Home Owners Associations

Q: Should I get a place with a homeowner's association?
A: No (if you can avoid it). HOA's are in place to make sure the entire community runs smoothly. They take care of the pool, mow the grass, make sure people aren't abusing the parking lots. The problem is that 1) there end up being a lot of rules that are pretty ...inflexible and 2) the HOA needs to be paid and those fee rise over time. The average cost I have seen in the greater SJ area is $300 a month for your typical HOAs. So if you are collecting $1500 in rent and $300 goes to the HOA. You've just lost 20% of your income. This $300 doesn't go into the house, you aren't paying down your mortgage...you get some maintenance and some insurance and a pool (maybe). Pretty steep for $3600 a year.

If you add fees for a property manager, that original $1500 is down to about $1050. You're almost down 1/3rd from the gross rent on the property. Little things add up in real estate and it's about cash flow. Try to limit those as much as possible.