A somewhat odd question about condos and HOA politics

[Jake Steven]

We recently had a family member offer to sell us his condo. It's in a great area, and the offer price is slightly below that of other comps in the area. Market price is around $180k, we can get it for $160k (using conventional loan, 20% down maybe 4.5% APR. We have good credit. He has a renter who pays $1300/month.

But the HOA is $400 a month! This seems like a lot and between HOA fees and taxes, it probably won't cash flow, but that got me wondering about something:

The condo is in a somewhat small building, only 8 condos. Should I assume that the HOA is being managed by those 8 owners? If this is the case, how much control might you be able to exert over where those HOA fees are being spent, considering you're now 1/8th of the HOA management team. Let's say you know what you're talking about and can actually spend the money wisely.

[Mike McDermott]

Hi Jake,

Eight units is small which might be a concern if there are large deferred projects or delinquent owners or both. A single delinquency can cause large hardships on the remaining owners, and if there is a large deferred project, such as roof replacement, that expense has to be divided between the small ownership. However, despite professional management or not, the Board is responsible for the budget, and it is my experience that most Boards try to run things tight (they pay assessments and don't like assessments any more than any one else), so I wouldn't go in with the expectation that I could change the world. Overall there isn't sufficient data to answer your question, but be cautious with a small community where a single upset could really rain on your parade.