10 Things You Must Know Before Buying Into A Private Gated Community Overseas
You’ve been dreaming about living abroad for years, and now you finally can afford to buy the perfect house in a beautiful gated community. You’re ready to sign on the dotted line, hand over the cash, and move in.
Not so fast—or your dream home could become your worst nightmare.
By paying attention to these 10 points, you can avoid finding yourself the less-than-proud owner of a home that is not what you thought it would be.
#1 The Condominium Regime
Is your dream home in a private gated community where visitors are restricted? If so, then it’s probably a legally formed condominium. In Mexico, for example, where I live, only condominium communities are allowed to have gates that restrict who comes and goes.
If you like the gate restriction, then make sure you ask to see the legal paperwork that initially formed your community as a condominium. This is a publicly registered document, and the administrator or developer should have a copy available. If not, your community might find the municipality’s director of urban development sending out officials who will require your gate to remain open to the public.
#2 Look For Permits, Permissions, And Paperwork
Have the developer or administrator show you all of the legal documentation that was involved in setting up your community. You don’t have to understand everything the documents say (the docs likely will be in a foreign language anyway); however, simply knowing that your developer or administrator has the paperwork readily available is an important sign.
You want the running of your community to be transparent, organized, and efficient. Having such documents on hand is a good indicator that that is the case.
#3 Check The Balance Sheet
Ask to see the latest balance sheet or whatever it’s called by the community. What you want to know are the latest figures on delinquencies, both by owners and the community, and how the accepted budget compares with actual expenses. A financially distressed community is dangerous.
#4 See What’s In The Reserve Fund
Ask how much is in the reserve account. That is important because you want to make sure the community has enough held in reserve to be able to afford major repairs or purchases. When the well runs dry (literally) or the wireless internet or swimming pool pump gets fried, you want your community to be able to have it fixed immediately.
#5 Look For Outstanding Lawsuits
Check to see if there are currently any lawsuits involving the developer, administrator, or the community itself. Check not only in the country where the community is located but also in the home country of the developer or administrator.
If there are legal actions, you need to find out why the suit was filed and what the disposition was.
Obviously, suits from owners filing claims involving your community need to be investigated. You don’t want to be the next one at the table. And don’t ignore claims involving the developer/administrator outside your particular community. They can give you indications of how business is conducted.
#6 Have A Look At The Common Areas
How do the common areas look? Are the roads in good repair? Is your community center up-to-date or have the furnishings been in need of updating since the late 90s?
Is the pool clean or moldy? Street signs legible or askew? Landscaping well-tended or weedy and overgrown? The entrance to your community, in particular, is the face to the outside world. Nothing destroys a community faster than bad PR. The individual homes may look great, but if the common areas don’t, something is amiss. Find out why.
#7 Check Out The Security Plan
What is the security like? Are there modern cameras? Security patrols? What is the gate protocol for visitors and workers? If anybody can get in by just asking, you might as well not have a gate. Ask to see a written security protocol. And ask about crime statistics for your community. If the local populace sees your community as easy pickins, theft will be hard to deter.
Security requirements differ among countries, regions, and communities. Look for what you believe to be appropriate.
#8 Analyze The HOA Dues Regime
See a breakdown of fees (HOA dues) that you are expected to pay. Can you pay monthly or must it be yearly? How convenient is it to make payments? Can you make a bank transfer? Pay with your home currency? Pay online? How often have fees been raised? What is the expectation for future increases? Have there been any special assessments? Why?
Some of these are convenience items, but they all give you insight into how the community is run.
#9 Look Into The CC&Rs, HOA Rules, Or Bylaws
Carefully read the HOA rules and regulations that you will be legally obligated to follow. Make sure you agree with them. Changing bylaws can be an arduous task that often requires unanimous approval by all owners. Don’t think that once you become an owner you’ll be able to convince people to change things you don’t like.
One particular point to check is whether the community’s bylaws restrict or prohibit rentals. Even if you aren’t planning to rent out your place when you’re not using it in the near term, your situation could change and the time could come when you’d like to be able to make some extra income this way.
#10 Talk To The Owners
Finally, and not least, question as many owners as possible about how the community is run. It is typical all across Mexico, for example, for condominiums (including gated communities) to be managed by an outside administrator who is supervised by a Vigilance Committee (VC) made up of owners. By and large, your satisfaction with daily life in your community is going to be heavily influenced by these two.
Find out if there is any owner dissatisfaction or unrest with the Vigilance Committee, the administrator, the developer, or among owners. It’s hard for people to agree on most things, but especially hard when it comes to where you live. Things can get ugly, so make sure your dream community is full of and run by people who share your core beliefs.
You don’t want everyone to be the same, but it’s no fun if you disagree on fundamentals. Remember, the policies that affect your daily life will be determined by the majority of owners and carried out by the administrator and VC.
Taking the time to address these issues could potentially save you from making a terrible mistake. Remember that the salesperson and developer want you to buy, so you aren’t likely to get the straight skinny from them. Do your research. Ask questions. Observe. It can be the difference between living your dream and dreaming of somewhere else.
Property Investor and Full-Time Mexico Expat