Condo for Rental Deal

[Trista Yerkich]

Hey everyone! Analyzing my first possible buy/rent property. It's a condo in the north Dallas suburbs. I'm planning on offering 30k below list (all cash) because the monthly HOA is quite high at $430 a month and the deal doesn't make sense if I don't offer the lower price. My question - for anyone who has condos for rentals with monthly HOA fees, can you share the good, bad and ugly about them?

[Greg M.]

You're approaching this wrong. The market value is the market value. It doesn't care if a deal doesn't make sense for someone at that value. Would you accept less money to make someone else's business model viable? Your offer needs to be based on market value, not your business model viability. 

HOA fees are rarely high. They are generally inline with costs. Few condo owners ever understand the actual costs of maintenance. The legal requirements and costs are also higher for commercial buildings, which HOA are considered. Review the HOA financials. See if there is a reserve study. Walk the complex and see if you notice maintenance issues. Talk to other owners about the HOA. You should easily be able to see if it is well run.

HOA Good: Other people handle many of the maintenance issues. Risk is spread across a large pool of owners. Generally lower costs to the owner as the bigger the project, the lower cost per unit.

HOA Bad: They can be controlling and petty. They can be run poorly. They can fine you for the actions of your renters. They can force you to pay for things you don't want or care about.

HOA Ugly: They can frequently restrict rentals. They can be run like a dictatorship.