The great thing about buying a home, as opposed to renting, is setting your own rules. You don't need to get your landlord's permission to paint your walls a certain color, install fixtures, or make permanent changes to your layout. But when you buy a property that's part of a homeowners association, or HOA, part of that freedom is taken away.
1. Added costs
Belonging to an HOA costs money; think of it as a mandatory club with recurring dues. Those fees are typically paid monthly and can make the cost of homeownership far more expensive than you may have bargained for. The more services and amenities your HOA covers, the higher those fees are likely to be.
You're probably aware that failing to keep up with your mortgage payments could put you at risk of foreclosure. But guess what: The same holds true if you fall behind on your HOA payments. If you buy a property that's part of an HOA, make sure you can swing those added fees on top of your mortgage, property taxes, and homeowners insurance.
2. Strict rules
When you belong to an HOA, you're often subject to rigid rules that dictate how your home can look and what it can be used for. It's not uncommon for HOAs to impose regulations on outdoor maintenance. You may not be able to paint your home's exterior a certain color or let your grass grow too high. If you ignore the rules, you'll often face extensive fines.
Furthermore, an HOA might prohibit you from renting out your home, whether on a full-time or seasonal basis. That could be problematic if you're hoping to use your home to generate income. An HOA might also prohibit you from conducting business in your home.
And let's not forget about pets -- HOAs are notorious for dictating whether you can have animals and what size they're allowed to be. HOAs can also impose parking regulations that make it difficult for you and your guests to access your home.
The takeaway: Read up on the rules before agreeing to buy a home that's part of an HOA or you could be in for some unpleasant surprises.
3. Potential conflicts with neighbors
If you want a say in your HOA's rules, the best way to do it is to get on the board. Not only does that mean spending some of your limited free time attending meetings, but it could also mean getting into heated debates with your fellow board members -- your neighbors -- and grappling with strained relationships after the fact.
Does your home come with an HOA?
HOAs are often associated with condos, co-ops, and townhome communities, but that doesn't mean standalone homes can't be part of one. If you're buying a home in a new development, be on the lookout for the presence of an HOA.
If you're certain you don't want to be part of one, make that clear to your real estate agent. The last thing you want to do is fall in love with a property only to learn it's part of an HOA with hefty fees and lots of rules.