What Is A Planned Unit Development (PUD) In Real Estate?

There are a lot of benefits to owning a home, but homeowners coming from apartment living may find that they miss perks like the central location, built-in sense of community and access to exclusive amenities that may not come with traditional homeownership.

If you spend a lot of time in the area surrounding your home, a planned unit development may provide the perfect opportunity to escape the renting cycle without losing the amenities you want. But what exactly is a planned unit development and how does it differ from a standard neighborhood? In this article, we’ll break down everything you need to know about living in this type of community.

A planned unit development (PUD) is a community of single-family homes, townhomes and/or condos integrated with other neighborhood elements like office buildings, shopping centers, recreational activities and even religious institutions, typically owned by a homeowners association (HOA).

Living in a PUD offers the benefit of common amenities like private parks, playgrounds and swimming pools within walking distance. But these amenities aren’t free – you’ll pay for them in your HOA fees.

Note that belonging to an HOA will impact what you can and can’t do with your home. Some HOAs may have strict rules on things like pets, parking and what your home can and cannot be used for. You’ll want to research the rules and regulations set by the HOA before you decide to move to a PUD.

There are a few noticeable differences between a single-family home and a PUD property. On the upside, PUD homes have access to private amenities. These amenities could be walking distance and save you money on travel and other day-to-day expenses.

But on the other hand, even the free standing, single-family homes within a PUD community may sit much closer together than what you’d find in more traditional neighborhoods. PUD real estate can also lead to some buying and selling challenges, as a PUD with multiple available units can make your home harder to resell down the line.

Buying a PUD house comes with access to things like lawn care, snow removal, private amenities and other perks. But these benefits come at a cost, which you will pay in HOA fees on a monthly, quarterly or annual basis.

The exact amount you’ll pay in HOA fees will depend on a few factors, including the region, property type and the individual community. But in general, the more services and amenities included, the more you’ll have to pay.

The average HOA fee is about $250 per month, though fees can cost as little as $100 or up to $1,000 per month in certain areas.

When applying for a mortgage, lenders will review loans for PUD and traditional homes in much the same way. The lender will consider your credit report, debt-to-income (DTI) ratio and other financial factors to determine if you qualify for a loan.

Where the process differs slightly is in the property requirements. If the PUD or its associated HOA doesn’t meet all the lender’s requirements – such as historically collecting their HOA dues on time – it may be difficult to secure a loan.

Why does the lender care about the HOA? If you foreclose on your home, your lender will take ownership of the property, like they would with any other property. But unlike a single-family home, the quality and reputation of a PUD home is contingent on the reliability of the HOA it belongs to.  An HOA with issues may make it challenging for the lender to resell the property.

To ensure the PUD meets all the necessary requirements, your lender will want to review their covenants, conditions and restrictions (CC&Rs) as well as the HOA’s financial records. These documents can be helpful for you as a homeowner as well, as they provide insight into how the PUD is run. And if you find a house in a reputable PUD with a reliable HOA, getting approved for a mortgage should be no more difficult than it would be with a traditional home.

Every PUD is different, so if you have certain amenities that will make or break your living experience, research what’s included in the PUD you’re considering moving to. Depending on the community, there are a number of amenities that could potentially be included, such as:

• Gyms
• Parks
• Playgrounds
• Swimming pools
• Recreational activities

Planned unit developments are interactive, dynamic communities. Planning is right there in the name, so you know without a doubt that significant time and effort went into strategizing a PUD community’s layout and design.

From access to exclusive amenities to a stronger sense of community connection, there’s a lot to enjoy about living in a PUD. But before buying a PUD home, take the time to research the HOA so you understand the fees you’ll have to pay and the rules you’ll need to follow.

In the market for a new home? Whether you’re interested in property within a PUD or elsewhere, it’s important to determine whether you should rent or buy before getting started.