- My investment specialization is buy-and-hold single family homes with 5-8 bedrooms and rent them out by the room, marketing specifically to professionals (rather than students or section 8).
- My farm is Loveland, Windsor, & Greeley.
- Occupancy Code in Loveland is no more than 3 unrelated people living in the same single family home.
- Loveland does not require a disclosure of occupancy. (compared to nearby Fort Collins that does).
- My investment specialization would put more than 3 unrelated adults in the same single family home, so my specialization would violate the occupancy code.
- Would Loveland, like nearby Boulder, tolerate single family homes that violate this code for years until finally making them legal through a special permit (housing coops)?
- Could the occupancy code paired with the absence of a occupancy disclosure requirement, be taken as the code is there IF problems are caused due to over-occupancy BUT is ignored if there are no problems?
- Could the above question imply that, as long as I ensure my properties/tenants are not a nuisance to neighbors, I can proceed w/out concern?
- How have other investors in cities across the country related to scenarios like this?
- What BP members have actual experience with this and what do they think?
My Proposed Plan(please critique)
Disregard the letter of the code and follow the spirit of the code, which is to make sure my investment properties are beneficial parts of the neighborhood not a perceived or actual nuisance in any way due to a higher occupancy. In time, join efforts to create permits for Loveland and, when permits are available, attain proper permits.
Greeley and Windsor also have occupancy limit laws on the books. You can call the city zoning department to get it directly.
Yes thanks. I know that. Do you have experience with how those codes in regard to my post?
I would be less worried about neighbors complaining and more worried about a savvy tenant holding you hostage to your illegal occupancy. One angry tenant who throws you under the bus and the whole house of cards can come crashing down quick.
Boulder has a unique density issue that forces the code enforcement to look the other way. Co-ops were a way to legalize it, but they will be limiting the number of co-op applications accepted each year. Without being able to build up or out, there is a real demand to increase occupancy per dwelling. I am not sure if the same dynamics are at work in Loveland.
You questions of "tolerate" is an interesting one. It kind of acts like Loveland is a person who will make a decision based on the greater intent of you maintaining a problem free rental that doesn't create a nuisance for neighbors. The municipalities themselves are going to treat it like a black and white issue of either you're over occupancy or you're not. There are also plenty of ways that an over occupied rental can be a nuisance without it being noise related. Specifically that many homes in the Northern Colorado area have 2-3 off street parking spots with the garage so if you are looking at 5-8 people living in a home and only half the tenants have cars you are putting one on the street.
The spirit of the code, from Fort Collins' perspective where I invest, is to not put neighbors in a situation where they have to address over occupancy directly with the home owner who is leasing to the tenants for any reason. The vehicle piece of it is also critical as even in areas in Fort Collins where you can apply for an over occupancy waiver you have to provide 0,75 parking spots per tenant that are off the street.
I also jump on your question of can I "proceed without concern." You are proposing to do something that violates a city code. While many residents and tenants generally look the other way it would be a mistake to assume that there will be no issues. If your cash flow model requires the over occupancy you are risking a city inspection that would result in putting you in the red from an income perspective. You are also potentially limiting your tenant pool to only those tenants who would feel comfortable violating the city code.
In summary, there are lots of people who violate the city codes but it is by no means something that municipalities ignore. I would not hang your hat on the assumption that you won't get caught as an investment strategy.
I really appreciate everyone who has chimed in so far. Thank you for taking the time to not only share your knowledge/wisdom, but also taking the time to carefully explain what & why.
If anyone else has anything helpful to chime in, please do.
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