Skip to Content

Get a FREE assessment of your rental property. Start here!

Get a FREE assessment of your rental property. Start here!

Are You Investing in a Planned Community?

O'Fallon Planned Community Homes Being Constructed When the moment arrives to purchase an O’Fallon investment property, one of the essential choices you will make is picking a property in an established neighborhood or a home in a common interest community. There are numerous different kinds of neighborhoods, some with owner’s associations (commonly known as HOAs), others none. However, a master-planned community is significantly different from your usual residential neighborhood, even those that may have an owners association.

To determine whether investing in a planned community is right for you, you need first to grasp what makes a master-planned community so different, as well as the pros and cons of buying one.

The Master-Planned Community

Probably the essential thing to know about master-planned communities is that they are less like residential neighborhoods or suburbs and more like little self-contained cities. Numerous planned communities are fairly big and feature commercial districts, schools, and private recreational amenities. Many planned communities provide a variety of stores and eateries and pedestrian walkways, public pools, and even golf courses – all located at a convenient distance from the community’s residences.

Advantages of Planned Communities

One of the great advantages of investing in a rental property in a planned community is the location. Individuals purchase in planned communities in significant part because of how close and accessible everything is. Walking or biking to jobs, shopping centers, and restaurants may be a compelling draw.

The amenities that numerous planned communities offer are another huge bonus. Multiple tenants prefer the concept of living a lifestyle that includes access to recreational opportunities – particularly if the amenities are only for the use of the residents. These amenities may generate possibilities for socializing far more than a conventional neighborhood could.

One more huge benefit of a planned community that investors might like is that most are geared toward protecting your property values. In some planned communities, the common areas are well-maintained, and others even offer front yard maintenance for residences. This can help keep your property values high, even if the rental market isn’t performing well elsewhere. Planned communities also seem to offer more security, including gates and security patrols. This can be very appealing for many tenants.

Potential Drawbacks

In contrast, all that upkeep and security comes with very strict rules, which some O’Fallon property managers and tenants may not enjoy. Property maintenance will be a much higher priority in a planned community than in a more typical residential neighborhood, and you will have less opportunity to pick landscaping styles, paint colors, and even if and how to decorate the home for holidays. You and your renters may need to get permission before engaging in any of these tasks as well.

An additional potential drawback is that there tends to be less privacy in a planned community. Houses are often built very close together, which may affect relations with neighbors. There is also a high rate of people doing activities outdoors, so crowding is always a concern. Some tenants may not appreciate being around people all the time.

Finally, the downside to all the extra upkeep and great amenities you get in a planned community is that it all costs money. Depending on the community, property owners may be expected to pay extra fees that range from several hundred to thousands of dollars each year. Depending on the property you purchase, you may even have an obligation to pay assessments to two or more sub-associations along with the master association. These assessments may also change as the community grows, maintenance becomes more expensive, or as reserve amounts are needed. As an investor, it’s necessary to include these extra fees into your calculations before you purchase in a planned community.

Lastly, the choice to purchase in a master-planned community depends on you. No two circumstances are comparable, and so relying on where you want to buy an investment property and what type of tenant you’d prefer to work with may factor strongly into your decision.

 

If you’d want help planning your next property investment, consider giving Real Property Management Three Bridges a call. Our rental market experts can give market assessments and tools that can make finding and choosing your next investment property easier. You can contact us online or call 636-542-8852.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.