Looking at a condo where the HOA only allows one lease per year. Meaning if my tenant doesn't pay, leaves, breaks the lease, etc. I cannot rent it out until the one year anniversary is up. I generally figure a 10% vacancy rate. I have no idea how to figure out a safe vacancy rate to see if the math works on this property or not. Using a 10% vacancy rate, property manager costs and typical operating costs I am at at 10% CAP rate. Any thoughts? Any advice? Or would you just run the other direction. Our buying market is hot, I've been looking for six months, I've made mutliple offers but keep getting out bid, so I'm still considering this condo.
Could you have the new tenant take over the lease/sublease with a rider stating as of date XX the new tenant is in good standing? You could potentially have a verbal agreement in place to followup with a year long lease after the original lease ends. I have no idea of legal ramifications, but just a thought.
I wouldn't worry about 6 months of searching. It took me 2.5 years and 12 offers. I ended up with the property that best fit my needs and was able to get a very strong feel for the market, laws, etc.
Thanks Stephen! I wish that was an option here. This is a courtyard condo building with mostly retired home owners. They aren't thrilled about renters in general and since they are retired and home all the time, they would definitely notice a change in renters.
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