As an individual homeowner you have the right to rent out your property. However, if you live in a community governed by a homeowner’s association those rights might be limited. Not everyone in a complex can simply rent out their unit. In fact, most HOAs will have a percentage of units that are allowed for rentals such as 25% or 50%. If you move in and the limit has been reached you might just have to wait for the next “opening” or apply for a hardship waiver before you can rent your property. There could be limits on the amount of renters based on Federal Housing Authority approvals. Does renting out your property hurt the resale value? That might just depend on the situation.
Location is what matters in the real estate market. There are many communities which are geared towards vacation rentals versus residential rentals. Obviously, if you’re investing in a vacation rental property you’ll be surrounded by like-minded property owners. These communities could still be governed by an HOA management and as the property owner you have the ultimate responsibility of maintain your property but the restrictions towards rentals aren’t as stringent. Because of the type of property the resale values aren’t impacted by renters.
On the other hand, in a traditional residential community the issue of renters is a concern for property management owners who worry about resale value. This concerned is based on the fact that renters don’t have a vested interest in the property. That can make a lot of difference with regard to upkeep. That’s why owners need to take full responsibility for their renters. According to the rules, they’ll be the one who will be fined if the renters break a rule in the CC&Rs.
The Renting Dilemma
Many first time buyers who invest in condominiums have to use that property as their primary residence as a condition of their loan. But there are just as many communities who have seen the wave of renters heading their way and have put up restrictions banning renters. Usually this has happened because of past bad experiences with renters. That’s bad news for folks who need a place to live and owners who want the revenue stream.
In one extreme case, a Florida HOA actually evicted renters and tried to rent out the property all without the owner’s permission. Apparently, this was a case of the HOA not liking the renter’s behavior and decided to take matters into their own hands. Now the case is winding its way through the courts which is clearly something the property owner never intended. All of this is meant as a caution for you to be clear about your intentions when buying a property. If you are looking at it as an investment property and there are rental restrictions it might not be the best place for you.
This article is provided by The Management Trust.