Rentals with strict CC&Rs and HOA

16 Replies

I am considering buying a fairly new home (2017) with some pretty strict CC&R's and there is also a small HOA fee ($63

/month ). Please tell me your experiences with similar investment properties. We will have to lay some strict rules out to potential tenants regarding things like noise, parking, not leaving items such as trikes and scooters on porch, etc. I’m just wondering if it will be difficult finding tenants that will abide by these rules.

Thank you!

I own in HOAs and am also on HOA Boards. It will 100% be on your screening ability and making smart choices of who you select as tenants. Obviously you can't discriminate, but maybe renting to a bunch of first time out of the house college kids isn't the smartest move if 95% of the community is older residents (seen this done more than once).

It's also going to depend on your ability to confront the tenant when something goes wrong. Will you have the backbone to push back when the tenant says the HOA rules are too strict and unfairly targeting them?

The HOA will fine you so you need wording in your lease that any fines from tenant actions will be passed on to them. I also have it in my leases that if I have to attend a Board meeting because of something they did, I will assess a fee of $100 per meeting.

I helped keep my friend keep his house rented when he moved to Germany. It was miserable as far as the HOA went. They were sending fines for parking on the street, leaving the trash can out after trash day etc. I had little control over the tenants. One of the 3 tenants that I dealt with followed the rules, the other 2 did not.

I would say absolutely do not buy a house in a HOA neighborhood that is heavy handed with the rules and handing out fines.

Oh yeah they sent out fines for weeds in the yard too.

@Karla Simmons We always send the applicant a copy of the HOA rules and regs BEFORE they sign the lease so they can see what they are getting in to. We also have them sign an HOA addendum attesting that they understand they are required to follow the rules of the HOA because any fines will be passed on to them. Make sure any correspondence from the HOA gets sent to you instead of the property. We had a tenant getting violations letters that we weren't aware of. HOA's can put a lien on the property.

I do not like having HOAs but in the areas I bought the ones worth renting were the ones in an HOA. It's just in the lease and the tenants know ahead of time. I promote it when looking for a renter. Some actually like it. I found it absolutely no problem in finding renters.

Greg M.:  Some very good advice.  Thank you.  My husband has the backbone to push back, fortunately.  I will make sure the lease is worded so the tenant knows the fine will be passed on to them. It does sound like the screening will need to be very thorough.

Originally posted by @Karla Simmons :

That's great advice. Thank you so much. Do you feel like having HOA decreases your pool of potential tenants?

I don't think having an HOA scares away applicants because 95% of our properties are in nicer areas with HOA's, and applicants generally know. They will ask if the HOA fee is paid by the owner and it is for all of the properties we manage. In one area of town, the entire community is within a well known HOA and it comes with some very nice amenities that applicants seek out. There are pros and cons so it depends on where you are.

 

I rented a home in a high end subdivision with a strict HOA. You need to find the right fit, and not just accept anyone. The way I do it in this situation is to hold an open house. I do 15 minute block showings, and hand out a LENGTHY application to anyone interested. I take notes on each person I meet with, taking names down, details, what kind of car they drive, etc. I pay special attention to those who did not pick up an application, in case they want the place later down the road... My stack of applications is usually like 6" high, and it is usually gone in a day. I tell them to fill it out completely, and follow any instruction I give in there. I have no "fee" to apply. Most PM's charge for this, I just charge for a background and credit check. In truth, I only need to really look through the best applicant's apps, which is why I don't charge. The reason I want them to fill out and initial at the bottom of each of my 10 pages, is to weed out the ones who can't read, or don't care to read, the very specific app. It is a good indicator as to who will read the lease, who will follow the lease's rules, and who won't. Once I know they have initialed it, and they send it back, I invite the prospects who I liked, and seemed "with it", back for an interview. When I have about 3-5 good prospects, who I know will not be a problem for the neighborhood, then I run the checks, and choose a tenant.

@Julie Hartman

Thanks Julie. This is new territory for us (HOA's) so it's just new things to consider. We have always paid for a gardener at our other non-HOA properties, so at least we wouldn't have to do that. I guess I'm just worried we could get a nightmare tenant in that causes us grief. We will screen thoroughly!

Originally posted by @Karla Simmons :

@Julie Hartman

Thanks Julie. This is new territory for us (HOA's) so it's just new things to consider. We have always paid for a gardener at our other non-HOA properties, so at least we wouldn't have to do that. I guess I'm just worried we could get a nightmare tenant in that causes us grief. We will screen thoroughly!

Just as an aside, the only HOA covered properties that take care of lawn/outside maintenance are at townhomes and condos, at least where we are. It may be different for your community. The SFR properties are responsible for their own lawn/snow maintenance. And yes, screening is critical anyway but especially now. Good luck!

 

@Karla Simmons

Most of my properties are in hoa communities. In my lease, it states tenants must abide by all hoa rules. I do get occasional warnings regarding lawn maintenance, trash cans left in site, and other minor issues. I always send the warning to the tenant letting them know it needs correction. I also have in the lease tenants are responsible for any fines associated with rules violations.

My only real issue are some of the more nit picky letters I receive. For instance, they said a driveway was dirty. No oil, just normal day to day grime. They expected me to clean the driveway. Of course, they were not so eager when I pointed out what a great idea they had and they should apply the same expectation for the sidewalks which were in common areas.