Purchasing a Home in an HOA in Texas – Pros and Cons

Let’s say you’re looking into purchasing or renting a house. Everything about the house looks great: It’s in a great area, the schools are good, and it has a backyard and a nice living room. You are almost committed and ready to make an offer when you discover an HOA. Now you aren’t so sure!

An HOA, or a ‘Homeowners Association,’ is an agreement or requirement that many neighborhoods now have. HOAs get plenty of negative press, and nobody seems to like them, but are they that bad?

Why do HOAs exist?

If you ask the average person why an HOA exists, they may say it gives everyone grief. One person self-declares they are president and then becomes an over-ruling monarch, creating rules and regulations that only benefit them.

That isn’t the truth, at least, not really. Okay, sometimes it is, but that isn’t why HOAs exist, and it certainly isn’t how an effective HOA is run.

An HOA aims to create a self-governing organization in “common interest” communities where homeowners collectively pay fees to maintain the neighborhood. This can include streetlights, a community pool, a playground, or, in some cases, a golf course.

HOAs also require specific standards to be maintained, such as a cut lawn, street parking rules, the color of the house, or a noise curfew. Often, this is where the drama and issues arise.

Pros of an HOA

Despite its bad reputation, an HOA can have a positive role. Here are some examples of how it can benefit homeowners (or renters).

Amenities: Sometimes, an HOA will add amenities to a neighborhood, such as a park, pool, tennis courts, or walking trail. In a big neighborhood, these amenities can be covered for a low monthly or annual fee.

Garage Sales: About 20 years ago, yard sales were an American tradition. Every Saturday, there were “garage sale” signs and sales on just about every corner. That culture has changed in much of the country, and those signs are becoming less common. Instead, many HOAs are putting on Neighborhood Garage Sales where everyone in the neighborhood is encouraged to have a yard sale on a specific day. This can bring in many potential buyers and be an excellent money-maker for many who participate.

Neighborhood Standards: This can be positive or negative, depending on how you view it. An HOA board of directors can make a basic standard of living that prohibits specific actions or caring for a property. Examples include setting a noise curfew, not allowing cars to park on the street, lawn standards, or how bright a light can be on a house. Additionally, HOA fees cover road maintenance, streetlights, security, and landscaping in public areas.

Sense of Community and Camaraderie: If done correctly, an HOA can create a sense of community and belonging. Some HOAs will sponsor events such as a summer BBQ, back-to-school activities, or a golf tournament.

Negatives of an HOA

Stereotyping is not something anyone should do. However, stereotypes do typically stem from some truth. Not every HOA will have these issues, but some more common ones are below.

High Fees: An HOA can charge high fees. For example, if living in a neighborhood with a golf course, two swimming pools, three parks, and a nature trail, the HOA fees can be hundreds of dollars every month.

Not Always Applicable: Yes, there is something to being part of a community, and sometimes that means paying money for things that may not be applicable or used by that person. Sometimes, it can feel over the top. If someone never golfs, spending $50 a month for the golf course adds up and can feel like throwing money out the window, only to have a few golf balls land in the backyard daily.

Social Club: Some HOA boards of directors can be like a high school clique group. When and if this happens, this group of friends can get together and make changes that they find convenient while leaving everyone else behind. In other words, if they all have young kids, here comes a splash pad! The tricky part is that there isn’t an actual election for this. Once a group is formed, there isn’t a way to officially overthrow or change that group.

Too Big or Too Small: If a neighborhood is too small, it can lead to high fees since the cost of road maintenance, lights, and any amenities is being divided up by a small group. If a neighborhood is too large, it can be challenging to have a voice, and the HOA can feel distant.

Some HOAs Don’t Allow Rentals: Depending on the neighborhood, HOAs don’t allow owners to rent out their homes. This is usually only in the highest-level neighborhoods, but it’s certainly something to check in on if there is any chance the house may be rented out later.

HOA’s and Rentals

Assuming you can rent out a home in a neighborhood with an HOA, remember a few things.

HOA fees shouldn’t be passed on to the renter. If you want to add a bit to the cost of the monthly rent to help cover expenses, you should always pay the fees directly.

Renters must still follow the HOA rules, which should be explained clearly before renting. If there is a rule against having a trailer in the driveway, there can be no exception, even for renters.

Renters usually won’t be given their own passcodes. If there is a gate code to enter the neighborhood or a community pool, you might have to provide them with your password as they likely won’t get their own codes. This is particularly true in more prominent neighborhoods.

Try a property management company if you have questions or want help running a rental property. A property manager can help with all the ins and outs of renting a house, including collecting rent, maintaining it, and, in rare cases, evicting tenants.

HOAs usually have better reputations than those that they’ve been given. While there are some terrible experiences and situations, for the most part, an HOA’s benefits and purpose outweigh the negatives. When purchasing a home, an HOA shouldn’t get in the way unless you know you don’t want to live up to the standards the neighborhood has set forth.