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What is an HOA?

October 14, 2020

If you are in the market for a new home or rental, then chances are you have come across HOAs. Home Owners Associations are put into place to help both residential communities and planned developments (townhouses, condos, ect..) maintain a clean and protected neighborhood/living atmosphere.

Every HOA you will encounter during your home search will have similarities and differences. For example, in a townhouse the HOA may cover landscaping and yard maintenance , whereas in a residential community, the HOA may dictate the square footage of your house and appearance of your property. Regardless, all HOAs require owners to pay monthly fees that are correlated to the services the HOA provides.

These fees vary depending on location and the type of HOA. Gated communities and residential communities, like golf course, often have higher fees than planned developments or non-gated residential communities. When living in a planned development you will most likely encounter HOA fees that help cover the building's community as a whole. For example, HOA fees associated with a condominium will help cover the building's insurance, building repairs, common areas, and lawn maintenance .

As you continue to search for your new home, keep in mind that you should also be looking into the HOA's as well. Make sure their dues are feasible and that you align with what the HOA covers. You want to make sure that you are feeling good about your contribution to the neighborhood/development. In other words, make sure you can see and respect the value of the specific HOA before you opt to buy and live there. If you can get behind the HOA's value, you will feel much better about your purchase in the long term.

For a deeper dive into HOA's, please read Investopdia's article here.

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