Should you buy a rental property that mandates HOA payments? How do you adjust for cap rate over the years, as the property’s rent increases with inflation? Should you buy an $88,500 house that rents for $1,250 a month? And can you dive into detail about how you work with contractors and property managers?
I answer these four questions in today’s Ask Paula episode, themed around real estate investing.
My husband and I live in Charlotte, North Carolina. I’ve been looking at local properties and I notice that a lot of these properties, Class C+ or higher, come with HOAs. For example, I’ve found properties that cost $80,000, rent for $1,000 per month, and have HOA fees of around $150.
How do you think about HOA fees in general, and how do these affect considerations like cap rate? I’d love to hear your thoughts.
Here’s a brief synopsis of my answer:
Avoid the temptation to have a knee-jerk reaction to HOA fees. These can be excellent for helping you control and predict costs, if they handle exterior maintenance at a predictable rate.