Managing Rental Properties in HOA Communities: What Landlords Need to Know

If you’re a landlord with a rental property that’s part of a Homeowners Association (HOA), you’ve probably noticed the unique dynamics at play. HOA communities involve rules and fees that can sometimes make things feel more complicated, especially for landlords who are not living in the unit but renting it out. While there are challenges, an HOA can also have a positive impact on your property’s value and the community’s appeal to renters.

Let’s explore how HOAs affect your investment property, how they can influence the landlord-tenant relationship, and some tips to navigate this aspect of property management smoothly.

What is an HOA and What Purpose Does it Serve?

An HOA is an organization in a community — whether it’s a condo complex, a townhome community, or a planned housing development — that manages shared spaces and enforces community rules. The HOA typically operates through a board of residents elected by property owners, and it’s responsible for a range of services and amenities such as landscaping and maintaining common areas (like pools and parks). These rules can cover everything from parking and pets to noise restrictions.

In return, homeowners pay HOA fees, usually monthly or quarterly, which cover the costs of these services. For investment property owners, these fees are an additional cost to consider, but they can also contribute to property appreciation over time by keeping HOA communities well-maintained and appealing to future buyers or renters.

How Does an HOA Impact Investment Property Owners?

An HOA can impact landlords in several ways. Here are a few key factors to consider:

HOA Fees

HOA fees are an ongoing cost for property owners, and they can vary widely depending on the community and what the HOA covers. These fees are separate from your mortgage, taxes, and insurance, and they’ll affect your cash flow. If the HOA fees are high, you may want to factor this into your rental rates to ensure you’re covering your costs. However, you’ll need to balance this so your property remains attractive to potential tenants.

Rules and Regulations

HOAs often enforce strict rules around property use, including rental restrictions. Some HOA communities limit how many units can be rented out, or they might require leases to be at least six months or longer. In extreme cases, they may even restrict rentals entirely or require HOA approval for each new tenant. Familiarize yourself with these rules, as violating them could result in fines or even legal trouble with the HOA.

Maintenance and Upkeep Requirements

The HOA will have certain standards for property maintenance, particularly for the exterior, to keep the community looking cohesive. If these standards aren’t met, you, as the owner, could face penalties. It’s worth discussing with your tenant what is and isn’t their responsibility, especially for aspects they interact with directly, like maintaining the yard or balcony.

The Tenant’s Role in the HOA

Since tenants are the ones living in your property, they’ll likely have more direct contact with the HOA and its rules than you will. This means that understanding how to manage their interactions with the HOA is crucial.

Setting Expectations

When you onboard a new tenant, be clear about the HOA rules and any obligations they’ll have. Give them a copy of the HOA’s rules and regulations as part of their lease package, and go over any specific guidelines they should follow. Tenants may also need to know about community amenities, such as where to pick up a parking permit or how to reserve the clubhouse.

Tenant Communication with the HOA

While it’s likely your tenant will need to interact with the HOA occasionally, they might not know how or feel confident doing so. Here’s where you can make things smoother for everyone involved:

• Make introductions:Some HOA communities require landlords to notify them when a new tenant moves in. If this is the case, provide the HOA with the tenant’s contact information and vice versa. This way, if any issues arise, they have a direct line of communication.
• Encourage direct communication for day-to-day issues:It’s helpful if tenants can approach the HOA directly for minor issues, such as obtaining a parking permit or asking about pool hours. This can save you the hassle of acting as a go-between for every small interaction.
• Set boundaries for escalated issues: Make it clear to your tenant that if there are any major issues — like a conflict with a neighbor over noise complaints or a dispute about community rules — they should inform you as soon as possible. It’s important for you, as the property owner, to stay in the loop about anything that could affect your property or your standing with the HOA.

Tips for Landlords with HOA Properties

Navigating an HOA as a landlord can feel tricky, but these tips can help:

• Read the CC&Rs thoroughly: The HOA’s Covenants, Conditions, and Restrictions (CC&Rs) outline the community’s rules. Knowing these rules can help you avoid unintentional violations and better prepare your tenants.
• Include HOA rules in your lease: Include relevant HOA rules in the lease agreement and discuss these with your tenant during onboarding. This helps establish clear expectations from the start.
• Budget for HOA fees and possible assessments: In addition to regular HOA fees, some associations levy special assessments for larger projects. Make sure you have some reserves set aside in case of unexpected costs.
• Stay involved in HOA meetings: While you may not live in the community, attending HOA meetings (or at least reviewing minutes) can keep you informed of any upcoming changes or issues that might impact your property.
• Maintain good relationships with the HOA: A good relationship with the HOA can go a long way. This can be beneficial if issues arise, as a friendly rapport might lead to more understanding from the HOA’s side.

Welcoming Tenants To Their New Home

Being a landlord in HOA communities requires a balance of managing both tenant expectations and community rules. While the extra rules and fees may seem like a hassle, the HOA can actually enhance your investment’s value by maintaining the community and fostering an attractive, well-kept environment.

With the right approach, a rental property in an HOA-governed community can be a smooth, profitable venture for landlords. And if you’re looking for a team to help you manage the complications that can arise when renting a home in an HOA, Rent Portland Homes Darla Andrew’s Office is here to help. For more information on our services and how we can maximize your rental’s ROI, call us at (503) 515-3170.