I'm Thinking of Buying A Portland Condo. What Five Things Should I Watch Out For in regard to HOA's:
First off, what is an HOA? An HOA stands for Home Owner's Association. This is the governing body for the condominium development. The association will make decisions for the whole.
1. Is the Homeowners Association (HOA) in good standing with a fully funded reserve account? Is the condo development older and needing some major repairs to all the units such as siding or roofing? If so but there is not enough money in the reserve account then your HOA dues could jump considerably.
2. What is the price of the HOA and how will that impact my loan? What is covered the HOA payment? Your HOA might cost $400 per month but if it covers your cable television, swimming pool, workout facility, maintenance, commons, balcony view, insurance, and has a full time concierge then it may be worth it for you because cable television, internet, swimming pool and workout facility might cost $200/month by itself if you were to purchase it elsewhere. Of course if you don't use a pool, don't workout, and don't watch television then it might not be worth it for your needs.
3. Is the HOA in litigation? HOA have been known to get in trouble from time and time and their might be pending litigation that may prevent you from purchasing but also if you did purchase after the litigation is over your HOA dues could jump much higher for the same benefits.
4. What are meeting minutes and how can they benefit me when purchasing? Well you can request a copy of the meeting minutes which is a summary of the discussion at the Homeowners Association meetings. The meeting minutes could address issues like faulty equipment or major repairs needed and it's good to know this information when thinking about purchasing. If the minutes talk about how to address the major structural problems of the condo you might want to think twice about purchasing.
5. What is a reserve study as it relates to a condominium or HOA? The reserve study is basically the budget for the HOA. The reserve study might show how much money the condominium is expecting to pay our for roads, lights, equipment, facility, building operations, management, insurance, construction etc.. If the reserve study estimates all the expenses low then inevitably your HOA rates will be going up.
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