So we’ve all got our share of HOA horror stories, and it probably won’t surprise you to learn that your local HOA could be gunning for your credit score. What may surprise you is that it doesn’t have to be YOUR HOA who tanks that FICO rating! I’ll tell you all the details in just a minute, but I want to mention first something else that can hurt your credit score in a big way: HACKING. And to get specific, Russian hacking, since the Russians are, according to most cyber-security experts, rivaled only by the Chinese when it comes to dedication on the part of that nation’s hacking community to getting into your email and into your business. We’ve got a special article on the website today that will tell you all about how Russian hackers are presently targeting real estate investors and other real estate professionals and how they may have accessed oh, about 100,000 email accounts belonging to real estate professionals in the past two years. Let’s get real here: that huge number means your odds are not good. Check out the details on the website at www.rei.today just as soon as you finish listening to this episode.
Now, (and I’m sorry, you’re probably feeling attacked from EVERY angle now), back to how your local HOA – hey, even your NON-LOCAL HOA – could be killing your credit score right about now.
Here’s the deal:
One of the biggest credit data aggregators out there (that basically means they collect information on you and then provide it to credit-reporting agencies like Equifax) recently announced that it will begin reporting to Equifax about home owners association delinquencies. Furthermore, this is just the beginning of a full-scale rollout where all major credit agencies will begin factoring in late HOA dues, fines, and other penalties. And THAT’S where the kicker comes in, hard.
First of all, that late payment on your HOA dues will carry the same weight as a missed mortgage payment. So that’s pretty big on its own. But much bigger is this: FINES AND PENALTIES! People, how many of you have lived in a neighborhood where they fined you for your playset in the backyard, not getting the color of your traditional brown house approved before painting, where they hit you up for $35 for that garden gnome and then tacked on $75 in late fees and you refused to pay on principal, (no this is not all personal experience, I swear, but it’s all real)! Not to mention, how many of you INVESTORS have been fined by HOAs in neighborhoods where you owned property, however, briefly, for not paying TRANSFER FEES that many HOAs use to raise extra money by charging them to every new owner or, let’s be honest, for failing keep your grass cut (hey maybe your lawn guy’s kid got sick) or any of the ZILLION other things that an HOA headed by an aggressive HOA covenants enforcer without quite enough to do.
Now, I’m not saying all HOAs are bad, or even that all of them are out to get you. In fact, while I used to live in a neighborhood with some pretty terrible HOA habits, when I moved I looked for a new neighborhood that had an HOA because they do keep property values up, the tennis courts clean and the pool open. And, in my current residence, they also throw some pretty awesome Mardi Gras and Fourth of July parties! But that’s another episode…
The important thing here is for you to realize that any HOA where you have control of a property for any period of time now has the potential not only to assess you with fees, fines, and penalties, but also is carrying a very big stick in the event that you don’t pay up. Unfortunately, I don’t have a magic solution for this one. Investors are just going to have to be diligent, detail-oriented, and make sure they find out whether or not there is an HOA and what it will require of them EVERY TIME a new property is purchased.
Now that I’ve beaten up on HOAs and probably gotten you pretty fired up too, I’ve got something that will hopefully ease your tension a little…Let’s indulge in some serious HOA Horror Story Terror. I challenge you to leave me a comment on the webpage for this podcast (it’s www.rei.today/HOAHORROR) telling me about your worst HOA experience ever. We’ll compile the stories and I’ll give an award for the most bone-curdling experience. How about a fantastic REI Today t-shirt (they are awesome, sparkly, and I love them, by the way!) and if you’re a man, don’t worry, I’ll send you a non-sparkle edition. So head over to www.rei.today/HOAHORROR and leave me your horror story right now! Once you’re done, check out all our breaking news coverage, uncut interviews with expert investors, and massive amount of training materials in the REI Today vault. Not yet a member? Don’t you worry. Text REITODAY no spaces no periods to 33444 and I’ll immediately send you the information you need to get that access.
And remember, when you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country. Text REITODAY no spaces no periods to 33444 or head over to www.rei.today/vault right now.
REI Nation, thanks for listening in and always remember this:
Your best investment is your own education.
Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.