Whether you like them or despise them, homeowners’ organizations have a significant presence in communities all around the globe. As a vacation rental owner, you are likely to encounter at least one HOA at some time in your career.
To develop a long and friendly connection with any HOAs you come across while operating your short-term rental company, you must first understand what a homeowners association is, what they do, what their costs are, and how to join one. For this article, we got expert recommendations from Vacation Rental Software leaders, Lodgable.
What exactly is HOA?
HOA is an abbreviation for homeowners’ association. It is defined as a group of homeowners inside a neighborhood, condominium, or planned community that create and enforce a set of regulations for the properties and inhabitants under their control.
As a property owner, you are legally responsible for adhering to the established rules and regulations, as well as paying any fees or participation requirements and complying with local, state, and federal laws. Each HOA’s expectations vary, so it’s important to study all of the criteria before acquiring property within the authority of a homeowners’ organization.
An HOA may be a valuable addition to any community with the right leadership and involvement. Let’s learn more about them so you can comprehend what it means to be a member of an HOA as a short-term rental owner.
All of these restrictions may seem to be an unnecessary burden, yet they exist for a purpose. A homeowners’ association’s mission is to protect and improve the properties in the neighborhood. Ideally, their control improves neighborhoods.
However, some HOA communities may be harsher than others. Many of the laws and regulations concern the property’s care and look, which may vary from just keeping the front of your house clean to limiting what you can and cannot do with your home in terms of building, decorating, and aesthetic appeal. Everything is dependent on the HOA you join.
Many individuals like having HOAs because they usually add a lot of appeal to the neighborhood, which implies better property prices and the opportunity to charge higher daily rates to vacation rentals. All of this, however, comes at the expense of giving up complete control over homeownership and paying monthly fees.
It is totally up to you as a short-term rental owner whether you invest in a property inside an HOA jurisdiction or not. There are benefits and drawbacks to homeowners’ organizations, and it is up to you to decide what is best for your vacation rental.
How does a homeowners’ association work?
Understanding how HOAs work and the framework that supports them is simple. If you buy a house that is part of a homeowners’ association, you instantly become a member of the HOA. This includes paying monthly fees, attending necessary meetings and activities, and adhering to its regulations. The Declaration of Covenants, Conditions, and Restrictions contains all of the norms and expectations for reference.
Typically, there will be weekly or monthly planned meetings at which all members of the group must attend and listen to community updates or concerns. Food or a social event may be provided after the meeting to help members create connections.
An HOA is administered by a board of directors elected by the community or donated their services. The board is responsible for formulating and enforcing regulations as well as collecting payments. They will also usually conduct community gatherings.
Board members have the authority to police the premises and issue tickets or penalties for community offenses. If the property owner ignores the citations or has many outstanding infractions, a trial may be held, and they may be booted out of the neighborhood.
As a short-term rental owner, you may face limits on the number of guests who may stay at once, noise levels, the number of rentals you can have in a certain period, or you may even be barred from having them at all. Pay attention to the regulations if you want to get along with the board of directors and follow their guidelines.
HOA fees are required to be paid monthly or yearly by all homeowners groups. HOA costs are typically between $200 and $400 per month but may vary from $100 to $10,000 in upscale areas.
What do HOA fees cover with so much money? HOA fees help to pay for a variety of activities, but they mostly cover the expenses of maintaining common facilities like lobbies, patios, swimming pools, tennis courts, community clubhouses, and other similar locations. They will sometimes assist with covering utilities such as water, sewage, and trash. HOA fees are used to maintain anything that is utilized by the community.
HOA fees often go toward the association’s reserve fund. This money is designated for significant refurbishment projects or emergency repairs. If there is insufficient money in the reserve for such repairs, the HOA board may levy fee assessments on residents to make up the difference.
When deciding whether or not to invest in a short-term rental property, owners should factor the HOA fee into their budget. If you currently own a property in an HOA jurisdiction, you might consider putting aside some of the money you earn from renting it to help pay for such costs.
Some online travel agencies (OTAs) will let you collect money from reservations for community fees, but you must manage a certain number of homes before you can start collecting payments for HOA fees.
How to Join an HOA as a Short-Term Rental Owner
Joining an HOA is simple since you immediately join when you buy a home within a jurisdiction. The extent to which you participate in the organization is determined by the regulations as well as your preferences.
As a homeowner, you must pay the fees, attend obligatory meetings, and follow the regulations. If you want to become more active in the HOA, such as joining the governing board, see the Declaration of Covenants, Conditions, and Restrictions for information on how to do so.
HOAs and vacation rentals do not often mix well since establishing guidelines for short-term rentals is a relatively new notion for HOAs to cope with. Vacation rental visitors typically do not feel linked to the community and have no long-term interest; thus, obeying the regulations to care for the community becomes a challenge. Parking, noise, usage of communal spaces, and security may all be issues.
To address this, short-term rental owners should make it extremely obvious to visitors what the restrictions are before renting and post them someplace on the property. It is also critical to be alert to any calls from the HOA board while visitors are staying at your property to respond swiftly if any violated regulations are brought to your notice.
Noncompliance with HOA guidelines may result in substantial fines, such as expelling disruptive visitors from the property, which would damage your vacation rental company. As a vacation rental owner, you must ensure that the regulations are enforced on your visitors and that you are working with the association to find a means to comply with the guidelines.
If you and your HOA are at odds, some potential solutions include creating laws requiring only long-term rentals, a minimum rental length, or requiring visitors to register with the HOA office. Of course, there are alternative options, and not all HOAs are against short-term rentals, but it is always preferable to have an open dialogue to have a positive connection.
Homeowners’ associations exist to keep the neighborhood pleasant and prosperous. There are both advantages and disadvantages to owning a home with an HOA. Suppose you decide to operate a short-term rental out of an HOA jurisdiction property. In that case, you must ensure that the regulations are followed to maintain a healthy and pleasant relationship between you, your visitors, and the homeowner’s association.