The Truth About Low HOA Fees
Looking for ways to save money is a good discipline. Saving money through low HOA fees may not be indicative of good discipline however. When homeowner’s associations’ fees are too low, it can sometimes result in significant problems later on for homeowners in the community.
Here are five possible consequences of low or inadequate HOA fees.
Poor Maintenance Decisions
Low HOA fees can be a result of an association making maintenance decisions based on saving money. If the board doesn’t believe in investing in preventative maintenance, including annual inspections, parking lot paving, or necessary cleanings, they may not see a need to increase HOA fees. Not collecting an adequate amount in fees can also force the board of directors to make poor maintenance decisions, skipping vital tasks and potentially placing the community at risk.
Not Saving Enough Money
Low HOA fees can also mean that the homeowners association is not setting enough money aside monthly in the reserve fund. A reserve fund is comparable to a savings account that the board can use for more significant repairs or maintenance needs, such as roof replacements, parking lot repaving, or flooring replacement in common areas. Without a reserve fund, the board of directors are forced to call for a special assessment that requires all homeowners to pay out of pocket to cover the expense should an issue arise.
Decreased Property Values
If proper maintenance isn’t happening in an HOA community, property values are likely to suffer as a direct result. Even though buying a home is an investment, if the surrounding property and community are not in great condition, homeowners will struggle to resell their home for the same amount they purchased it for.
Not a Safe Place to Live
Low HOA fees can also mean that the board isn’t keeping up with the times in the way of technology and safety equipment. These days, video surveillance cameras and automatically locked doors are often standard. If the HOA doesn’t collect enough in fees, they won’t be able to invest in these safety features to keep the community a safe place to live.
Price Hikes are More Likely
Nobody likes a sudden price increase, especially if it is drastic. A price hike is more likely if HOA fees have been too low for a number of years. If an association suddenly needs to raise HOA fees to cover new costs or conduct a special assessment, homeowners will feel the negative effects.
If your HOA needs assistance with strategizing the right amount to charge for HOA fees, contact AR Management today!