Property Purchase in HOA with Amenities

Hi All,

I am seeking opinions on purchasing a townhome with many amenities to purchasing a stand alone home with no amenities.

Background: I signed a contract on a new stand-alone home in December when interest rates hovered around 3.5 to 3.75 percent range. The home is due for completion in mid-September. Interest rates have jumped up to a range of 5.5 to 5.75 since then and are predicted to get even higher.

I am getting nervous about the climbing interest rates and have been looking at other options. I found a new mixed use community with stand-alones, townhomes, and apartments. A clubhouse, swimming pool, walking paths, and a water feature are all planned for this community. The community is in its beginning stages. None of the amenities have been constructed yet. There are 3 townhomes available for sale to be completed within the next few months. The price is $75,000 less than the stand-alone home that I have contracted for. The realtor stated that HOA fees will be $125 a year with a small unknown fee for the pool and clubhouse. I am a bit skeptical about that but...The covenants are 25 pages which I assume are fairly typical of these types of communities. There are 2 pages of rules. Nothing grabs by attention except that there are classes of members labeled as such: Class A - Stand-alone homes, the owner is responsible for lawn maintenance and snow removal. Class B - Townhomes, lawn maintenance and snow removal provided by the HOA at the owners' expense. The realtor stated that no lawn maintenance or snow removal is provided by the HOA. ??? I will have to check that out for sure.

My spouse is not so much on board with the townhome plan because there are no windows in the living room and dining room. It is an open floor plan with a large patio door in the kitchen. It gives us both pause about that plus the shared wall. The garages are in the front of the home so basically the entire living room, dining room, and kitchen abut the shared wall.

We would probably not use the clubhouse or swimming pool but the walking paths and water feature are appealing. It is also in a quieter location than the stand-alone home.

Any thoughts would be appreciated.

The HOA is for the whole community. You are correct that townhomes typically do not sell as fast and that is a consideration. We are approaching the age where we probably won't be living in either home for the long-term. Senior housing may be in our future.

Our timing is not good. We can lock in a rate in mid-June. The Federal Reserve will be meeting again in the beginning of June and it is anticipated that they will raise rates again. Mortgage interest rates typically follow suit in just a few days after the meeting.

I wish I could include the link to both developments to get opinions on the HOA aspect of both homes but naming the HOA is not permitted per posting rules.

Thanks for responding, Melissa.

This is my own personal opinion. You simply cannot predict what you are walking into since it is a new community. The HOA fees will be kept low for a while to attract buyers. How much and when it will rise is an unknown. A clubhouse and pool will be a major expense down the road. If the streets are owned by the HOA this would be a concern for me. Basically I would not do this unless I was ready to accept that this experience could turn sour in a heartbeat.

I don't think there is an wrong answer here and only you and your wife can decide what is best for you. Good luck!

I agree with John. There is no way to predict what HOA fees will be in the future. Any idea when the community will be built out? Are the apartments (I'm assuming they are condos) in their own sub-association? If not, then is the master responsible for the roofs and other maintenance? Same for the townhouses. If the master is responsible for all maintenance then there is no way $125 per month is ever going to cover all the costs. The developer will do turnover, a reserve study will be done, and they will double or triple your monthly fees. The other issue is the unbuilt amenities. Sometimes the developer decides to delay on those, especially if the houses are slow to be sold. And when you finally get your amenities remember that you will be paying for the added insurance which can be quite expensive.

So much of this is just personal choice. I'm old enough to remember that big recession in the 80's. I bought a condo and my mortgage had 12% interest, but I was able to pay the payment and it was still a good choice for me. The home I live in now was bought in 2008 and even though that was the time of the housing crash, we paid too much for it and it was underwater (couldn't get what we paid for it if we sold it) for many years. But we could afford it, it was the home we wanted and you can't regret those kinds of decisions. Remember that with interest rates you can always refinance when they go down.

I personally don't think you should go into buying a personal home with the idea of how desireable it will be for the next person. There's always a buyer for every home. On the one hand, the home with the HOA and amenities might have more to offer but will probably cost you more in the long term. On the other hand, you like the non-HOA home better and your costs are know. Also factor in if there are tax differences in the two areas.

Not an easy decision.

I've been watching interest rates as well, since my sister and I plan to sell our mother's home to help pay for her assisted living, and an increase makes me a bit nervous, although I think it will sell relatively quickly. I'm more concerned about not selling it to an investor - it may be quicker for us, especially since we live out of state, but I grew up in that neighborhood and would rather sell it to someone who will live there and treat it more like a home as opposed to an income stream

Regarding the townhouse, I live in one, and at the time I selected it, it had a pool, a clubhouse, a small playground and a basketball court. There are other conversations on this website where I relate the story of how and why we got rid of the pool - and it's not missed. The basketball goal disappeared shortly before I moved in because it was attracting too many people from outside the community who'd play all night and sometimes fight. That had calmed down by the time I moved in - the court was left, but during my 10 years on the board we got rid of it because some residents would bring over portable goals and sometimes they and their friends would come close to starting more mayhem. Mostly they were loud, and since I lived near that area, I was really happy when we finally got rid of it.

The playground, such as it is, is still around - when we replaced the equipment, we checked with the Consumer Product Safety Commission to see what was appropriate (unlike the last two that were built). It's not used very much because it's geared towards toddlers - we figure the older kids and teenagers (who destroyed the first two) can find another way to entertain themselves and we're a mile and a half from a city park that has a playground AND a poll.

Bottom line - I personally think a townhouse community doesn't need much more beyond a clubhouse, especially if similar amenities are in the surrounding community anyway. I'd focus more on what I absolutely most have in the house, whether it's detached or a townhome. For me, the pool and clubhouse weren't dealmakers or breakers, although I thought the pool would be nice if my niece and nephews came to visit, as I don't have kids. Turns out my home is a little snug for three adults and three VERY ACTIVE kids, so my sister and family usually stayed in a nearby hotel with an indoor pool. The kids (now adults) were far more impressed with that.

In your case, I'm nervous about the classes of residents because I've seen the back and forth some communities have had in similar communities. I'd prefer two HOAs to address issues in the townhouse community vs. the stand-alone community because I can see the stand alone homeowners getting a little miffed about no lawn care while the townhome owners complain about parking (I've seen at least one conversation on this website about such a clash).

Townhomes do take time to increase property values for the reasons Augustin mentioned - ours are doing ok, but it's taken the 20+ years I've lived here to get to that point partly because we had (and still have) issues with delinquent owners and owner/landlords (at least half the time, they're the same). If you move into the townhome, I'd look for rental restrictions - some folks have suggested requiring buyers to live in the community for 1-3 years before renting it out, so that would be a start to slow down the investors. You may also want to see that short term leasing is banned altogether (Airbnb and Vbro aren't necessarily bad, but I don't think those rentals work in a townhouse community anyway.

I've seen enough on this website where I'd avoid moving into a community that's still under development because too much can happen before the developer finally leaves. My community had two developers - both declared bankruptcy and the second one turned the community over when it was 75% built. That was long before I showed up, and nowadays, I'd ask detailed questions about the developer's relationship with current homeowners and talk to the people already there for their take. A good developer should leave the community in such a way that it stands a better chance to succeed as opposed to doing stuff like leaving streets not funding a reserve study to at least get the community started on a good note and perhaps working with the new board on updating the documents to remove references to the developer before the community changes hands. And a few other things, but that's a start.

One reason I choose my present association (small, standalone patio homes) is we have no amenities. Amenities can be expensive and very argumentative.

I share your skepticism.

The apartments are rentals. My realtor spoke to the listing agent and the listing agent stated the HOA fees are $125 per year not per month. Pretty amazing and certainly gives me pause.

Renters might if it's in the lease.

Just to clarify, I was answering Lori. She mentioned she thought the apartments were condos. They are rental apartments as part of the planned community. I am not renting an apartment but possibly buying a townhome. The owner is the developer and I am sure will charge rents high enough to offset the cost of the future amenities.

When you buy in a community that is still under development, you take a risk that things will not go as projected. The builder/developer may go out of business and sell the remaining lots to another developer. They may change the kinds of homes being built (cheaper and lower quality homes, as happened during the Great Recession). Amenities may be changed or not built at all. My preference is for communities built just prior to 2008 - still new enough to minimize any issues with neglected maintenance, but built before the cost cutting started.

In communities under development, they may also offer buyers financing that allows rates to be locked in. Now would be a good time to do that since rates are rising. Other lenders may offer the similar incentives.

I live in a community without any amenities by choice. Reasons: lower maintenance expenses, lower insurance premiums, less noise, less squabbling, less worry about trespassers. Amenities are attractive nuisances, and many of the pool communities in my area have problems with outsiders coming onto the property to swim. No thanks! And if your home sits near the amenities, you'll have the noise and traffic to deal with.

On the townhome vs. stand-alone home, it will boil down to whether or not you want some distance between your neighbors and you and how much exterior maintenance you want to mess with.

* Side-to-side noise transmission isn't as bad as it is up-and-down, but you still can hear things.

* How about smells such as cigarette smoke or cooking smells? No matter how well built a building is, there will be some seepage of odors - if you have allergies or other health issues, or if you're sensitive to odors in general, you may want to avoid attached homes.

* Less light can be an issue in townhomes but it will depend on the design of the home. I own an end unit townhome on the south end of the building, and I have sunlight all day long (I bought my unit in part for that reason).

* Other things to consider in townhomes: what sorts of firewalls are in place, and do they go all the way from the foundation to the roof?

* What kind of privacy walls do they have outside? Could you sit on your patio and talk without your neighbors seeing and hearing everything?

* Where are the HVAC compressors sitting? Mine sits right outside my bedroom window, and I have one word for that: don't.

* Do you like to grill out? Local fire codes may prohibit grilling closer than 10 feet away from multi-unit buildings. This would not be an issue in a stand-alone home.

* Do you want to let your dog out to do his business in the yard? You generally can't do that in townhomes because the yard is common area.

* Want to have a hot tub on your patio? That may be an issue in a townhome.

There's probably more, but you get the idea. In townhomes you're much more aware of living close to others. This may or may not be an issue for you.

get the house, thinking about things that are not even made yet is like counting your chickens before they hatch. the water feature and trail could wind up being duds and rude neighbors that close and make your life miserable.

https://www.donpeterson.com/bluestem-commons/

Here is the link to the property information in the HOA I was thinking about buying a townhome in. If anyone is interested in skimming it and sharing an opinion, I would appreciate it. It's pretty lengthy so I don't expect anyone to read it fully.

I hope it is not violating the posting rules since it is a public website. I have noticed others posting names of communities, full names, and businesses in their postings.

If not permissible, okay. Thanks.

I personally agree 100%

I wouldn't live in an HOA with these many restrictions, but as a manager I was curious on the governance of the HOA.

First, the number of director, once turned over is a minimum of five, but can be as high as , as long as the number shall be divisible by five. Seems odd. Term is two years, with one half elected one year the other half the next year. How do you elect half a person?

According to the Bylaws, the HOA was formed to maintain the Common Area and maintaining the lawns, driveways, parking lots and walks of the Lots. Nothing about streets.

Board meeting are held ONCE a year.

Nominations to be on the Board are from a Nominating Committee, big no, no for me.

Can foreclose after 60 days delinquent? Assessments may be assessed by any rational basis determined by the BOD, no thank you.

Being the last to buy means you could be paying significantly higher price with a higher interest rate just to see if the amenities are built out, nope.

You mentioned that you plan on being your last home. Next will be a retirement home. How will buying into a Townhouse now differ from your future retirement home plans? Are they not going to have simularities? I know we have some "townhomes" here that you transition from independent to nursing care.

For me the Townhouse arrangement could be a "practice" for a retirement home. Do you want to start living that type of lifestyle now or still have the independent powers you would have with a home?

If you haven't settled on a community yet, you may want to look around for builders who are catering to older adults with accessibility features that can allow for aging in place. These features include things such as minimal to no steps, wider doorways to accommodate wheelchairs, lever door handles, rocker switches, reconfigured kitchens that allow access to cabinets without stooping or climbing, comfort height toilets, walk-in showers with seats, and the like.

Keep in mind that gas at that time was around $1 to $1.50.
Now it's $4 to $5.

Congrats.

I do think you will be happier.