If you're not sure what a homeowners association (or HOA) is by now, it's about time you found out. As a potential property investor in Orlando, there is a high likelihood that the home you end up buying will be linked to an HOA. It's therefore essential that you fully
understand the implications of buying into an HOA community, both from a regulatory perspective as well as a financial standpoint.
What is an HOA?
A homeowners association (or HOA) is essentially a residents' committee that takes charge of looking after a group of communal properties within the same building or compound. They are most commonly found in shared building complexes such as a condominium where there are a number of individually-owned
units or 'condos'. They are also a common feature of planned housing developments and gated communities.
What are they for?
Each Orlando homeowners association will have its own specific policies; however, the
primary aim of any HOA is to ensure that the values of all their
properties are maintained, and hopefully increased. The HOA will also seek maintain a level of decorum in the building, acting as a sounding board for any grievances residents may have or arbitrating in disputes between occupants.
Homeowners associations will also often dictate which sprinkler
systems, fertilisers, and pesticides you may or may not be allowed
to use on your property. They might also limit the percentage of gardens which you can
plant in or lay flagstones etc. and you will need their permission to
install things such a solar panels.
Do I need to be a member?
As a resident of the association you have a legal obligation to become a member of the HOA and to pay the fees, regardless of whether you intend to live in the property or
Failure to pay HOA fees on time, or to comply with the requirements
of your HOA membership agreement can soon lead to late fees, interest
payments and the freezing of any rental income. Continued lack of
payment may eventually result in eviction and in you being foreclosed upon.
Before purchasing an HOA-linked property in Orlando it's worth verifying whether the property is currently in compliance with HOA rules.
In some cases the home you're considering buying could be in
violation of an existing homeowners association regulation, which could
have prompted the previous owner to sell or vacate the home.
If you choose to purchase a property which is out of compliance you
will have to take measures to rectify the issue immediately. The upside
is that this property is likely to be on the market at a sizeable discount.
Is an HOA property right for me?
There are certainly both pros and cons to buying an HOA-linked property. One of the main advantages is knowing that you're buying into a community where grounds maintenance and other important day-to-day functions are taken care of, albeit at a certain cost.
However, at the same time you should be aware that being part of a homeowners association may limit your ability to customise and alter your property as you like. There are also monthly fees to take into account and - in some cases - possible restrictions on letting out the property to third parties.
While most property investors find the positives usually outweigh the negatives, If you're someone would rather do things their own way, it may be best to consider a property investment which isn't tied to an HOA.