Written By: Jacquelyn Annete García Vadnais
Homeowners Associations can cause a great deal of confusion with homebuyers and real estate investors alike due to the lack of clarity regarding how they bring value to real estate communities. Many purchasers wrestle with whether having a Homeowners Association is worthwhile or whether they should seek out a community that does not have high Homeowners Association dues. This is a decision that should not be taken lightly as it has the potential to greatly impact the overall cost of a particular residential property. In order to learn more about the pros and cons of investing in or purchasing a property that has a Homeowners Association, review the information below:
Pros and Cons to Consider When Purchasing a Property that Has a Homeowners Associations
Pros
Maintenance of Amenities
Communities that have Homeowners Associations can benefit from offering residents many amenities. This can be appealing to a resident or prospective tenants that may want to lease the property. Typical amenities that Homeowners Associations include in their fees are: swimming pools, tennis courts, gyms, conference rooms, golf courses, doorman, repairs, gate security guard, and an event space that can be reserved. Depending on the particular community and its location, Homeowners Associations will tailor their offerings to what their target residents may be interested in.
Higher Sales Price in the Future
On average, properties that are located within a community that has a Homeowners Association sell for 4% more than those that do not. The reason for this is that Homeowners Associations, when they are run properly, can make the lives of their residents much easier while simultaneously improving the appearance of the residential community.
Water & Gas Bills Are Often Included
When having a Homeowners Association, it is possible to have certain utility bills included in their monthly bills. The two most common bills that are included in the Homeowners Association fees are the water and gas bills. Cutting down on this expense combined with the other benefits that Homeowners Associations offer, it could potentially provide a great deal of value to a prospective homeowner or investor.
Your Neighborhood Will Look Attractive
If the Homeowners Association is for a residential community of homes, many times they will cover the gardening of the entry to the community and grass areas that do not belong to a particular owner. This can be a very appealing option to residents or investors that do not want to worry about these extra tasks in the community. These efforts also can increase property values due to the overall presentation of the neighborhood.
Cons
Falling Behind on Homeowners Association Dues Can Lead to Foreclosure
There have been many instances where residents do not see the value of the dues they are required to pay to their Homeowners Association. When this occurs, it has the ability to put the home into foreclosure. For residents that do not want this risk, finding a community that does not have a Homeowners Association may be a better fit.
The Homeowners Association Sets the Standard for the Exterior of Your Home
Many residents would prefer to have freedom about additions they can complete on their home, landscaping or paint changes. Homeowners Associations vary on how strict they are with appearance; however, many residents do not want to worry about obtaining approval. For residents that want complete control over every aspect of the appearance of their home, it may be best to find a community that does not have a Homeowners Association.
Increased Costs
Individuals who have Homeowners Associations need to be prepared to have increased costs of living. For residents who have a mortgage and many other monthly expenses, adding Homeowners Association fees can have a substantial impact on their budgets. It is wise to ensure that both residents and real estate investors are able to afford the increased costs associated with having a Homeowners Association in order to avoid late fees or even a foreclosure on their property in the future.
Complicated Board of Directors within the Homeowners Association
Many of the disputes that occur related to Homeowners Associations have to do with how finances are managed and whether the Board of Directors is fully qualified to be running such a large association, particularly in larger communities. In order to be elected to the Board of Directors, any resident can run. This means that even if the individual may not have the ideal experience for the position, they can be elected and make important financial decisions with fees that all residents are paying. This is a careful point to consider when Homeowners Association fees can be quite high and having an ethical and skilled Board of Directors is essential. For residents or investors that do not want the headache of dealing with the Board of Directors of a Homeowners Association, it could be wise to find a community that does not have one.
Final Remarks
It is imperative for potential residents and investors to carefully consider whether having a Homeowners Association is a fit for their particular needs. It is also wise to review the contract provided by the Homeowners Association carefully in order to avoid many common pitfalls and misunderstandings. For individuals that want less headaches, a path to higher property values, and a beautiful community, having a Homeowners Association can be very valuable. For those that do not want to invest additional capital in the high fees or want to have complete freedom on the property that they own, it may be better to consider communities that do not have Homeowners Associations fees or strict regulations. What is important to remember is that there are both options available in the United States depending on the ideal preferences of the potential resident or investor.
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Jacquelyn Annete Garcia Vadnais is an Investment Consultant and field expert blogger for Barracuda Consulting.
Jacquelyn has a JD/ MBA from Suffolk University, an LL.M in International Law from the University of Miami, and a B.A. from the George Washington University in International Affairs with a Concentration in International Politics. Jacquelyn speaks English, Spanish, French, and Portuguese and has lived in ten countries. Jacquelyn has done work for firms such as Boston Consulting Group and has worked with firms based in over ten countries in the fields of Real Estate, International Law, Expat Living, International Business, Forex Trading, and Travel. She has also volunteered her time and expertise at the Victims Rights Law Center based in Boston, MA.
Please leave your comments below. If you would like to subscribe to our newsletter, click here: https://tinyletter.com/barracuda-consulting. To purchase a full real estate report, or to access a complete suite of investment advisory services please contact us: https://www.barracuda-consulting.net/contact.
Homeowners Associations can cause a great deal of confusion with homebuyers and real estate investors alike due to the lack of clarity regarding how they bring value to real estate communities. Many purchasers wrestle with whether having a Homeowners Association is worthwhile or whether they should seek out a community that does not have high Homeowners Association dues. This is a decision that should not be taken lightly as it has the potential to greatly impact the overall cost of a particular residential property. In order to learn more about the pros and cons of investing in or purchasing a property that has a Homeowners Association, review the information below:
Pros and Cons to Consider When Purchasing a Property that Has a Homeowners Associations
Pros
Maintenance of Amenities
Communities that have Homeowners Associations can benefit from offering residents many amenities. This can be appealing to a resident or prospective tenants that may want to lease the property. Typical amenities that Homeowners Associations include in their fees are: swimming pools, tennis courts, gyms, conference rooms, golf courses, doorman, repairs, gate security guard, and an event space that can be reserved. Depending on the particular community and its location, Homeowners Associations will tailor their offerings to what their target residents may be interested in.
Higher Sales Price in the Future
On average, properties that are located within a community that has a Homeowners Association sell for 4% more than those that do not. The reason for this is that Homeowners Associations, when they are run properly, can make the lives of their residents much easier while simultaneously improving the appearance of the residential community.
Water & Gas Bills Are Often Included
When having a Homeowners Association, it is possible to have certain utility bills included in their monthly bills. The two most common bills that are included in the Homeowners Association fees are the water and gas bills. Cutting down on this expense combined with the other benefits that Homeowners Associations offer, it could potentially provide a great deal of value to a prospective homeowner or investor.
Your Neighborhood Will Look Attractive
If the Homeowners Association is for a residential community of homes, many times they will cover the gardening of the entry to the community and grass areas that do not belong to a particular owner. This can be a very appealing option to residents or investors that do not want to worry about these extra tasks in the community. These efforts also can increase property values due to the overall presentation of the neighborhood.
Cons
Falling Behind on Homeowners Association Dues Can Lead to Foreclosure
There have been many instances where residents do not see the value of the dues they are required to pay to their Homeowners Association. When this occurs, it has the ability to put the home into foreclosure. For residents that do not want this risk, finding a community that does not have a Homeowners Association may be a better fit.
The Homeowners Association Sets the Standard for the Exterior of Your Home
Many residents would prefer to have freedom about additions they can complete on their home, landscaping or paint changes. Homeowners Associations vary on how strict they are with appearance; however, many residents do not want to worry about obtaining approval. For residents that want complete control over every aspect of the appearance of their home, it may be best to find a community that does not have a Homeowners Association.
Increased Costs
Individuals who have Homeowners Associations need to be prepared to have increased costs of living. For residents who have a mortgage and many other monthly expenses, adding Homeowners Association fees can have a substantial impact on their budgets. It is wise to ensure that both residents and real estate investors are able to afford the increased costs associated with having a Homeowners Association in order to avoid late fees or even a foreclosure on their property in the future.
Complicated Board of Directors within the Homeowners Association
Many of the disputes that occur related to Homeowners Associations have to do with how finances are managed and whether the Board of Directors is fully qualified to be running such a large association, particularly in larger communities. In order to be elected to the Board of Directors, any resident can run. This means that even if the individual may not have the ideal experience for the position, they can be elected and make important financial decisions with fees that all residents are paying. This is a careful point to consider when Homeowners Association fees can be quite high and having an ethical and skilled Board of Directors is essential. For residents or investors that do not want the headache of dealing with the Board of Directors of a Homeowners Association, it could be wise to find a community that does not have one.
Final Remarks
It is imperative for potential residents and investors to carefully consider whether having a Homeowners Association is a fit for their particular needs. It is also wise to review the contract provided by the Homeowners Association carefully in order to avoid many common pitfalls and misunderstandings. For individuals that want less headaches, a path to higher property values, and a beautiful community, having a Homeowners Association can be very valuable. For those that do not want to invest additional capital in the high fees or want to have complete freedom on the property that they own, it may be better to consider communities that do not have Homeowners Associations fees or strict regulations. What is important to remember is that there are both options available in the United States depending on the ideal preferences of the potential resident or investor.
--
Jacquelyn Annete Garcia Vadnais is an Investment Consultant and field expert blogger for Barracuda Consulting.
Jacquelyn has a JD/ MBA from Suffolk University, an LL.M in International Law from the University of Miami, and a B.A. from the George Washington University in International Affairs with a Concentration in International Politics. Jacquelyn speaks English, Spanish, French, and Portuguese and has lived in ten countries. Jacquelyn has done work for firms such as Boston Consulting Group and has worked with firms based in over ten countries in the fields of Real Estate, International Law, Expat Living, International Business, Forex Trading, and Travel. She has also volunteered her time and expertise at the Victims Rights Law Center based in Boston, MA.
Please leave your comments below. If you would like to subscribe to our newsletter, click here: https://tinyletter.com/barracuda-consulting. To purchase a full real estate report, or to access a complete suite of investment advisory services please contact us: https://www.barracuda-consulting.net/contact.
I was planning to buy my first house in the United States. That's why one of my friends recommended contacting EXP realty's local representatives. Then I contacted EXP Realty's local brokers, who assisted me in purchasing my home quickly. Now I'd want to express my gratitude to my buddy for his idea!
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