Does the 50% rule go out window when evaluating properties with HOA fees?

[Marcello Di Gerlando]

Considering condos and town homes have varying HOA fees does the 50% rule go out window when evaluating these properties as rental prospects?

[Kyle Meyers]

The HOA dues should cover a portion of long term capital expenses which are a part of the 50% rule, but normally not something you set aside money for each month. There are sometimes additional costs as a result of poor management which would not be covered under the 50% rule. And of course, every property is different and the 50% rule is a estimation guideline, not a true rule. Learning about the budgets, including reserves, and the management of an HOA is very important before buying.