What Home Owners Association Fees Cover?

July 30, 2015

What Home Owners Association Fees Cover?

When buying a home, you should also consider about monthly (or in some cases, annually) fees that you will be paying as part of your monthly budget and that is home owners association fees or in short, HOA. While some people do not seem to understand the importance of what it does, or tend to regard not quite highly, as a home owner or future home owner (or in some instances, you are a renter), you should be able to know what does your HOA fees cover. This will enable you to know whether your payment is getting into the right pocket.

So in this article, we will be discussing what does home owner fees really get you? First off, home owner association, according to Wikipedia, is a corporation formed by the real estate developer for the purpose of marketing, managing and selling of homes and lots in a residential subdivision. It does sound really great especially if your swimming pool and walking trails are always cleaned and well paved, but it is not too good if the rules are just very strict. Since you are a homeowner, we will be covering the managing part.

How does it work?

Gated neighborhoods or buildings with such fees often charge as much as $400 per month or it can be usually higher if the property has an upscale facilities and better amenities. Since you are living within the same community, they have this idea that you as home owners can help one another out with some shared needs. All residents are equally responsible for maintaining common areas. The governing HOA board sets rules and protects the property values for all properties as well as ensures a better quality life within the community. It is important to learn the rules, and also meet people who are residents of the community before you go ahead and make the final decision of buying the home.

Maintenance

As a home owner myself, it may seem to find it to be quite difficult with your property’s upkeep such as maintaining the lawn, etc. Paying HOA fees can actually be a great help because they (or normally called property manager) will take care of your lawn, garbage disposal, swimming pool, snow removal, and other common areas such as elevators, lobbies, clubhouses, walkways, etc. That actually depends on what amenities you have and how much you are paying, just be sure that they are reasonable enough.

Amenities

This is also another part that your HOA fees cover – amenities are some sort of the property’s main attraction and sometimes you can see it as their selling point. Amenities include basketball courts, swimming pools, clubhouses, gyms, tennis courts, gardens and green spaces to name a few. The added entertainment benefit can outweigh the cost of fees for residents – just what was mentioned earlier - the better the amenities you have, the higher your HOA fees will be.

Community

It gives you and lets you appreciate the sense of community and the security; these are normally what you get as well when you live in a HOA community or apartment. You can choose to be active within the community and get to meet your neighbors and friends by attending HOA meetings.

Insurance

Why HOA would need to pay insurance? Let’s cite an example – say, there was an emergency repair that needs to be done and the damage is actually located in the swimming pool. Since everyone living within that community has access to that facility and is actually using them, who else are going to cover for the repair but everyone because it is a shared amenity. HOA has reserve funds for these types of emergency repairs. This does not only apply for unexpected damage repairs but it is also applicable for future improvements. It is best to research further on what insurances are included in the HOA fee.

Every community has their own set of rules and priorities, so when you are planning to purchase a home (or even paying for your first month’s rent), consider how much you can afford, what can you afford and if the benefits of HOAs are important to you and your family and what exactly you would get out of a specific property. You can also have a chat with your real estate agent and they can discuss with you your prospected property’s HOA rules and benefits.

Source: http://www.realtor.com/advice/buy/what-hoa-fees-cover/