Recently, at a continuing education class, the instructor shared some facts about HOA’s. There are currently around 11,500 Home Owners Associations (I am not sure if that is in the state, or in the county I didn’t write that tidbit down) and of those HOA’s 3000 of them are upside down financially.
I was surprised to learn that as little as 15% of properties going into foreclosure in an HOA can cause financial stress to the balance sheet.
With our residential purchase contract, you the buyer, do get to check out and approve during the inspection period, the CCR’s (rules and regulations of the HOA). We are now suggesting adding in that the buyer to also receive the current financial records for the HOA. Knowing what the financial status is of an HOA, you will have a better idea if there are going to be large assessments in the future, does the HOA have reserves, and are they adding to the reserves each month.
The instructor over at the Arizona School of Real Estate shared those numbers. I am not sure where to get the stats to confirm.
I know our HOA raised the monthly fee 2 times in a year to compensate for foreclosure properties. We are still putting money into the reserves and the only way to do that was to increase the rate.
Irene, Would love to hear more details on this. Were any online sources cited?