Do Homeowners Associations Make A Profit From HOA Dues?

Homeowners that live in an HOA are required to pay monthly dues or fees which the association uses to help pay for the upkeep and maintenance of all properties.  The amount is usually fixed but it can vary depending on square footage, community amenities, and much more.

 

The neighborhood website explains in detail that putting this money into the budget is expected by all community members to maintain and keep them running properly.  Below are the following ways how some homeowners associations make a profit.

 

The most common and effective way an HOA makes money is by renting out common areas such as a pavilion or clubhouse.  Common areas are parts of the community that you don’t own but have access to since you belong to the HOA.  These areas include the swimming pool, boat docks, and picnic or grill spaces.  The rental fees are normally used to maintain the space and pay for expenses such as insurance and utilities.

 

An HOA is like a real estate board for the community.  When you buy a house, you will be charged realtor fees as part of the process.  If a homeowner is not planning on selling their house in the future, this will be one of the many expenses they have to pay annually.  However, if you decide to sell your house, this can be deducted from the sale price, thus earning the HOA more revenue.

 

Fines are a primary source of revenue for homeowners associations.  On the neighborhood website, you can find the HOA rules to know more about violations regarding parking and having an untidy yard.  All these fines are used to maintain the upkeep of common areas and shared amenities in the association.

 

Some homeowners associations do profit from the dues and successfully cover the costs of running their organization thanks largely to property taxes.  But, most HOA dues go towards expenses like cleaning services, code enforcement, and safety inspections.  Furthermore, a lot of the money that HOA's collect is used to cover costs and get a good sense of how much they’ll need to charge next year.