Photo courtesy of Mike Koojori Photography
Right now is a great time to buy real estate in Las Vegas. Prices remain stable and investors have been pulling out of the market. Buyers who are thinking about purchasing a condo as a primary residence or investment will probably have more opportunities as we move towards 2016.
One thing often overlooked by people who have not purchased a condo before, is the Home Owners Associations (HOAs) and how it will affect your ownership of the property.
What is an HOA?
HOAs or a Home Owner's Association, can exist in a neighborhood of single family homes, townhouses or condos. In general they oversee and enforce rules put forth by the community while maintaining common areas. They impose dues to cover these expenses, which can be collected monthly, quarterly and sometimes annually. These costs usually include (but are not limited to) ground maintenance, building insurance, snow removal (not so much here), pool upkeep, exercise rooms, pest control and may also include cable or water.
Is this your primary residence or an investment?
If you are considering purchasing a condo in Las Vegas as an investment, there are a few things you should take into consideration before you start your search:
What are the rental restrictions (if any) imposed by the HOA?
Is there a minimum or maximum rental requirement?
Is there mandatory owner occupancy time period before you may rent the unit?
Does the building have an onsite management company? If so, how much do they charge?
Deed Restrictions
Another issue to keep in mind are the deed restrictions. What are they and will you have an issue adhering to them? The listing agent or owner should have these available along with other property disclosures and financial statements. It’s imperative that you have a clear understanding of them before you proceed with any transaction.
Show me the money
How is the fiscal strength of the HOA you are considering? Some associations will provide these financial reports upon request. However many do not like to disclose them until a written offer is on the table. Some even require a signed contract before providing this information. You want to make sure that there are no special assessments looming on the horizon and that the HOA is of sound fiscal health.
Other financial concerns
How are their reserves? Have there been any lawsuits? Are they running a surplus each month or a deficit? Again, make sure you add a contingency into the contract that allows you to be released if you are not happy with the financial reports.
Recap
As the southern Nevada real estate market stabilized, so did many of the HOAs that also felt the hit during the downturn. That being said, it’s important for you to cover all bases prior to purchasing a condo here in Vegas. Structure your purchase agreements in such a way to protect your interests, have a full understanding of all HOA rules-especially if you’re an investor and if you are unsure of the financial records, have a CPA look at them.