A Homeowners’ Association (HOA) is an organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties and their residents. An HOA can play a significant role in preserving property values and ensuring a harmonious living environment, which can, in turn, attract potential tenants or buyers.
People who own property within an HOA’s jurisdiction automatically become members of the HOA and are required to pay dues, known as HOA fees. These dues are used for maintaining shared spaces, such as parks, pools, gyms, elevators, exteriors, landscaping, and more.
In terms of real estate investment, HOAs can provide value by ensuring the community’s properties are well-maintained and conform to specific aesthetic standards. This can help maintain or increase property values over time. However, the rules and regulations imposed by an HOA might also be restrictive for some investors, such as limits on rental periods or property alterations, which could impact the flexibility and potential profitability of an investment.
HOAs also play a significant role in managing conflict within a community, upholding rules, and maintaining a certain standard of living. Therefore, from an investment perspective, understanding an HOA’s rules and fee structure is crucial when assessing the viability and potential return on a real estate investment within a specific community.