House #20: HOA Issues

February 3, 2011 · 13 comments

I was talking with a fellow investor the other day about the fact that I don’t post enough about the mistakes I make in my business anymore; I used to devote about 50% of this blog to the mistakes we were making and the things we were learning. While it’s true that — after a couple dozen rehabs — we don’t make nearly as many mistakes as we used to, we certainly still make our fair share of stupid moves, and I think it would be beneficial for my readers (especially those who are new to real estate) if I posted more “lessons learned” in this blog…

So, I’m going to start with a great lesson that we learned today…the hard way…

Over the last few months, we just started buying properties in subdivisions with Homeowner Associations (HOAs) — including Houses #19 through #22. Other than paying our dues on time and not making any design changes to the exterior of our houses, I haven’t really given any consideration to the HOA rules and covenants in these neighborhoods. Well, that lack of consideration is going to cost us some money…

We received a notice in the mail today that the exterior painting we did on The Lake House doesn’t conform to HOA guidelines, and that we didn’t receive approval for the new paint colors. The covenants clearly state that all exterior painting must be approved by the HOA in writing and that only certain colors may be used.

The letter only pointed out that the trim color on the house (currently an off-white) must be white instead. This means that we’ll have to pay our painters a few hundred dollar to repaint the trim, gutters and garage doors on this house; and if it turns out that the main exterior color violates the rules as well, we may have to repaint the whole exterior, which would likely cost $1500-1800!

And we’ll have to go back to the buyers of this property and let them know that we’ll be changing some or all of the paint colors on their new house…

Luckily, we received this letter today. We were planning to start painting the exterior of The Trifecta House (which is in the same subdivision) tomorrow, but given this new information, we’re going to hold off until we can talk to an HOA representative and get official approval.

Hopefully we won’t have to repaint anything other than the trim on The Lake House, and hopefully the colors we’ve selected for The Trifecta House will get approved…I’d hate to waste more time and money because we forgot to check with the HOA before we started painting. We’ll also make sure to get the colors for The Leak House approved before we start working on that one as well…

After this, I’ll start being a lot more conscientious about our houses in HOA subdivisions…

13 responses to “House #20: HOA Issues”

  1. Mike R says:

    I feel your pain. We bought a cool (or so we thought) lot in an airpark, but the HOA here has turned it into a hellish experience for us!
    Love your blog!

  2. Up until I moved into my condo 3 years ago I never had much experience dealing with HOAs. I do not like it at all because they seem to be a group of people who want to control every little thing you do to your home. They are quick with the fines, but slow on communication. I’m moving the first chance I get.

  3. Uncle Jeff says:

    Landscaping changes can be problematic as well. Some associations include plans for positioning every tree and plant.

  4. Tom Greene says:

    At that price point I’m very surprised that they are so strict. I deal with HOAs all of the time, but rarely do I see regulations so strict and enforced. Glad you found out about it before you started on the outside of the latest house.

  5. Jingle says:

    I have come to hate HOA’s. For some reason they tend to attract small minded people to serve as officers, with nothing better to do than peek over your back yard fence and tell you whats wrong…….grrrrrrr. On the other hand, I once bought a nice house at a Sheriff sale due to unpaid HOA dues for a pittance. The whole deal ended up in a lawsuit, took almost 2 years to resolve, but I made a hefty profit in the end. I wouldn’t do it again, what a head banging experience…..

  6. J Scott says:

    Thanks all for the feedback! I definitely agree that most HOAs are over-zealous in their attempts to create and enforce rules, though I also think some very basic guidelines are a good idea to keep some homeowners from destroying the property values of other homeowners. For example, I’m perfectly happy that my neighbor is not allowed to paint his house fluorescent pink… πŸ™‚

    In this case, it seems the HOA is being a lot more stringent than I think is necessary (even the property manager for the HOA told us that the house looks fantastic, just before telling us we’d still have to change it)…I’ll have more info in my next post…

  7. […] Fix And Flip Tips: Why You Should Always Check With The Local HOA Posted by: david | Category: Flipping Houses, Real Estate Investing, Rehabbing Houses […]

  8. Shae Bynes says:

    HOAs….the necessary evil. LOL! I’ve had some run-ins with HOAs…enough that I’ve sworn off further investing in condos or townhouse communities. Seems the HOAs for subdivisions of single family homes are typically not as bad, but I guess it all depends on the community. Can’t make any assumptions!

    Glad you were able to get that letter before starting paint on the other house!

  9. Shae Bynes says:

    J, can you please add a social media sharing plug-in to your site? I’d love to share some of your posts (and bet other readers would too), but just want it to be easily done in 1 click. You can do one like Sexy Bookmarks, or the RetweetMeme button, or the facebook like button…anything πŸ™‚ Thanks for considering! Have a good weekend, J!

  10. Don Hines says:

    I am going to our annual HOA meeting tomorrow evening to defend my honor. I have heard that my habits are on the agenda for using my driveway to work on my party barge and I have the audacity to use it to load my camping trailer and park it there over night. Otherwise, I spend over $125 per month for long term storage. I know it is an old geezer with nothing else to do but gripe about everyone else.

  11. J Scott says:

    Shae –

    I’ve been meaning to do this for a while…thanks for the little push! Done… πŸ™‚

  12. Shae Bynes says:

    Your readers (well at least me) thank you! πŸ™‚ LOL!

  13. Zac says:

    Came across your blog via Matt Kearney and Dominic Kirchner’s blog over at Flipping Smart. Very informative! I’ve enjoyed reading through many of your older posts!

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