Properties in POA or HOA

Does anyone have tips for buying properties in a POA or HOA? I recently was offered a property in a county I am not familiar with. I found out that the property has POA fees. I checked the POA website and saw there are many listings of people selling their lots for $1 or FREE!

I am going to call some of these owners to get the details…

My gut reaction is that this is a bad sign but perhaps others have come up with a way to make these lots profitable. Any thoughts? And is there a special due diligence list for HOA/POA properties?

@suitedconnector this comes up a lot in HOAs precisely because of the fees and the usage limitations. People don’t like paying a ton of money for something they can’t use and can only sell to a certain type of buyer.

Selling for $1 or free isn’t necessarily normal, but it is pretty common to find a lot of highly motivated sellers in these neighborhoods because of the limited uses and high cost of owning property in an HOA.

Sometimes these deals can make sense when the price is so low (I mean, if you’re paying nothing for it, you could just roll the dice and see if you’re able to find any buyers with the selling skills you have as a land investor, which most average people don’t have). But you’d have to really understand the permitted uses and what it’s going to cost you and the next owner to hold onto the thing. If the holding costs are just ridiculous, then it might not be worth your time.

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Tip#1: call the POA/HOA early in your due diligence to validate that assessment dues are paid-to-date. One of my mailers several months ago produced several calls from property owners in lake community POAs. They were willing to practically give me their property to avoid the $1000+/year POA fee. After calling the POA directly, I found out that many of them were back due on their fees and the POA had a lien on their property. If you plan on buying any POA/HOA properties, be sure to contact someone at the POA to validate that all prior dues are paid. If you close with a title company, they will do this for you, but you may want to figure this out before signing a Purchase Contract and wasting anyone’s time.

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@tylerd I already called and emailed the POA and they have not replied in several days. I called/email owners who have listings on the POA website and they are not respnding. I emailed the guy who originally offered the property. He said “what’s a POA?”. LOL. Never easy…

I have been offered $1 properties in HOAs for all the reasons already mentioned. One was along the coast in a nice marina and golf community. I called a realtor who had a lot in the HOA listed on and he spilled the truth like he’d been waiting to confess for a long time. Many lots didn’t perc. They were still hit with the same $1500/year HOA fee and had to keep up the landscaping and yard even though the owner couldn’t build, camp, or park an RV. So unless you have a solution to whatever the problems are that you uncover, don’t buy there. Make sure you get the story from a local realtor though. You may be the one who can solve the problems, who knows?

@suitedconnector it could be that the HOA is defunct (nobody is managing it and it has no money in the account… basically an empty, unused shell). I’ve seen this a few times.

I’m honestly not sure what the next legal steps are in a situation like this when the entire neighborhood and all the landowners are basically hung out to dry.

I would assume the HOA would basically cease to exist if it’s not serving any benefit for the neighborhood, but I’m not sure what legal steps would need to be taken to officially wipe it out from the title history.