If you are looking at purchasing in a gated community, or guard gated community then you should carefully examine the rule of the Home Owners Association, and the fees it charges. These are defined in the Covenants, Conditions & Restrictions (CC&Rs). For example, the Lake Las Vegas HOA fees are some of the most expensive around at approximately $1 per square foot of your home’s area. Your get immaculately landscaped grounds for this, but on the other hand it puts downward pressure on net rental yield if you are purchasing as an investment.
Another thing to watch out for is any HOA fees that are outstanding at the time of purchase, particularly if you are venturing into the Las Vegas foreclosure market. Not only do you need to look out for the fees themselves, but also the charges from the agencies that collect delinquent payments. With no cap on these collection charges they can accumulate to a significant percentage of acquisition cost on low value properties – i.e. they can be a yield killer for the foreclosure investor.
On 24th March 2010 a home owner regulatory commission approved the first draft of rules that limit the amount of fees that collection agencies can charge for chasing delinquent payments. The Nevada Commission for Common-Interest Communities is made up of seven members, and they voted to set the limit as $1,950 as the amount that collection agencies can charge homeowners for collecting fees. The limit of $1,950 was suggested by Red Rock Financial Services, a collection agency, and accepted by the commission. The regulation also defined limits on specific services such as $400 for default notices, and $150 for demand letters.
If the regulation is eventually passed then it will not include the HOA fees that are due, late fees, or interest payments. Beyond the amounts due you should also look into the contents of the Covenants, Conditions & Restrictions and their implications. They include the policies that HOA Boards adhere to, such as the collections policy. Following on from these policies are the procedures that are used to enforce them. Once of the most important procedures to investigate is assessment collection. The rules and regulations of the CC&Rs are often geared towards uniformity of properties, and control of pets and parking. Finally, the HOA Board will make resolutions, which are a way to introduce any new policies, procedures, rules and regulations. If you are investigating a community such as the Lake Las Vegas HOA, that is showing some signs of stress, then it is worth asking about any resolutions that are currently tabled for possible inclusion in the CC&Rs.