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What You Need To Know About Buying in an HOA Part 2


In this article, we'll go into more detail on the practical aspects of buying in an HOA and what you should think about before you buy.


It's important to remember that each HOA is unique, so the guidelines that apply to one neighborhood could not apply to another.


3. Am I buying a home that needs to be put into compliance?

Maybe the HOA called out an issue to the seller of the property and they didn’t take care of the issue. As the new owner, you will need to address this and it could cost you money.


4. Can I do what I want with this property/home?

Along the same lines as restrictions, before you purchase, you need to know your long-term goals. Is this your forever home or is this home a part of your overall real estate plan for wealth building?


a. Are you an investor and want to rent this home out?

i. There could be a Rental cap, which limits the number of homes that can be rented. Let’s say there is a community with 100 homes and there is a 20% rental cap. Only 20 homes at any given time can be rented, as the HOA wants more “owner-occupied homes.”

ii. There could be a minimum amount of time you can rent a home. Some communities have a one-month rental minimum, for example.

iii. Are rentals allowed at all? This is most commonly seen in condominium communities.


b. What if I’m just a homeowner and I want to rent out my current home when I’m ready to purchase my next home? All the above rules may apply - but there may be some exceptions. This is why you need to understand the HOA governing documents.


5. Will my lender be able to get a loan finalized with this HOA?

As a buyer, you need to discuss the issues with your loan type and the HOA you would like to purchase with your lender first and foremost. Below are some of the issues that may prohibit a purchase:


a. The percentage of owner-occupied homes isn’t allowed by the loan product.

b. The HOA doesn’t accept the loan type (VA or FHA).

c. The lender may not approve of the HOA insurance.

d. There are lawsuits and the lender won’t do any loans on the property (for example a highrise condo that has construction lawsuits)


6. Is the HOA professionally managed?

The advantages of a professionally managed HOA - where the board hires a professional company to advise the board and manage day-to-day operations - far outweigh the opposite, where the HOA is “self” managed. Self-managed HOA boards do not know what they do not know. For example, there is one community where the owners are suing the HOA because the self-managed board of directors had too many owner-occupied homes and the HOA didn’t have the proper insurance. They had put everyone into a strange conundrum. Sellers in that community had real monetary losses because they couldn’t sell their homes.


What you need to take away from this blog as a buyer: If something is important to you - whether it’s if you can park your boat on your lot, you want to do an addition on the home or if you want to understand more about the financial situation of the HOA - you absolutely need to let your real estate agent/broker know your goals so they can best address your particular needs and concerns.


Kristin Bushnell is a Designated Broker/Owner of Bushnell Real Estate Solutions in Washington and Arizona states. Kristin has a 25+ year career in real estate with comprehensive knowledge to help you with your real estate needs or your real estate career. Contact Kristin here at kristinbushnell@gmail.com or call 425-559-1355. You can also click here to set up a time to chat.



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