HOA setup

Hi,

I am new to this forum and HOA and would appreciate it if I can get help in answering my question below:

I am planning on getting into a partnership to purchase a vacant land with an approved plan for building 4 townhouses in Nwark, CA. I am in the process of evaluating costs and profits, and the costs will include setting up HOA. I am new to HOA and need to find out the process and costs for setting that up. As I am still in the evaluation stage, I don't need to know all the details yet. I just need to know enough to calculate the costs.

1. What are the steps in setting up an HOA for 4 townhouses?
2. What would be the approximate cost for each step?

Any input will be very much appreciated. Thanks!

RJ

You can find some of the forms your going to need at a local Office Supply store. They have forms for setting up non-profits and a few other issues related to a HOA. The forms are where they sell "How to sell your home" forms. There should be a rack specializing in such forms. Can't guarantee all of them you may need are in stock but read the price tags of the empty racks to find out if they exist. Some of the forms come with CD's. Each does vary from state to state. So read what is applicable in your state.
I don't believe it's really a HOA until the developer is no longer in control. A HOA is typically used as a "sales tool" of the developer/builder to generate interest in the property. It's a way to have the owners share the resources amongst themselves that are common once the developer leaves. Common area can be considered property, clubhouse, pool, or other recreational areas. Basically, the developer/builder installs these "big" ticket items and the owners will be responsible for the maintenance/replacement costs after they takeover. It's a way for the developer/builder to get their money upfront and get out.
A developer/builder really only makes their money upfront. It's the sale of the lots and home sales where they make their profit. It is NOT in the operation or maintaining the property. Say you purchase the property for $100K and are able to build 10 homes on the property. You sell the lots for $50K a piece. Your up to 500K. Then you have to minus the $100K investment and you get $400K profit. It's not that much to "throw-in" a swimming pool or clubhouse out of the profit. The developer will eventually turn over the property to the Homeowners (making it a HOA) and not be responsible for the maintenance/insurance/repair cost of these items. That would be a drain for the developer.
The management company on the developer is also a drain but a necessary evil for a developer. They need someone to manage the funds coming in for the homeowners until they can turn it over. To a developer, a mangement company is more like their accountant than manager. The developer is in control of the property with their majority voting rights and make the rules. It's when the homeowner's takeover, they get to generate their own rules.

Thank you so much for the feed back. I will do some research based on the information all of you provided.

Thanks,
RJ