Seeking HOA Experience/Advice

[firemane]

Hello.

There has been something on my mind for a while, that while not an emergency at this time, I believe might be something to look out for.

I live in a Townhome neighborhood with an HOA that I think is subpar. I have lived here for 12 years and it started out great, but has been in decline. It started out with things like not seeing the sprinklers go on for all of the rows when they used to follow a strict schedule, and has advanced to things like weeds, tennis court looking awful, tear in pool cover, dumpster is always a mess, mildew on siding, etc. They hired a property management company, but the board still has to make approvals and they don't approve much because it seems like everyone just wants the fee to be as cheap as possible. Besides that pool cover, the pool seems to be the only thing that they do care about in here.

To get to my worry. The units are now between 22 and 32 years old, mine being on the newer side, and none of them have had any new roofs put on besides hail damage repairs. Some of the roofs look a bit beat up when looking at them. They are architectured shingles but are curling a bit - especially on the older rows of homes. I also worry about how bad the neighborhood owned streets are. They are blacktop and they generally just patch the holes as they come. I have seen what is in the reserves for money wise and it is not much. It can cover repairs, but not anything big - it would need some sort of massive special assessment, but the way things are managed I don't think they would do this type of stuff proactively. The board didn't have much to say on these concerns which is typical. They priority is generally just to have the lowest monthly fee possible.

The good: The are is one of the fastest appreciating areas in my mid-sized city. It has a multibillion dollar development in discussion and they are cramming houses and commercial real estate on every piece of land that they can get. Hip restaurants in the cities are opening 2nd locations out here. The virus sped things up even more as people are leaving their their downtown apartments to houses as well as extreme taxes on the nearby state that people are fleeing.

Sorry for the long post, but I wanted to see if anyone has any advise to offer me based on my post. I am kind of debating in my head between wait a year or 2 since it is booming and then move, or just move asap. My unit is mostly remodeled.


Thanks

[frugalcoconut]

Since you're writing this post in the first place, you're obviously concerned enough about the situation to contemplate moving.  I previously owned a condominium in Florida in a development that did not have appropriate reserves for some things.  I lived there for the first year, then I rented it out for several years, and during the last year I served as a board member.  This association suffered from inept prior administrations and lackluster property management support, but it was also held back because the original condo charter/declaration (created by the builder) made it difficult to change things because it required a certain majority of votes from owners in the community which was nearly impossible to obtain due to lack of participation.  Ultimately they ended up charging a hefty "special assessment" to cover the needed repairs and deferred maintenance, and shortly thereafter they increased the monthly dues for each unit in order to bring the annual budget more in line with what it should have been the whole time.  Once these things are announced by your HOA, you'd have to disclose to a potential buyer even if you managed to sell before they took effect.  If you wait to sell, it is also possible that the lack of upkeep by the HOA would reflect poorly on the marketability of your unit.  Real estate transaction costs are significant though -- so it really depends on how much all this is bothering you.  If you don't want to personally live there but you want to avoid the real estate transaction costs and are willing to accept the risk of special assessments and/or increased HOA fees, you could consider renting out the unit instead (assuming the HOA allows that).  You could also attend some HOA meetings and voice your concerns and see what they say.  If you're not happy with how the property is being managed though, it probably won't get better anytime soon without someone who is willing to put forth the effort required to turn the property around.  Unless they are planning to change property management companies or unless someone new gets elected to the board, it will probably remain status quo.  I ended up selling the condo because, especially after being active with the board, I could see that there was little hope of recovery and I just didn't want to deal with it.

[waltworks]

GTFO.

-W

[firemane]

Thanks a lot for the replies, especially frugalcoconut. that is great info and I can sense a similar frustration to mine. I don’t rly mind the special assessment as much as I think that no one cares enough to get to the point of deciding to replace roofs etc to require it. Most people just... don’t seem to care. If the rest of the neighborhood seemed to be on the same page I would otherwise have no problem with the unit and I would probably keep it long term and eventually turn it into a rental, but I just don’t see it happening unfortunately

[Dicey]

I agree with Walt, but honestly, OP you have a bit of culpability in all of this.

Let this be a lesson to any and all who buy into homeowner's associations. You have to pay attention to what the hell is going on. Attend meetings, get on the board. The return for the time spent is totally worth it!

You can't just buy these types of properties and expect everyone else to take care of your investment.

True story: I lived in an old, six building apartment conversion condo complex. All it had going for it was location, location, location. After attending meetings for years, I finally joined the board. Couple of years later, we needed new roofs. The bid was so high we were going to need a Special Assessment to pay for the job. The assessment was way more than I wanted to afford (about $6k in 1998-ish, IIRC). I thought about it, then asked if it was necessary to do all six buildings at once. The roofing contractor did an assessment and decided that that only two needed to be done right away, followed by two the next year and two the year after that. By doing it that way, no Special Assessment was needed. In addition, after the first two buildings, the roofer figured out a way to do the rest in such a way that it actually cost less than the first two. My ROI for time spent was literally through the roof!

[Steeze]

I am in this situation also - my coop is a ticking time bomb.

The old timers that have lived here for 20-30 years have done minimal maintenance, there are no reserves, and our fees barely cover the bills. 20 units and I estimate $500k-$1M in deferred maintenance. The board is run by a lady who has no interest in spending money for any reason unless something is an emergency, absolutely no preventative maintenance.

As an engineer I feel like we are merely occupants of this structure and should be good stewards, maintaining and improving it as we go. Instead they have pillaged it - using up its beauty and utility by kicking the can down the road. They are all old and retired, on fixed incomes - they will just keep this up until it is not their problem anymore.

For example, why paint the fire escapes every year for $1000-$2000 when you can replace the entire thing for $50,000 every 30 years? Especially if you won’t be alive in 30 years.

Hopefully I will be out of here in a couple years and nothing major will have gone wrong by then. Will never buy in an HOA again... Sad.

There is an identical building down the street that is in great condition - their fees are about 50% more than ours, about $250 more per month. Knowing what I know now, I would have happily paid the extra maintenance to have actual maintenance done. The $250/mo isn’t worth the possibility of a $10,000 looming all the time.

[firemane]

I agree with Walt, but honestly, OP you have a bit of culpability in all of this.

Let this be a lesson to any and all who buy into homeowner's associations. You have to pay attention to what the hell is going on. Attend meetings, get on the board. The return for the time spent is totally worth it!

You can't just buy these types of properties and expect everyone else to take care of your investment.

True story: I lived in an old, six building apartment conversion condo complex. All it had going for it was location, location, location. After attending meetings for years, I finally joined the board. Couple of years later, we needed new roofs. The bid was so high we were going to need a Special Assessment to pay for the job. The assessment was way more than I wanted to afford (about $6k in 1998-ish, IIRC). I thought about it, then asked if it was necessary to do all six buildings at once. The roofing contractor did an assessment and decided that that only two needed to be done right away, followed by two the next year and two the year after that. By doing it that way, no Special Assessment was needed. In addition, after the first two buildings, the roofer figured out a way to do the rest in such a way that it actually cost less than the first two. My ROI for time spent was literally through the roof!

I totally agree that there is some fault on my end here too. I bought this unit at such a young age that I didn't really have much knowledge of HOAs. I primarily bought it because the houses I could have afforded at the time were in bad neighborhoods. It was either a nice condo, or a undesirable house pretty much. This probably sheds some light on why it is going downhill, people often buy the condos because it is all they can afford in a good neighborhood more often and not because they chose a condo lifestyle. Being 80% invested into the MMM lifestyle i don't generally feel the need to trade up in houses over time even if my pay has increase a lot, so I have stayed here. 1350 sq ft is plenty size wise. I may check out some of the meetings once they start having them again, however, I believe it would be very hard to change the culture and mindset of the other residents

[firemane]

I am in this situation also - my coop is a ticking time bomb.

The old timers that have lived here for 20-30 years have done minimal maintenance, there are no reserves, and our fees barely cover the bills. 20 units and I estimate $500k-$1M in deferred maintenance. The board is run by a lady who has no interest in spending money for any reason unless something is an emergency, absolutely no preventative maintenance.

As an engineer I feel like we are merely occupants of this structure and should be good stewards, maintaining and improving it as we go. Instead they have pillaged it - using up its beauty and utility by kicking the can down the road. They are all old and retired, on fixed incomes - they will just keep this up until it is not their problem anymore.

For example, why paint the fire escapes every year for $1000-$2000 when you can replace the entire thing for $50,000 every 30 years? Especially if you won’t be alive in 30 years.

Hopefully I will be out of here in a couple years and nothing major will have gone wrong by then. Will never buy in an HOA again... Sad.

There is an identical building down the street that is in great condition - their fees are about 50% more than ours, about $250 more per month. Knowing what I know now, I would have happily paid the extra maintenance to have actual maintenance done. The $250/mo isn’t worth the possibility of a $10,000 looming all the time.

My situation is similar, however, the elderly people here seem to be the only ones who DO care about the units. Its the young people wanting a cheap "starter home" that do not want to put in the money. Our fees are laughably low (significantly under $200 total per month). They used to raise the fee more aggressively every year at like $7 a month and people freaked out over it.

[Montecarlo]

I agree with Walt, but honestly, OP you have a bit of culpability in all of this.

Let this be a lesson to any and all who buy into homeowner's associations. You have to pay attention to what the hell is going on. Attend meetings, get on the board. The return for the time spent is totally worth it!

You can't just buy these types of properties and expect everyone else to take care of your investment.

True story: I lived in an old, six building apartment conversion condo complex. All it had going for it was location, location, location. After attending meetings for years, I finally joined the board. Couple of years later, we needed new roofs. The bid was so high we were going to need a Special Assessment to pay for the job. The assessment was way more than I wanted to afford (about $6k in 1998-ish, IIRC). I thought about it, then asked if it was necessary to do all six buildings at once. The roofing contractor did an assessment and decided that that only two needed to be done right away, followed by two the next year and two the year after that. By doing it that way, no Special Assessment was needed. In addition, after the first two buildings, the roofer figured out a way to do the rest in such a way that it actually cost less than the first two. My ROI for time spent was literally through the roof!

I totally agree that there is some fault on my end here too. I bought this unit at such a young age that I didn't really have much knowledge of HOAs. I primarily bought it because the houses I could have afforded at the time were in bad neighborhoods. It was either a nice condo, or a undesirable house pretty much. This probably sheds some light on why it is going downhill, people often buy the condos because it is all they can afford in a good neighborhood more often and not because they chose a condo lifestyle. Being 80% invested into the MMM lifestyle i don't generally feel the need to trade up in houses over time even if my pay has increase a lot, so I have stayed here. 1350 sq ft is plenty size wise. I may check out some of the meetings once they start having them again, however, I believe it would be very hard to change the culture and mindset of the other residents

• Setup a property management company
• Setup a llc
• sell your home to the llc
• llc contracts with property management company to lease out and manage the unit
• property management company leases out the unit to you and...
• ...llc sales the property along with assignment of the property management contract to an investor

There you go.  All the risk is offboarded and you don't have to move.

Consult with an attorney and cpa before doing anything crazy like I just suggested.

[firemane]

I agree with Walt, but honestly, OP you have a bit of culpability in all of this.

Let this be a lesson to any and all who buy into homeowner's associations. You have to pay attention to what the hell is going on. Attend meetings, get on the board. The return for the time spent is totally worth it!

You can't just buy these types of properties and expect everyone else to take care of your investment.

True story: I lived in an old, six building apartment conversion condo complex. All it had going for it was location, location, location. After attending meetings for years, I finally joined the board. Couple of years later, we needed new roofs. The bid was so high we were going to need a Special Assessment to pay for the job. The assessment was way more than I wanted to afford (about $6k in 1998-ish, IIRC). I thought about it, then asked if it was necessary to do all six buildings at once. The roofing contractor did an assessment and decided that that only two needed to be done right away, followed by two the next year and two the year after that. By doing it that way, no Special Assessment was needed. In addition, after the first two buildings, the roofer figured out a way to do the rest in such a way that it actually cost less than the first two. My ROI for time spent was literally through the roof!

I totally agree that there is some fault on my end here too. I bought this unit at such a young age that I didn't really have much knowledge of HOAs. I primarily bought it because the houses I could have afforded at the time were in bad neighborhoods. It was either a nice condo, or a undesirable house pretty much. This probably sheds some light on why it is going downhill, people often buy the condos because it is all they can afford in a good neighborhood more often and not because they chose a condo lifestyle. Being 80% invested into the MMM lifestyle i don't generally feel the need to trade up in houses over time even if my pay has increase a lot, so I have stayed here. 1350 sq ft is plenty size wise. I may check out some of the meetings once they start having them again, however, I believe it would be very hard to change the culture and mindset of the other residents

• Setup a property management company
• Setup a llc
• sell your home to the llc
• llc contracts with property management company to lease out and manage the unit
• property management company leases out the unit to you and...
• ...llc sales the property along with assignment of the property management contract to an investor

There you go.  All the risk is offboarded and you don't have to move.

Consult with an attorney and cpa before doing anything crazy like I just suggested.

Haha, interesting suggestion