Quote from @Lena Johnson-Bey:
Just getting started. I have an offer in on my 1st investment property, a short sale condo. Glad to be a part of this community.
Aloha and welcome to BP!
If you plan on buying condos it is critical that you review and understand the Governing documents for the HOA you are potentially buying into as well as understanding the current operating budget and reserve funding plan. Check for a local chapter of the Community Association Institute, where you will be able to find a great deal of information and learn about how HOA's are
supposed to be operated. Also, in many jurisdictions, there are different laws for condo associations, vs. home owner associations. Be sure you understand which applies to the property you are investigating.
The Governing docs will describe what elements of the property are truly "yours" to maintain and modify, and what the HOA is responsible for. They will also tell you, broadly, how the HOA is supposed to operate...meetings, voting, changing rules, budgeting, and the rules you and/or your tenants will be required to abide by...or even limit how you can rent "your" condo. You need to know all this well before completing a purchase.
The operating budget will obviously tell you what they are spending money on for the current period, on things like landscaping, various routine repairs, pest control, pool service, utilities, and preventative maintenance. The Reserve funding plan will tell you what they are planning to spend money on, and when, for ALL major elements of the HOA. Roofing, painting, major tree maintenance, concrete repairs (sidewalks, driveways, building spalling) and much more. By comparing what you can observe about the condition of many elements, with what the planned schedule is for that element, you can get an idea of what is having maintenance deferred, and what is being well maintained.There should also be calculations that show the percentage of funding they are planning, which should be well above 65% to ensure no unexpected maintenance fee increases or special assessments.
