If you're planning to buy a home, there are countless decisions you'll have to make. How many bathrooms do you need? Do you want to live in a community that has good schools? How high are the property taxes? What's the crime rate like? And somewhere in there, you may want to ask yourself: Do I want a home that's part of a homeowners association?

A homeowners association is a planned development of houses, often nestled in a gated community or a neighborhood of condominiums or townhouses.

Many HOAs are lovely places, and it may seem like a no-brainer to live in one, if you've ever admired the well-manicured lawns, or perhaps the development's swimming pool or clubhouse. But HOAs aren't for everyone. Here's a roundup of some of their pros and cons.

HOAs have a lot of rules. The idea behind the rules is to keep everything looking a certain way.

"Some people love them," says Lori Strickland, a real estate agent, of the rules. She lives in an HOA in Norfolk, Virginia. "They love the fact that their neighbor will not be able to put giant chicken heads in their front yard – yes, I have actually seen this – or paint their house hot pink," she says.

But Strickland adds that not every homeowner loves complying with a neighborhood's rules. For instance, in her HOA, a waterfront community called East Beach, Strickland says, "the trash cans must be accommodated for and hidden in the landscape design."

But there's a pretty simple fix to your curiosity over whether the rules are too onerous. Find out what they are.

"Read the bylaws," advises Mary Palumbo, a real estate agent with Keller Williams Realty in Wellington, Florida. You may also want to meet with the HOA president to ask questions, she adds.

"Go to a meeting, if you can," Palumbo says. "It's better to know what you are getting into before you move into any home because you don't want to be stuck if it's not for you."

Another smart suggestion: Ask your potential neighbors what they like and dislike about their HOA, suggests Rocky Lalvani, a financial coach in Harrisburg, Pennsylvania.

"You could even attend a [HOA] meeting to see what people are asking or complaining about," he says.

HOAs can be expensive. For starters, you'll have HOA dues every month, which may be pretty affordable, under $100, but are often several hundred dollars. Your dues may rise before too long as well, and if there's an expensive neighborhood project to pay for, the HOA may learn it's short on money. And who do you think will pay for that?

"We recently had to spend $80,000 to repave a parking lot for 100 units. That is $800 per unit, however we had the reserves, so no surprise bill," Lalvani says.

But no such luck for Sheryl Dineen, a marketing executive in Chicago. Shortly after moving into her development in 1990, she received a special assessment for $10,000 that went toward construction of the circular driveway and patio area.

"It was quite a surprise," Dineen says. In fact, she had to pay the entire amount right away and wasn't able to set up a payment plan.

And unsurprisingly, she now advises any new homeowners to read the board notes from the past year to look for similar surprises, and to ask your HOA about any special assessments and reserves. You may not mind paying the occasional assessment, even a whopping one, if you've lived in your community for a while and care about it. But a $10,000 assessment is not exactly what you want as part of a welcome wagon.

She says she also had to pay a special assessment about nine years ago, for repairs to the roof, and a $1,500 assessment related to her development's parking garage.

That said, if your HOA fees are somewhat high, that actually might be a positive in the long run, says Stephanie Heacox, a business owner in Boulder, Colorado. It may be a sign that you won't be encountering a lot of costly assessments.

Heacox poses a question that all potential HOA members should ask themselves: "If roofs and elevators will need to be replaced every 25 years, is your HOA putting money aside over time, or will you be hit with a hefty assessment when the time comes?"

HOAs are very community oriented. If you've never really known your neighbors and wished you did, then you have another reason to like HOAs. Many, aside from having gyms and swimming pools where you can meet neighbors, have organized block parties and gatherings. HOAs have a reputation for being quite social.

Of course, some of the reasons you'll get to know your neighbors is that you might have to clear changes to your home with them first.

"When we had a fence put in, we had to notify our neighbors. When we painted our house the same color, we had to notify all the neighbors who could see our house," says Kathleen Lynch, an attorney in Cary, North Carolina. In that way, she feels sometimes her HOA overreaches a little.

If you join your HOA board, or at least attend the regular meetings, you'll likely get to know your neighbors that way, too.

Heacox promotes being involved in the meetings, even if you aren't a people person. If nothing else, she says: "It will give you valuable insight into decisions regarding your property and your investment."

Daniel Morris, a CPA and managing director of a tax and accounting firm, agrees. He is the president of Sunrise Heights, an HOA of 187 single-family homes in Happy Valley, Oregon, and he admits he'd prefer to live outside an HOA because he likes making his own decisions.

"But I live in one, so my advice is to be active, read your documents, participate and help," Morris says. "Sitting outside the process and then bitching is like not voting and then railing against the elected. You can’t have it both ways."

Tags: home improvements, personal finance, personal budgets


Geoff Williams has been a contributor to U.S. News and World Report since 2013, writing about a variety of personal finance topics, from insurance and spending strategies to small business and tax-filing tips.

Williams got his start working in entertainment reporting in 1993, as an associate editor at "BOP," a teen entertainment magazine, and freelancing for publications, including Entertainment Weekly. He later moved to Ohio and worked for several years as a part-time features reporter at The Cincinnati Post and continued freelancing. His articles have been featured in outlets such as Life magazine, Ladies’ Home Journal, Cincinnati Magazine and Ohio Magazine.

For the past 15 years, Williams has specialized in personal finance and small business issues. His articles on personal finance and business have appeared in CNNMoney.com, The Washington Post, Entrepreneur Magazine, Forbes.com and American Express OPEN Forum. Williams is also the author of several books, including "Washed Away: How the Great Flood of 1913, America's Most Widespread Natural Disaster, Terrorized a Nation and Changed It Forever" and "C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America"

Born in Columbus, Ohio, Williams lives in Loveland, Ohio, with his two teenage daughters and is a graduate of Indiana University. To learn more about Geoff Williams, you can connect with him on LinkedIn or follow his Twitter page.

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