Townhouse Buying Tips - Look At The HOA Carefully

21 April 2015
 Categories: Real Estate, Articles

If you are sick of living in an apartment but do not want the responsibility of owning a house, then it may be a wise choice to purchase a townhouse instead. Townhouses are bigger than apartments, and you will own the space instead of renting it.  You need to make sure that the townhouse you choose is right for you though.  A real estate agent who specializes in townhouses can help with this.  You also should consider the homeowners association that is associated with the townhouse.

Consider HOA Costs

Most condominium and townhouse communities have a homeowners association that you must belong to if you own a residence in the community.  This HOA collects either monthly or yearly fees from all townhouse owners.  These fees are then used for things like lawn landscaping, roof repairs, swimming pool maintenance, parking lot upkeep, security, and other types of maintenance.  Joining the homeowners association can drastically reduce the amount of time and energy that you need to spend as a homeowner to take care of your property.  However, HOA fees can be quite expensive.  

On average, HOA fees range from about $100 to $200 a month, but they can be higher if you live in a more affluent area.  If you are working on a tight budget, then this may elevate your monthly expenses outside of your budget.  Your expenses may even go up if the HOA fund does not have enough money to cover a costly expense.  Residents in the community will then be asked to make up the difference. Make sure your budget allows for the basic fees as well as some extras.

Experts say that you should save about 1.5% of your home's value to allow for necessary yearly repairs.  This budget indicates that you should put aside about $200 or $300 dollars a month.  This means that the expense is about the same or less if you own a townhouse with an average fee scale instead of your own home.  Take this into consideration if you think that average HOA fees are exorbitant.

Fee Increases

Your HOA fees will likely not stay the same from year to year either, and you must consider this as well.  Some homeowners associations may increase fees as they see fit, but this may lead to radical increases.

To protect yourself, look for a clause in the homeowners association paperwork that states that fee increases must be voted on by the residents of the community.  This type of clause will likely mean that a budget meeting will be held that details the need for additional fees.  Once you make sure that the clause is in the contract, also ask for a detailed list of fee rates for the past several years.  You can ask about the average percentage of the increase as well.  Increases that range from about 1% to 2.5% are reasonable, because they account for the yearly inflation rate.  This means that your fees increase as maintenance costs also increase.

Think About the Rules

There are many rules and regulations that you must follow when joining the homeowners association.  You may need to seek permission to change the color of your house or to plant flowers outside your home.  Certain paint colors or landscaping features may not be allowed even if you do ask.  Also, rules involving pets, noise, satellite dishes, car parking, visitor parking, fence heights, and even curtains are common when you join an HOA.  If you are a free spirit or if you are used to setting your own rules, then these stipulations may not jive with your personality.

Not only can the regulations grate on your nerves, but you will most likely be cited with a violation if you break one of the HOA rules.  You then will be required to pay a fine.  Some homeowners associations are stricter than others, so consider asking tenants about warnings and fines before you purchase a townhouse.  In some cases, an HOA may be so strict about their regulations that they may try to force you to sell your townhouse if you break the rules too many times.  A lien can be placed on your home too, if you do not pay fines. You may then be sued over the costs and foreclosure can occur. 

If you are thinking about moving into a townhouse for rent in your area, then you need to look at the HOA carefully that is associated with the residence.  Otherwise, you may end up with a townhouse that is too expensive or too difficult to live in.