I don’t think they can tell you who you can and can’t sell your house to but there are other ways HOAs can use to discourage investment companies from buying homes in the community. One way is to restrict rentals or put a moratorium on them. Like any new homeowners can’t rent out their houses for 2 years or something like that. Rental restrictions are common in HOAs, so I wouoldn’t be surprised if your HOA did that
I don’t believe there is a maximum amount that an HOA can hold in reserves. Most HOAs actually have underfunded reserves. The optimal level is to have it at least 70% funded. Do you believe your HOA has reached that level?
To answer your questions, yes and yes. An HOA does need to be incorporated (usually a non-profit) most of the time. You also need to pay taxes since you’re still treated as a corporation.
I’m assuming you’re in the first stages of starting an HOA, which can be very difficult. Make sure you register with the proper agencies and have a solid declaration. You will also need to elect board members and they must thoroughly know your bylaws and covenants.
I find that many fledgling associations neglect insurance. Don’t make this mistake. Insurance is important and you should see to it that you have all the policies – a master policy, liability insurance, D&O, worker’s comp, crime and fidelity, etc.
It also wouldn’t hurt to hire a management company if you have the money for it. It’s going to make your life a lot easier, trust me.