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HOA vs paying yourself
Hello 
I'm new to The Nest (previously on The Knot) and dh and I are starting to shop for our first house. I've been lurking a bit, there's lots of great conversation and information here!
We are trying to weigh out paying HOA fees compared to paying for what would be covered on our own in other neighborhoods. Currently our top choice property requires a monthly HOA fee of about $400/month (if I recall correctly from talking with the sales person). This would cover all exterior maintenance including the roof, landscaping, gym, pool, clubhouse, common areas, water/sewer/trash, and building insurance so we would only need contents insurance on our belongings.
Does this sound reasonable? We're not really sure how much to expect if we had to pay for these things on our own, other than comparing similar expenses at our apartment complex.
Re: HOA vs paying yourself
I currently pay a monthly hoa fee that covers my exterior, landscaping, grass cutting and snow removal and my advice to everyone is if you can get a home that you dont have to pay an hoa do so. our hoa is very lazy our grass often goes uncut and the snow removal is on there own time and my husband usually ends up doing it himself. As long as you have the time to keep up on your exterior dont worry about the costs because once you have a lawn mover and snow blower you probably wont have to replace it for many years. Home owners insurance is often added into your mortgage payments so the $400 in hoa fees you would be paying could go towards a larger home and trust me the bigger the home the better because as you'll soon find out once you get married you acquire more things than your use to and your home gets very small very quickly. Also, most HOA have many rules that you have to abide by and you feel restricted even though you truely are the owner of your property. Also, something to know if you for some reason fall behind on your HOA fees the HOA can place a lein against your home and foreclose on you even if you are current on your mortgage or rent payments. Those are 2 things i wish someone would have told me before buying my townhome because it makes you feel as if you truely DONT own the home you pay your mortgage on every month.
best of luck
Well, if you didn't have an HOA, chances are excellent you wouldn't have on-demand access to a pool, gym, clubhouse or common area. How much are these amenities worth to you?
Landscaping/yard maintenance takes time but not necessarily a lot of money per month. Would you hire a professional to maintain and landscape your yard on your own? Would you have the time and energy to maintain your yard without it? Mowing, raking, gardening, mulching, etc etc etc. WIthout the HOA, you'll need to buy a lawnmower and maybe a snowblower.
Sewer/trash can be expensive. I think my mom pays around $75/month for hers. (We have an HOA so I don't know what we'd be paying if we didn't).
In a regular home, you would only need a homeowner's insurance policy, which would have one deductible. In an HOA, their insurance has a deductible and your condo insurance will have its own deductible. Our policy has a rider that if interior damage also has exterior damage, they will pay up to like $25K to cover the deductible of the HOA policy (say, in the instance of a tornado or something and our roof got ripped off). You could be on the hook for paying 2 deductibles. Additionally, the HOA deductible can be pretty high. Ours is $10K per home. In contrast, our condo policy deductible is $1,000.
Can you afford the PITI + HOA per month? Most banks don't factor in HOA fees when calculating your approval and monthly payment amounts. So if you can afford $1500 in housing expenses per month, $1100 should be your PITI (mortgage principle, insurance, taxes and interest) and $400 should be the HOA if that makes sense. This will have an impact on the purchase price of your home and how much home you can afford.
HOAs will also adjust (usually raise) fees each year to cover expenses and reserves. For instance, when my sister bought her home, her dues were at $175/month. Two years later they're up to about $200/month but the things the HOA covers have not changed or increased. They can also change the rules when they feel like it. Depending on your particular HOA, they may or may not have a lot of regulations about what you can do to the exterior of your home (paint color, adding a fence etc). Best case scenario you'll have to go through some red tape and paperwork every time you want to make a modification to your home's exterior.
HOAs can be beneficial because in theory their rules keep everything looking lovely, owner occupants in the majority of homes and therefore help stabilze property values. This point is arguable.We pay about $400 a month in HOA which covers:
Landscaping
Roads
Exterior care/maintenance of our townhouse
Trash pick up
Water
Pool (open year round)
Insurance on exterior of building including hurricane insurance
Basic cable
Home alarm
It does not cover sewer which is separate from water and trash here. Our fees have actually gone down as more homes were built, so more people paying into the HOA. Another reason they have gone down is the transfer of the HOA into the hands of the owners versus the builder, which means all contracts were re-negotiated at a savings to us. I am aware that ultimately our HOA fees will begin to go up, and I'm not looking forward to that. Around here high HOA fees are common and hard to avoid, so we found one that was paying for things that we'd use versus paying for a golf course we'd never touch.
We've discussed how much we would use the extra amenities - if there was no gym we would be paying for gym memberships, we used the pool at our apartment complex all summer because it's so hot here you can't really do anything else. So your question is valid and I'm glad we're on the right track looking at it from this perspective.
Very good point to factor in the HOA with how much we can afford per month. If there was no HOA, we would hire someone to do lawn care, etc for us - it's just not really our thing and we would rather spend the money and spend our time doing other things. I guess the best way to get a true idea of cost would be to get quotes for landscaping, etc and compare the totals to what the HOA is. Thank you for sparking this, helps a lot!
Another great point for conversation with the sales rep at the neighborhoods, thank you!!