Rental Cap Limit 30% ??? Any options before to buy?

5 Replies

Hi! I'd appreciate any help here. I just wondering any work around to rentals to avoid to be trap in Condominium rental cap. The manager of the association where I plan to buy (for rental) just told me that they have a 30% rental limit for the condominium. I'm practically new in real state investment. Is there any option to avoid this kind of head ache?? What about if I buy and then I cannot rent my unit? Any other investment alternative? I want to invest $150k

                      Thanks!!! John


@John Landmark This is a common problem with condos - The HOA bylaws can restrict many things for the investor. Personally, I will never buy a condo for this reason. If you have $150k you can look for other condos who do not have rental restrictions (make sure you read the entire bylaws, some condos allowed exemptions during the recession but they can enforce the original rules at any time) or use the money as a down payment on a bigger property

Thank you! Brie,

                           I was thinking on that. Here in Florida there are plenty of neighborhoods with houses without association. Thank you for your advice! John

@John Landmark   I buy condo rentals all the time. You need to ask the condominium management company if the rental cap has been met. Also make sure that the rental cap has been officially adopted by the association, and isn't a "suggestion" by the management company. Every so often, I will ask about a rental cap and the management will give one, but then backtrack when you ask if this is the official policy of the association. Often associations can't get rental caps past a vote, but will try to enforce a soft cap by mentioning a number to those who inquire.

You just need to call the management company and ask how many units are currently being rented, and what the maximum number of rentals are. If it's full, then ask about the waiting list. Generally speaking, I would not buy a rental unit in a building with a maxed rental cap unless it was extremely undervalued and I could flip it for a higher price. You don't want to deal with running afoul of the association, they can make your life hell if they want to.

As far as alternatives, of course you have other options. Find a condo without a rental cap. Buy a single family home. Buy stocks. Don't get caught up with any individual unit. Hind sight is always 20/20. There are plenty of deals where I kick myself that I didn't do them. Then there are others where I'm real happy I didn't do them. Just make a decision and move on.

Thank you! Hal,

                         As a new investor, I'm full of doubts. I like the idea of single family home for now. I appreciate your advice as well.  

regards, John 

@John Landmark ,

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