Dealing with HOA dues

[Roman Pak]

Hi BP!

I'm a noobie investor. I've been looking at starting out with 1/1, 2/1 or 2/2 condos in my area (NW suburbs of Chicago, specifically Buffalo Grove).

The issue I constantly run into is that when I run the numbers on a property, the HOA dues, typically between $250-$400/mo. completely kill any potential cash flow on the property.

The rental ratio for condos in my area is around 1.5% of purchase price. The ratio for SF houses is even lower approx. .8%-1%.

Does anyone have any experience solving this kind of problem? Do the renters take care of the HOA dues every month?

[Mark Ainley]

Run from HOAs. Not only do they wipe out your cash flow but they control what u do and don't do and often have financial troubles themselves that only cost you the investor more of your cash flow. The trouble I have with HOAs is they are ran by a board of volunteers that lack the experience and knowledge to take on that kind of responsibility most of that time and if there is a Managment company they can get stuck following the boards lead.

I do own condos (early on purchases)and try to stay active on the board to make sure I have a controlling stake on changes and influence on the way the property is being steered.

Your in Buffalo Grove with the proximity to areas like Grayslake, lake Zurich, & round Lake where there are plenty of single family deals getting better rents for the same cost of a condo and maybe even a lower price.