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When homeowners in a master-planned community all benefit from shared amenities and services, and they all pay a percentage of the expense while maintaining association governance, that is a common interest development (CID). Planned unit developments, co-operatives, golf course communities, and condominium and townhome developments all fall under the umbrella of common interest developments -- they are residential communities where all residents share access to common areas and recreation facilities and which are governed by a homeowners association. They are also called common interest communities (CIC); the two terms and acronyms are interchangeable.
While they have their upsides and downsides, CIDs are nonetheless a rapidly growing area of real estate development. CIDs give each homeowner the chance to enjoy a lifestyle they couldn’t have in a single-family home, and they are a great investment opportunity for developers who can build at scale on previously underused land.
What are the defining features of a common interest development?
- Owners have shared access and usage of common property, amenities, and facilities.
- Self-governed by a homeowners association (HOA).
- Fees for common property shared amongst owners.
- Regulations, dues, and guidelines for a CID are contained in a legally binding Covenants, Codes, and Restrictions (CC&Rs) document, filed at the county recorder’s office.
What types of communities are under the CID umbrella?
A broad spectrum of development types fall under the CID umbrella -- more than you might guess. Some commercial and mixed-use developments are CIDs. The residential community types that are considered CIDs include:
- Planned unit developments (AKA planned developments).
- Condominium complexes.
- Co-operatives (co-ops).
- Retirement communities.
- Golf communities.
- Timeshare developments.
- Stock cooperatives.
Although the architecture and design characteristic most commonly associated with a CID is uniformity; i.e., where every unit in a pod has an identical exterior and the landscaping looks the same throughout, not all types of CID have this identikit look. There is such a thing as a planned subdivision, and while the homes in this type of community are all maintained and landscaped to community standards, they don’t necessarily all look exactly identical. Nor do they share walls.
Note that your potential decision to buy in a common interest development could be made more difficult due to the rules that the Federal Housing Administration (FHA) and the government-sponsored enterprises (GSEs) have for various types of developments under this umbrella.
The FHA has recently loosened up its guidelines around eligibility for mixed-use developments and condo developments, in a move specifically to allow more individuals to buy condos as a primary residence. Still, many condo complexes, golf communities, and mixed-use developments will not be eligible for federally backed loans. And timeshare loans are not considered mortgages at all.
Pros of buying in a CID
The selling points of CIDs play very well in real estate listings. Beautifully maintained, with sparkling pools and colorful children’s play areas, many of these master-planned communities present as the exact kind of place you’d want to raise a family or live peacefully as a child-free adult. These are some of the most sought-after pluses:
- The main benefit of buying in a CID is the access to shared amenities and living space that wouldn’t be affordable in a single-family home.
- Another pro is safety. Many CIDs have some sort of security staff or at least a community security system.
- Roads and sidewalks tend to be well maintained, since the budget for this is allotted in the CC&Rs.
- There is often some type of professional management overseeing the day-to-day maintenance and operations.
Potential problems with buying in a CID
The problems inherent in living in a common interest development tend to present themselves over time. Some things -- e.g., residents not paying their dues, leading to a cash-poor HOA -- you can discover in due diligence before closing on the home. In fact, the FHA encourages potential buyers to be diligent by not guaranteeing loans for certain high-risk CID developments. Lenders are even more stringent.
However, CIDs which are perfectly in order financially may still be problematic for some people to live in because of the restrictions they put on day-to-day life, including the following:
- A big one is the compromise in ownership rights due to the HOA’s authority.
- Many CIDs force a certain amount of conformity in how units look, what’s allowed in front of each home, and even the private yards’ landscaping.
- The community element of CIDs reduces privacy.
- There can be many rules and regulations -- and if you don’t adhere, you can be fined.
- Monthly dues, plus the ongoing possibility of additional fees for maintenance or improvement projects.
- The HOA oversees the budget to which the individual homeowners all contribute.
Is a common interest development the right option for you and your family?
Many families have decided that this type of lifestyle is right for them. The access to amenities, cleanliness, extra security, and sense of neighborly community is appealing. Some people like them because even though the maintenance fees are certain, there’s someone around to take care of most of the outdoor maintenance. Others like the feeling that many of these CIDs have of being a self-contained little community inside the larger city.
When CIDs go bad, there can be simmering or raging disputes between neighbors, disputes between residents and the HOA board over fines and fees, or refusal to pay HOA fees or special assessments -- and when these intensify, there can be lawsuits. The system of having volunteers in charge of a community’s well-being is certainly not without flaws.
However, fans of CIDs appreciate the extra layer of private governance because it feels protected from the outside world, with lifestyle perks and a greater sense of neighborly well-being than in communities that have evolved organically.
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