, how do you know when to ask about that HOA financial help?
• 13:29
  SPEAKER_00: This is where buyers need to put on their investment hats.
• 13:32
  SPEAKER_00: Look at such things as when you read the HOA document, the budget, how much money comes in, and how much money goes out.
• 13:41
  SPEAKER_00: So reserve.
• 13:42
  SPEAKER_00: Does the association have money set aside for major expenses, delinquencies?
• 13:48
  SPEAKER_00: Are they delinquent on anything?
• 13:50
  SPEAKER_00: Are a lot of homeowners behind assessments, you know, are they paying their HOA fees?
• 13:55
  SPEAKER_00: Because this can be uh your bill, you know, technically.
• 13:59
  SPEAKER_00: So the special assessments are you currently pending major repairs in the community?
• 14:05
  SPEAKER_00: Are there major projects coming?
• 14:08
  SPEAKER_00: Do you need to become an accountant to learn this?
• 14:11
  SPEAKER_00: You don't need to.
• 14:12
  SPEAKER_00: You don't, you don't need to be an accountant, but some of these things will stick out to you.
• 14:17
  SPEAKER_00: But you need to understand the financial picture because you don't want to walk into a situation where the HRA is not only having drama, but they're having financial problems as well.
• 14:29
  SPEAKER_00: So, from the military perspective, now let's talk to you all.
• 14:34
  SPEAKER_00: This is especially important if you're buying a house while you're serving, because your plans can change at any time.
• 14:40
  SPEAKER_00: You receive orders, you may relocate, you may deploy, you may decide to rent the property, you may even sell it.
• 14:48
  SPEAKER_00: So, because buying in an HOA asks, if I get orders in two years, can I rent this property out?
• 14:55
  SPEAKER_00: That's a great question to ask when you buy into a HOA.
• 14:59
  SPEAKER_00: Because if the HOA has rental restrictions, that could affect you financially.
• 15:05
  SPEAKER_00: Military real estate isn't just can I afford the house?
• 15:08
  SPEAKER_00: It is learning the ins and outs of the little bitty-inty things that could cause you financial damage.
• 15:14
  SPEAKER_00: So it's also how flexible is the property if my life changes.
• 15:19
  SPEAKER_00: Those are some things that you need to ask regards to HOA.
• 15:23
  SPEAKER_00: You know, I would say if HOA is it good or bad.
• 15:27
  SPEAKER_00: Now, I want to make something very clear, right?
• 15:30
  SPEAKER_00: I'm not here to tell you HOAs are bad.
• 15:33
  SPEAKER_00: No, I'm not.
• 15:34
  SPEAKER_00: That's not true.
• 15:36
  SPEAKER_00: An HOA can have real benefits, it can help maintain common areas, it can provide amenities, it can establish community standards, it can help maintain the appearance of the neighborhood.
• 15:48
  SPEAKER_00: And some homeowners love HOAs, some homeowners do not because they want to have the flexibility to do what they want to do when they wanted to do it.
• 15:57
  SPEAKER_00: And that's okay.
• 15:58
  SPEAKER_00: The real question is is this HOA right for you when you're buying a home?
• 16:04
  SPEAKER_00: Does it fit into your situation?
• 16:06
  SPEAKER_00: You know, so I created this HOA rookie checklist.
• 16:10
  SPEAKER_00: So before you buy a property with the HOA, here's some key points to ask.
• 16:15
  SPEAKER_00: What are one, whether the monthly or annual assessments?
• 16:19
  SPEAKER_00: Okay, just ask.
• 16:20
  SPEAKER_00: What are the monthly or annual assessments?
• 16:23
  SPEAKER_00: Number two is can the assessments increase?
• 16:26
  SPEAKER_00: Three, are there current or pending special assessments?
• 16:32
  SPEAKER_00: Four, are there rental restrictions?
• 16:35
  SPEAKER_00: Five, are there pet restrictions?
• 16:38
  SPEAKER_00: Six, are there parking restrictions?
• 16:41
  SPEAKER_00: Seven, what exterior modifications require approval?
• 16:45
  SPEAKER_00: Right?
• 16:46
  SPEAKER_00: And then eight, are there restrictions on short-term rentals?
• 16:50
  SPEAKER_00: And nine, what are amenities are included?
• 16:53
  SPEAKER_00: 10.
• 16:54
  SPEAKER_00: How financially healthy is the association?
• 16:57
  SPEAKER_00: And my favorite, can I actually live within these rules?
• 17:02
  SPEAKER_00: Because that's the real question.
• 17:04
  SPEAKER_00: You have the information.
• 17:05
  SPEAKER_00: Now you got to decide, hey, you know what?
• 17:07
  SPEAKER_00: I really want flexibility.
• 17:09
  SPEAKER_00: I'm not really, you know, vibing on the HOA.
• 17:12
  SPEAKER_00: Well, in another one, I like the HOA.
• 17:14
  SPEAKER_00: It set rules and standards.
• 17:16
  SPEAKER_00: Well, you know, I could deal with that.
• 17:17
  SPEAKER_00: I love the rules and the standards for everyone.
• 17:19
  SPEAKER_00: But so no one could just do what they want to do and when they want to do it.
• 17:23
  SPEAKER_00: So it goes both ways.
• 17:24
  SPEAKER_00: You know, here's today's Ricky rules.
• 17:27
  SPEAKER_00: Don't buy the house until you understand the HOA.
• 17:30
  SPEAKER_00: You might love the house, you might love the kitchen, you might love the backyard, you might love the neighborhood.
• 17:37
  SPEAKER_00: But if you hate the HOA rules, you're gonna be living with these rules for a long time until you sell it.
• 17:44
  SPEAKER_00: So these are some things that you need to think about when you buy into an HOA.
• 17:49
  SPEAKER_00: Now, I want you to do something for me.
• 17:52
  SPEAKER_00: If you're currently looking at a house that's part of an HOA, don't just ask, how much is the HOA?
• 17:59
  SPEAKER_00: How much is the fee?
• 18:00
  SPEAKER_00: A month, a year, ask, what do I need to know about this HOA before I buy?
• 18:08
  SPEAKER_00: And if you're a veteran, active duty service member or a first-time investor, or simply just buying a home, share this episode with someone who's house hunting, who's in the middle of house hunting, or even thinking about house hunting, because sometimes the biggest surprise isn't the mortgage, it's the HOA.
• 18:26
  SPEAKER_00: So make sure you follow me on the episode at Rena Military Real Estate Rookie, leave a review at Rena Baron Real Estate on Instagram, and share this episode and send me your real estate questions.
• 18:39
  SPEAKER_00: I'm happy to, whatever subject that is to your concern, I'm willing to investigate it and give you, educate you on that, you know, because I feel like a house isn't just four walls and a roof.
• 18:50
  SPEAKER_00: You buy into a community.
• 18:52
  SPEAKER_00: And sometimes that community comes with rules, fees, responsibilities, and restrictions.
• 18:57
  SPEAKER_00: So before you fall in love with the house, the house could probably become a headache.
• 19:01
  SPEAKER_00: And you don't want that.
• 19:03
  SPEAKER_00: Fall in love with the numbers, understand the HOA, understand the property, understand the contract, and understand what you're going to be agreeing upon.
• 19:12
  SPEAKER_00: I'm Rena Baron, your host, Military Real Estate Rookie.
• 19:16
  SPEAKER_00: Thank you for listening.
• 19:17
  SPEAKER_00: And if you enjoyed this episode, follow the podcast, leave a review, share it with somebody who needs to hear it.
• 19:24
  SPEAKER_00: And remember, don't just buy real estate, understand it.
• 19:28
  SPEAKER_00: Ask questions.
• 19:29
  SPEAKER_00: And if you see, you know, I'll see you on the next episode.
• 19:33
  SPEAKER_00: And remember, ask the questions on the HOA and you should be good to go.
• 19:38
  SPEAKER_00: Because you, once you sign on the data line, the home belongs to you and all the amenities and all the HOA frustrations and everything that's concerned the HOA.
• 19:48
  SPEAKER_00: It could be a good thing and it could be uh a bad thing.
• 19:52
  SPEAKER_00: But anyway, I want to make sure that you guys get this information because HOA is simply not about the monthly fee.
• 19:59
  SPEAKER_00: Okay.
• 19:59
  SPEAKER_00: So enjoy, and I'll talk to you on the next Military Real Estate Rookie.
• 20:04
  SPEAKER_00: Bye.