# Entrepreneur this week post 3 - HOA today I want to talk to you about one of the things you…

# Initiated weekPost 3 - HOA

Today I want to talk to you about one of the things you should check when you do ink-diligence mainly for construction project but also for major improvements.

In many neighborhoods in the United States there is a body called the Homeowner Association or in Hebrew the neighborhood committee. The purpose of the committee is to take care of the neighborhood and its residents, it takes care of maintenance and services for the residents of the neighborhood and especially emphasizes the visibility of the neighborhood.

Each committee has its own set of rules and guidelines for how the built house should look.
Of course, these laws can have a direct impact on the cost of building or renovating homes

When considering a transaction, ask the realtor or seller to see if there is an HOA. If what we do is try to make connections with them. Make an appointment with them to coordinate expectations of what they want to have at home so that we can match that to our construction budget. Many times they already have a book ready with definitions of what should be at home, for example, a mailbox at the entrance to the house, or what kind of exterior cladding should be at home.

If there is something that doesn't suit us or the budget, we have several options - to go back and discuss the issue with them, or decide we are acting against the request (something we like less because it may cause conflicts later to delay us) or if it seems material to us - can also cause Withdraw from the transaction.

In addition, there is also the committee's annual tax interest, and if we purchased a large number of lots then even if it is an exit deal we need to put that into our budget.

Of course, when you buy a rental property, it is important to check the commission payment, especially if you buy town houses because in some cases the payment can be very expensive and also monthly and not annual, as there is maintenance on the building and not just the neighborhood, and sometimes it can kill you.

And here is a story about the HOA and a deal we were about to purchase from some Atlanta lots. During our tests, we talked to the HOA to understand what exactly to build and we were surprised to find that there was an agreement with another contractor to design the models to build in the neighborhood, and according to the agreement for every home builder in the neighborhood, this contractor had to pay $ 70,000 for the design of the houses. It was very strange to say the least. We tried to see if it was something that could be bridged but were not willing to talk to us about this issue. Needless to say, it prevented us from entering into a deal and that is good.
So the next time you think about entering a project in an area that has HOAs, remember to ask if they have any special requirements.

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