Love them or hate them, homeowners’ associations have a strong presence in communities around the world. As a vacation rental owner, odds are that you will come into contact with at least one HOA at some point in your career.
It’s important to learn what a homeowners association is, what they do, their fees, and how to be part of one in order to build a lasting and amicable relationship with any HOAs you come across while running your short term rental business.
With the correct leadership and participation, an HOA can be a great asset to any community. Let’s learn more about them to understand what joining an HOA means for you as a short term rental owner.
Don’t see the form to download the House Rules Template? Click here.
What is HOA?
HOA stands for homeowners’ association. It is by definition a group of homeowners within a neighborhood, condominium or planned community that makes and enforces a set of rules on properties and residents within their jurisdiction.
As a property owner, you are legally responsible to follow the set rules and regulations and comply with any fees or participation requirements, as well as abiding by the state and federal laws of the area. The expectations are different in each HOA, so it’s important to read through all the guidelines when purchasing a property within the jurisdiction of a homeowners’ association.
Having all of these rules put in place may sound like an unnecessary burden, but they exist for a reason. The goal of a homeowners’ association is to preserve and enhance the properties within the community. Ideally, they improve neighborhoods through their regulation.
That being said, some HOA communities might be stricter than others. Many of the rules and regulations have to do with the upkeep and appearance of the property, which can range from just keeping the front of your house clean to regulating what you can and can’t do with your home in terms of construction, decoration and visual appeal. Everything depends on the individual HOA you join.
Many people love having HOAs in place because they typically add a lot of desirability to the community, which means higher property values, and in turn, you can charge higher daily rates to vacation renters. However, all of this comes at the cost of giving up full control over homeownership and paying monthly fees.
Whether you invest in a property within an HOA jurisdiction or not is entirely up to you as a short term rental owner. There are perks and downsides to homeowners’ associations, and it depends on what you think is best for your vacation rental.
How does an HOA work?
Understanding how HOAs operate and the structure behind them is pretty straightforward. If you purchase a property that has a homeowners’ association tied to it, then you automatically become part of the HOA. That means paying monthly fees, participating in mandatory meetings and events and complying with their rules. All of the rules and expectations for reference are written in a document called the Declaration of Covenants, Conditions and Restrictions.
Normally, there will be weekly or monthly set meetings that all members of the association have to attend and listen to updates or grievances from the community. There might also be food supplied or a social event following the meeting to build relationships among members.
An HOA is governed by a board of directors, elected by the community members or who have volunteered their services. The board is in charge of making and enforcing the rules and payment. They will also typically run the meetings for the community.
The board members may patrol the properties and write citations or fines for community violations. If the property owner ignores the citations, or if they have multiple outstanding violations, there may be a trial, which can end in being kicked out of the community.
As a short term rental owner, there may be restrictions against how many guests you can have staying at once, noise levels, the number of rentals you can have within a period of time or you may even be prohibited from having them altogether. Pay attention to the rules in order to get along smoothly with the board of directors and abide by their laws.
All homeowners associations have HOA fees that you must pay monthly or annually. HOA fees are usually between $200 and $400 per month, but they can range from anywhere between $100 and $10,000 for luxury communities.
That’s a lot of money, so what do HOA fees cover? HOA fees contribute to many things, but they mainly cover the costs of maintaining common areas, such as lobbies, patios, swimming pools, tennis courts, community clubhouses and other such areas. Sometimes, they will also help cover utilities such as water or sewage and garbage. Anything that is used by the community is upkeeped by HOA fees.
Many times, HOA fees also go into the reserve fund of the association. This reserve fund is set aside for large renovation projects or for emergency repairs. If there is not enough in the reserve for such repairs, then the HOA board can impose fee assessments on homeowners to make up for the needed money.
Short term rental owners should calculate the HOA fee into their budget when determining if they should invest in the property or not. If you already find yourself with a property within an HOA jurisdiction, then it may be advisable to consider setting apart some money made from renting your property to help pay for such fees.
Some online travel agencies (OTAs) will allow you to collect money from bookings for community fees, but you have to manage a minimum amount of properties in order to begin collecting funds to pay for HOA fees.
How to be a part of an HOA as a short term rental owner
Joining an HOA is easy, as once you purchase a property within a jurisdiction you automatically join. How involved you are in the association can depend on the rules and also on personal preference.
As a homeowner, you are expected to pay the fees, go to mandatory meetings and abide by the rules. If you would like to be more involved in the HOA, such as joining the governing body, then you should look to the Declaration of Covenants, Conditions and Restrictions about how to do so.
Stereotypically, HOAs and vacation rentals do not mix well, as creating rules for short term rentals is a relatively new concept for HOAs to deal with. Vacation rental guests generally do not feel attached to the community and have no long-term interest, so this becomes a problem with following the rules in order to care for the community. There may also be problems with parking, noise, use of common areas and security.
To help combat this, short term rental owners should make it very clear to guests what the rules are before renting and have them visible somewhere on the property. Also, being vigilant of any calls from the HOA board while guests are staying at your rental is important to quickly take action if any broken rules are brought to your attention.
Not complying with HOA rules can mean serious penalties such as the removal of unruly guests from the property, which would be highly detrimental to your vacation rental business. As a vacation rental owner, you should be sure that you’re enforcing the rules to your guests and that you are working with the association to find a way to abide by the rules.
If you and your HOA are butting heads, some possible solutions can include implementing policies about only having long term rentals, a minimum rental term or having to register guests with the HOA office. Of course, there are other solutions, and not all HOAs are against short term rentals; however, it’s always better to have an open conversation to promote a smooth relationship.
Homeowner’s associations are there to keep the community happy and thriving. There are many benefits and downsides to having a property with an HOA attached to it. If you choose to run a short term rental out of an HOA jurisdiction property, you much make sure that the rules are followed to ensure a healthy and positive relationship among you, your guests and the homeowner’s association.
Don’t see the form to download the House Rules Template? Click here.