This is episode number 2062. Jill and I are talking about what an acceptable HOA is in your land acquisition and what is not. HOA is the Home Owners Association. LOA is the Land Owners Association.

POA is the Property Owners Association.

Discord Question

I’ll define that in a couple of minutes. I’ll define why some properties have them, why some properties don’t, why some are good, and why some suck. Each day on the show, we answer a question from our Land Academy Member Discord forum and take a deep dive into the land-related topics that you request.

Jack wrote, “Where can I get more instruction in sales training? The more I speak with potential sellers, the more I understand how important it’s to be good at this.” There are so many places online. There are all kinds of good things you can do. Number one, I’m happy to help you. This came from Discord, so you were in the group. The first thing I would say is to ask me anything. You have a couple of things. You have me every week for free as a member in the Land Academy call that we all get together on.

You also have the opportunity to do one-on-one coaching with me if you want to do that too. It’s turn it on, turn it off. We can do it for 1 month, 2 months, 6 months, or whatever you need. We’ll even make phone calls together. I’ll do that too. I’ll pick up the phone and call the seller and you could be right there listening to how I handle it live. I’ll try to get a deal for you. It’s one of your deals, not one of mine. I’ll call one of yours. That’s an opportunity too.

The other thing is there are always good things to read about. I don’t zero in on one person’s training style or sales style like Grant Cardone. I’m going to read everybody’s. I’m going to read this person’s style because I’m going to take little nuggets from all of it, including me. You’re going to take some from me and then put it into your own thing of what works for you. Even listening to me, mirroring what I say, and writing down my script may not be as natural as how you would do something. I am sure the way that I talk to people to get what I want out of them with a seller is very different from how Jack does it. I know that from experience. Back when he used to talk with the sellers, it was very different.

We got a lot of deals done though.

You did. You got some.

It was a different approach. You’re right.

Read everything you can get your hands on. I don’t have one place where I would say, “Go here.” I do know this. In the land space, I would go up against nearly anyone about acquisitions, winning over sellers, and getting the most deals. We’ve done little contests like that with friends over the years, like who can get to $1 million fastest and that kind of thing. I happen to have some experience there.

The audience is probably not going to want to know this, but this is something that, for the most part, you’re born with. You can sharpen your skills. You can create your own MO and develop some really good habits. There are basic statistics on talking with people and getting them to do what you want that you should follow. The more I talk to them and the more times I touch them, the more of a chance there is that I’m going to sell them what I want, buy their property, or whatever. That’s a super important situation. What Jill has is the ability to assess who she’s talking to really quickly.

You have the ability to sharpen your skills, create your own MO, and develop some good habits. Share on X

Largely because we live in an RV and we have for a lot of months, but I have never worked this closely with you proximity-wise. She’ll come back and say, “This guy’s not a real seller.” I can hear what’s going on in the conversation I would not have picked up on that. She’s very astute quickly. She doesn’t waste time. She does put in the time where the people are, “I do want to sell this but I’ve got this obstacle.” She sits down and addresses the obstacle.

Acceptable HOAs

With the deals that we’re doing, there are other siblings involved in a property they own. That’s a huge one. Price, we can overcome pretty quickly. If they’re the actual decision-maker and Jill doesn’t see the value in what they want and they’re not going to move, she moves on. Those are some basic stuff, but largely, I know Jill was born with this for a lot of reasons. Thank you. This topic is about what’s an acceptable HOA in your land acquisition.

There’s HOA, POA, and LOA. Those are all versions of Property Owners Associations. Why do they exist? I do know why they exist. There are two parts. Can I give you my definition?

Sure.

Number one, it’s a way to positively guarantee that this piece of land that you have control over because you established this HOA will remain to whatever standards, whatever level, whatever size, and whatever things that you want. You could put anything you want in there, like, “Everybody has to have a red front door. Everybody can always have their garages facing in the back. No one can have a trash can out after 5:00 PM on trash day.” Dream it up. You can create anything you want. No one can put used cards in your front yard. It’s all kinds of things. You can see some things and you are like, “I agree with that,” but it can get crazy. You can do whatever you want. That’s a reason why people would establish that.

There’s another core reason, which is flat-out money. It’s like, “I’m going to make this the most beautiful thing. I’m going to say every property has to be an acre so everybody’s going to want to live here. I’m going to make this beautiful clubhouse. You’re going to pay for this. I’m going to make a beautiful park in these green spaces. I’m going to charge through the nose and I’m going to always get recurring money because you have to pay me monthly, quarterly, annually,” or however you want to spell it out. This is your thing. It starts with owning the land. Can I keep going?

Yeah. My whole thing’s going to be way more negative than yours, so this is good.

I’m on a roll. You know what’s going on with HOAs. You’re like, “I see. I get it.” What’s happened over the years is that they have gone cuckoo. There are some that have gone cuckoo. They’ve gotten so expensive. They have age restrictions. It’s all the things I talked about. There’s even more than that that you could request and require. It’s all legal. I’m sure there are some business practices and things you have to establish, but you can do what you want because you control the land.

What has happened is it’s gotten so kooky that for a long time, we said, “No HOAs. I don’t want to deal with it. I’m not even going to go there. If there’s an HOA, I’m out.” They’re easy to spot. We use ParcelFact.com. You’re looking at the property. You’re looking at the legal description. You’re looking at all the details of who owns it. You pick up on subdivision and the assessor’s data. You’re like, “It looks like it’s Jill’s land.” Phase one, we’re going to know if Jill’s land might have an HOA and why they would have that there. That’s a good indication. How do you further check that? Google it. Call the county. There are other ways that you can confirm all that. That’s what’s happened over the years.

What’s interesting is you’re missing a lot of property. We have learned this too over the years that not all HOAs are bad. Especially in some of the more rural weather-challenged areas, sometimes there are lovely communities. There are lovely communities in parts of the country that have an HOA. All it is is shared road maintenance, making sure the mailboxes are clean, making sure you can get in and out of your property, snow removal, and keeping the pretty posts at the front. It’s little things like that. It’s not always a guard gate, a lady with a clipboard, and gauchos with a visor.

With a beehive of a haircut.

Driving around in a golf cart. If you live in that community, sorry. You know exactly who we’re talking about. Her name is probably Karen.

She’s had two terrible relationships.

Her dog is right there with her and her dog is mean. It’s a little white dog.

She no longer trusts anyone. You’re the customer and the enemy.

Also, the problem. She is out there with a ruler in your yard every week checking your weed growth. An acceptable HOA is not the first one we’re talking about but the second one. If I’m paying an equivalent of $25 a month, which adds up to whatever a year, I’m okay with that. I’m paying $100 a quarter to keep my mailbox cleared, the gravel consistent, and the snow cleared. That’s an acceptable HOA to me.

The point of the topic for this episode is I don’t want you to rule out all the HOAs. I want you to get your hands on them. Look at the price. Often, the price will tell you. Is it $500 a month or $500 a year? That’s going to give you an indication too. For $500 a month, they got a staff. There’s stuff going on. That’s usually an indication that they need to be checking all this stuff and they’re nuts. For $500 a year, they’re not doing that much. What are they doing? You’re like, “I need to get my hand on the regs and figure this out.”

The other thing is too when you’re carrying these properties, you’re buying a property to resell it. What if you’re buying it in the winter and you know it’s going to go in the spring? You’re going to hang out with it. You’re like, “I checked the trend many years ago. I know what’s going to happen if I list this thing in April. It’s going to be gone in two weeks. I know how great it is. Maybe I’ll list it in March and get the build-up.” That’s great whatever you’re doing, but you need to think about these carrying costs. If you’re spending $500 a month carrying costs on these properties, that is eating away at your profit when you do go to sell. That’s another thing to think about. My main point is to get a hold of it, see what they’re all about, and don’t kick them all to the curb.

Understand your HOAs. See what they are all about and do not kick them all to the curb. Share on X

This is a huge opportunity for me to rant, which I’m going to pass up because Jill did a great job talking about HOAs. To summarize this, you’re either an HOA person or you’re not. You’re either looking out your window and saying, “This is an amazing neighborhood I live in. Nobody is parked on the street. All the houses are painted the same. I don’t have to worry about this anymore. Somebody else is. I only have to pay $82 a month,” or whatever it ends up being or you’re on the other side where you trust your neighbors and yourself. You have an air of collaboration, not punishment.

If somebody’s walk isn’t getting shoveled, it’s probably for a reason. They’re a little bit too old or they’ve aged in place and they need your help. If somebody’s got too much trash around their house and the entire neighborhood doesn’t like it, then everybody gets together, goes over there, and says, “John, you got too much trash. We’re going to help you move it because it’s screwing up everything for us.” That’s trust and collaboration.

The other way, unfortunately, is what it is. You’re either an HOA person or you’re not. These HOAs that we run into as land investors are because in the ‘50s, ‘60s, and ‘70s, subdivision laws taking a huge piece of property and dividing it into smaller, tinier pieces of property with the intent to be built on were created with very few regulations, so it got abused.

To make it worse, there are thousands of subdivisions south of Albuquerque. There are thousands of properties that are charged $25 a month not because of the Karen thing, but because they wanted an income stream that would live on forever. They never got developed. They never were intended to be developed. They were intended to collect $25 a month from somebody. That’s the stuff we get smashed on as land investors. We send out a mailer and there’s no way to extract it effectively from the mailer that you’re doing from a data standpoint because the assessor doesn’t care. It doesn’t fall into the assessor’s data.

It is separate. You’re right.

Closing Words

Even if you see a little button that says, “Remove all HOAs,” it’s not effective. The key is to look at it if you get some property coming back in an HOA to decide which one it is. Is it the snow removal HOA where everybody’s collaborating and saying, “We do need to put $25 into the kitty all year and then cut a contract with the snow removal service so that John down the end of the block isn’t late for work every time it snows?” That’s really healthy. We buy property in HOAs like that frequently. We don’t buy the other kind. Join us in the next episode. We’re going to discuss whether or not you have the personality traits of a successful land investor. You are not alone in your real estate ambition.