Investing with 'HOA' funds

[Jeff Deville]

I have a friend in a small neighborhood whose roads are private. The owners all have to put money in to a pot so that if the roads need work at some point, the work will be done. This is, as I understand it, about the extent of their 'HOA'. I put it in quotes, because I'm not 100% certain that is what this entity really is.

At any rate, this account has over 100k in it right now, all sitting in a money market account, losing value to inflation. I'd like to offer them a win-win situation such that they will derive a greater return, while still having access to the funds needed on demand, but be able to invest this money myself.

I'm 100% new to all of this (I haven't even sent my self-intro post yet), but I was wondering if anyone could suggest to me whether my idea is legal, reasonable, and perhaps what I should look into to getting the ball rolling. It seems like a great opportunity to me, so please disabuse me of my ignorance if it's not!

Also, does anyone have any notion of how much might they need at any one time that I'd need to be able to deliver in a hurry? How much does it cost to fix a pothole?

[Mike M.]

I thought HOAs were organized as non-profits. Would actively "investing"and receiving a return disqualify them from that tax treatment?

I live in an HOA and consider fees a necessary evil. However, I'd be reluctant to give my dues to a stranger to invest, especially if there wasn't enough recourse with the investor to recover the funds when needed.

Sounds like the HOA needs to manage its dues collection better. $100K for 1/2 mile of road is outrageous and a waste of homeowners' money.

Mike