Helping Raleigh Townhome Buyers and Sellers in the Face of Underfunded HOA’sThe Cost of Special HOA Assessments in the Triangle

Back in the mid to late 1980’s Raleigh home builders began to construct several townhome communities in the greater Triangle area. While not all developers and builders targeted first time home buyers (Jud Ammons, developer of Winchester Pointe townhomes in Greystone Village built high-end luxury units), the primary reason for building these communities was to offer more affordable housing options for Raleigh home buyers. Plus, Triangle townhomes were an affordable real estate portfolio option for local investors who purchased townhome units for positive cash flow rental units. Once constructed, these townhome communities transitioned to a separate HOA management company that make it their business managing and maintaining the community.

What is the Financial Condition of Your HOA?

Here is the bitter reality, what if you live in one of these 20 year old Triangle townhome communities and your HOA is underfunded for a much needed new roof or exterior siding replacement? Guess who will foot the bill with special assessments? Local NBC affilliate Channel 17 Reporter Kerry Hall filed this news report on this issue on 1-24-08.

Know All the Facts About The Neighborhood HOA

As a Raleigh townhome buyer, it is critical you know all the facts about the community’s homeowners association. Here is a list of important questions you should ask before you consider buying a home in a townhome/condo community:

  • Know how much your monthly HOA fees/dues will be per month
  • What do the HOA fees provide (pool, tennis courts, maintain the common areas..etc)
  • Are there current special assessment fees being collected
  • Secure the minutes from the recent HOA meetings. The meeting’s minutes should indicate the recent hot-button topics and issues the community faces.
  • Secure a financial statement from the HOA. That way there will be no surprises when the HOA announces that there will be an additional assessment for a new roof or paint job. FYI - it’s possible these special assessments are tax deductible. If you have any questions about this topic, leave a comment or send me an email.
  • Look at the overall condition of the exterior and roof of the townhome units. Ask the HOA when was the last time the units experienced any improvements ( exterior painted or when the roof was replaced.)
  • Carefully inspect any community amenities that are included in your dues. If amenities are provided inquire as to the overall condition of the pool, tennis courts and common areas?
  • Ask your real estate partner how many property foreclosures have occurred in the community recently as a result of increased assessments and fees?

Information is Power!

Armed with this information, you will make smarter home buying decisions and avoid costly mistakes. You will also be better prepared when that day arrives and you are asked to fork over money each month in the form of a special HOA assessment.

In my next post I’ll offer some helpful tips for townhome sellers who are thinking about selling their townhomes in this type of circumstance. In the meantime, do you know the financial condition of your community’s HOA? Are you financially prepared for a special assessment should your townhome community need a major improvement?

Until my next post,

Jim

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