Condos are multi-family homes located in communities that have homeowner's associations (HOAs), and these types of homes are great for people who are looking for maintenance-free living. If you are thinking of buying a condo and would like to find the perfect one for your needs, you should contact a real-estate agent today. The agent can help you find homes within your budget that meet your needs, and your agent can also help you evaluate the financial condition of the HOA before you buy the condo.
Why Is the Financial Condition of the HOA Important When You Are Buying a Condo?
The HOA that runs your community is responsible for making decisions about your community and paying expenses for maintenance and repairs. Fully understanding the financial condition of the HOA can reveal a lot about the way things are done in this neighborhood. For example, a financially healthy HOA will have plenty of money in its accounts and will have short-term and long-term plans for renovations and maintenance. It will also make good, wise decisions that will benefit the homeowners in the neighborhood.
A poorly run organization can lead to problems for the homeowners. This can include problems with maintenance work being completed, and this can result in issues with the way the homes are taken care of. Eventually, this can result in lower home values, and this is something you will not want to experience.
Spending time researching and evaluating the financial condition of the HOA will save you time, money, and headaches in the long run, and it will help you choose a condo that is located within a community with a well-run HOA.
What Are the Best Ways to Evaluate the Financial Condition of an HOA?
There are several good ways to evaluate the financial condition of an HOA, and the first place to start is by looking over the HOA's financial statements. This can show you how much money the organization is collecting each month, and it can reveal how many homeowners are not paying their monthly dues. In addition, you will be able to see how much money the organization spends each month for maintenance, and you will see how much money they save each month toward the reserve fund.
A reserve fund is used to save up for long-term projects. If you notice that the reserve-fund balance is low, you may want to question this. If there is no money for long-term projects, who will pay for these things? When an HOA suffers financial problems, it will often ask the homeowners for extra money to use to pay for projects.
A second way to analyze the financial condition of an HOA is to find out the percentage of owner-occupied units. An owner-occupied unit means a person owns the unit and lives there. If units are owned by investors and rented out, they are not owner-occupied units. In addition, any vacant units are not included in this number either. As you look at this factor, you should look for an HOA with a high percentage of owner-occupied units. The minimum amount should be 50%, but you may want to stick with buying a unit in a community that has an even higher percentage than this.
This is important for several reasons. The first reason is because a high percentage means that the HOA is most likely collecting a lot of money for the monthly dues, and this usually indicates good financial health. A second reason is that it may be hard to qualify for a loan on a condo if this percentage is low. Banks are often leery of loaning money on homes that are in communities with HOAs that appear to be suffering from financial problems, and a low owner-occupancy rate is one indication of trouble.
If you would like to learn more about condos for sale or ways to evaluate the financial health of an HOA, contact a real-estate company, such as Marilyn Salzman Real Estate, today.Share