Things to Think About when Adding an HOA Clubhouse

by | Case Studies

Case Study for Adding an HOA Clubhouse

Realtors in the area knew that units in the Atlanta condominium complex were undervalued. There was a general reluctance to steer potential buyers to the building because of the ominous repairs that were needed. Both realtors and buyers were afraid of the “unknown”. They could see that much work was going to be required but they were not able to project the costs of the repairs.

Renovations were needed for the HOA Clubhouse

The community pool was dated and looked to be unsafe. Both the clubhouse and fitness center were in desperate need of massive renovations and the parking lot was peppered with potholes and broken asphalt. Potential buyers feared that they would be tagged with a large assessment or multiple large assessments in the future to fund the much-needed repairs.

Know problems of your current HOA clubhouse

Various boards had been fielding complaints from residents for years. They were all aware that something needed to be done. But it had been easy to finish a term and kick the can down the road to the next board. There was a lot of interest and sympathy but not much energy to actually face these problems head on. 

New leadership at the HOA

All that changed when Marge took over as President. Having been a long-time resident, Marge was very familiar with the situation. Rather than being part of the ongoing complaining faction, she wanted to be part of the solution. She understood that a repaired and renovated condo complex was in all of the unit owners’ best interest.


Marge’s first order of business was to assemble a team of volunteers to identify and assess the overall costs of the various projects. Once the primary cost estimates were collected, her committee ranked the projects in order of importance. Armed with a ranking system and rough cost estimate, she began exploring a preliminary budget and financing alternatives.

Cost Estimates for the HOA clubhouse and other projects

Clubhouse $1,100,000
Fitness Center $ 750,000
Pool $1,500,000
Parking Lot $ 750,000
Preliminary Budget $4,100,000

The renovation committee turned to Arch Capital Solutions to help them build a priority matrix for various scenarios along with projected costs and preliminary budgets. Arch Capital helped them pare down their analysis to 4 scenarios ranging from a “Bare-Boned” renovation and an upfront assessment to a “Cadillac Rehab”.

HOA project prioritization

HOA Project Priority

Highest Priority
Very Important
Nice to Have

Cadillac Rehab
Clubhouse $1,100,000 $1,100,000 $1,100,000 $1,100,000
Fitness Center   $ 750,000 $ 750,000 $ 750,00
Pool     $1,500,000 $1,500,000
Parking Lot       $ 750,000
Preliminary Budget $1,100,000 $1,850,000 $3,350,000 $4,100,000

They examined financing alternatives ranging from large upfront cash assessments to combinations of a lower upfront assessments and a long-term loan to fund the balance of the work. They overlayed their scenarios with several funding alternatives.


Preliminary Budget

# of Units: 450
Average Monthly Dues $ 350
Average Annual Dues $4,200

  Scenario 1 Scenario 2 Scenario 3 Scenario 4
Budget $1,1,00,000 $1,850,000 $3,350,000 $4,100,000
Monthly Loan Payment
(Per Unit)
$ 18 $ 30 $ 55 $ 67

Finally, they enlisted a realtor in an attempt to project “post-renovation” condo values so they could construct a cost-benefit analysis. Before the work, units were selling for an average of $450,000.

Return on investment (ROI)

Post Renovation Market Analysis / Return on Investment (ROI)

  Scenario 1 Scenario 2 Scenario 3 Scenario 4
Value of Renovation 5% 10% 15% 20%
Post Renovation Market Prices $472,500 $495,000 $517,500 $540,000
Projected Increase in Market Values $ 22,500 $ 45,000 $ 67,500 $ 90,000
Total Dues Increase (over life of loan) $ 3,225 $ 5,475 $ 9,912 $ 12,131
Return on Investment 691% 822% 681% 742%

The unit owners overwhelmingly voted in favor of the “Cadillac Rehab”. They understood that their HOA dues were going to be increased in order to repay the loan. More importantly, they also understood that their association would become much more livable and desirable once the work was completed.