“This condo is perfect. Location is great, price is doable and it’s walkable to everything”.
Before you fall too far in love, always remember, particularly with hi-rises, to check out the HOA. Nobody wants to live in a crappy neighborhood. Hi-rises are vertical neighborhoods. Since HOA’s are in charge, they determine what kind of neighborhood you will live in. So, do your homework.
When shopping at Condo A, be sure to ask their Building Management how it compares with Condo B, or C or D. And remember, you’re not looking for an answer. You’re looking for, “how” they answer.
Property Managers never trash talk a competitor. In Atlanta, they’re more apt to mention good things about their competition. Just listen. After a few buildings, you will get a trend of what buildings no one mentions. That becomes a red flag. And, if you ever hear, “bless their heart, in reference to any particular building—it means the red flag is blinking.
December is HOA meeting season throughout town. Condo owners, every few years, you should do a “sanity” check on your own HOA by visiting other Buildings and seeing what is new and what is trending. Chances are, if you “feel” like your Building isn’t keeping up, it probably isn’t.
The following are 5 key questions or concerns every buyer should have of their future HOA.
Investors on Boards
During the last downturn, investors flooded into the condominium market. Their stench lingers. Investors are NOT interested in developing a Community. Their interests are portfolio-based. Investors “need” to push the Lincoln head through every penny. Homeowners just want a nice place to live. The two are incompatible.
If a HOA doesn’t have rules governing the number of investors allowed on Boards—don’t buy in. Investors sitting on Boards are a cancer on the Community they serve.
Technology & Social Media
In multi-generational neighborhoods, Building management must communicate on multiple platforms. Today, a 30-year old consumes information much differently than a 60-year old. Both needs need to be served. Now more than ever, HOA’s have to be on top of technology. Simple email no longer cuts it. Be sure to always ask Building management about their technology plan. If they don’t have one; red flag.
Communications & Transparency
Seems simple, but it isn’t. For reasons unknown, people get on Boards, something happens, and they start doing secret stuff. You hear; “they’re not being honest with the homeowners”, all the time. This is why Buyers and Agents should always ask Building Management about their communication methodology and, perhaps more importantly, their problem resolution procedures. If their answers sound sketchy and unformulated, there is a reason for it. Red flag!
HOA Boards should never become a “clique”. Buildings hurt themselves when it’s the same residents, year after year, who keep dominating HOA policy. It’s kind of like plaque to arteries. Fresh blood doesn’t get through.
As sure as the sun will rise, your HOA will be fraught with petty politics and drama. Seems people who live for drama often find themselves on HOA Boards. Term limits help minimize the negative influences of any one Board member.
Percentage of Full-time Residents
Many well-positioned condominiums, have owners who use their property only on occasion; weekends or when family comes. Great for them, but these owners don’t add much in terms of contributing to a Building’s community. The percentage of full-time residents is a critical Building statistic.
The number of rental units is most often capped at a 25% of a building. That means 25% of the HOA votes are coming from investors. Part-time owners will generally, always vote with the investor. It’s in their financial best interests. With a large percentage of part-timers, it create a situation where the homeowners, who actually live in the community, become a voting minority. A ruby red flag!
In the end, good HOAs giveth and bad HOAs taketh away. The comparable swing from Building to Building can be as much as tens of thousands of dollars. Buildings earn their reputations. One simple way to check on a Building’s reputation is to learn their average “days on market” (DOM). Generally speaking, a low DOM speaks well of a Building. A high DOM, not so much. Considering we have had a hot market for nearly 3 years now, any Building today with a high DOM is, bless their heart, probably having some problems in terms of reputation.