16 Apr The Value of Assessments, Part 2
Part 2 of our 2-part series will focus on the elements of an association assessment.
A common element is something available for use by all and maintained by the community based on the developer designation at the time of the initial build. Every associations common elements are different so, it’s important to really look at the association budget and understand exactly what the assessments will protect and support.
The most ‘common’ common elements in a single family residential or condominium community are pools, clubhouses and tennis courts. Current developers are also adding parks, walking trails, electric vehicle charging stations and exercise facilities. But what many fail to see is that there are infrastructure elements that also need to be supported.
Streets, sidewalks, perimeter fences and street lights, are often part of the budget for an SFR. Roofs, exterior building maintenance, and landscaping will be part of the condominium budget. Co-ops and condo hotels have unique outliers that are designed to maintain their common elements.
Amenity Option Assessments
Some communities have amenities that are definitely pay per use. As owners it’s important to look at these items and determine if they’ll enhance the homes appeal to renters or not.
Recreational Vehicle parking, golf memberships and boat slips are normally part of an “add in” package of amenities. There are even varying membership packages for clubhouse access and exercise facilities.
For investor owners, the best choice may be to leave optional packages up to the discretion of the renter. Often residents want to live in a golf community because it affords features they find desirable, but the golf course isn’t one of the limited use elements they are interested in using.
The Basic Common Elements
Associations pay for power to HOA security lighting. They pay for water for landscaping, gate maintenance and appropriate insurances. Condo associations may pay for water and sewer, sidewalks and asset protection. These are basic budget line items that you pay for when you live in an apartment building, but instead of being a separate bill, it’s included in your monthly rent.
There are many planned communities that do not incorporate associations. Municipalities do their best to maintain roads, ensure streetlights are functioning and remove debris. But those municipalities are focused on a much larger segment of real estate than any homeowner association. With that bigger focus comes an inability to act as swiftly as an HOA to repair a damaged wall or clear wind-swept debris.
The HOA assessment is not about nickel and diming homeowners. It’s about maintaining the community. It’s about giving everyone the ability to live in the place they saw when they were looking for somewhere to call home.
There’s a simple way to think about HOA assessments. When the next assessment check is due, consider that you’re paying your part to keep the streets you drive on, or the gate you drive through, or the elevator you ride in, maintained to the best possible standards.