One concept that seems to be confusing to some when moving to Hawaii is the possibility of HOA or association fees. It seems like more and more properties in the state of Hawaii have some sort of additional fee charged for these groups. This is usually a charge that is an additional monthly expense on top of the mortgage and bills. It is widely understood that you may have this expense if buying a condo, but this also applies to many single-family homes too.
This is not the same with properties on the mainland and can greatly affect the client’s buying power. That’s why I think it’s important to have a local Hawaii lender that is knowledgeable about these associations and expenses. The lender may approve a certain loan amount, but if they are not aware of the possible additional expense, it can be an issue down the road. It is always best to have a clear understanding with the lender on exactly what property might be purchased. If there is an additional expense, the lender needs to know so that they can approve this monthly amount on top of the mortgage expense.
What Do The Fees Cover?
The fees from associations can vary greatly from almost nothing to large expenses monthly or yearly. It is not uncommon to have the same association manage different projects in the same area and the properties can have very different expenses. Some of these associations really give you a lot of buying power for the charges. They might include cable, water, internet, and common area expenses that, when you break down the charges, make sense. Other times, the association might be projecting for major repairs or replacements and this can increase the expenses and not provide much tangible value. It is important to research the charges and understand what the money is going towards. You also need to be aware if the association is healthy and has enough money in the reserves.
What Are The Rules?
In addition to the monetary expense, the association might have rules and covenants. This might include small items such as what types of plants they allow to larger rules on house colors and parking. Many associations have smaller sub committees such as ARC (architectural review committee) that many charge to review and approve exterior changes to your property. This might also affect items in your yard. Usually, if it can be seen by anyone, even in your yard, it needs approval.
They also might have some serious rules on pets. This can include allowing or not allowing them, breed restrictions, or number of pets. The parking can be a huge issue in Hawaii as well. Is there street parking? Will they tow your car? How long can a car be parked and left? These are all questions that need to be addressed in order to make sure that the new property and the possibility of rules match your lifestyle. Usually, you will not win if there is a dispute and issues can turn into a legal mess if it escalates.
It is really best to consult an agent that understands each association, and as a buyer, you really need to do your research and make sure that the area fits you and your needs. I am more than happy to help research and advise about each HOA/Association so that a good decision can be made early in the buying process. If you would like more information, please contact me.