Huntsville Real Estate Forum

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Michael S.
  • Huntsville, AL
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HOAs limiting number of rental properties

Michael S.
  • Huntsville, AL
Posted Jan 22 2022, 07:51

Madison County (AL) investors,

Just wanted to alert you to a recent development. We received our annual HOA dues statement for one of our SFH rentals. With the statement, there was a ballot to submit for HOA by-law revisions. The revisions including eliminating STRs (which aren't permitted by the city ordinance anyway without very specific qualifications/zoning), limiting the total number of rentals in the subdivision to a percentage, etc. They noted that all existing rentals were "grandfathered" in from any restrictions, likely to avoid a possible legal battle from the existing LTR owners.

As such, if you are buying an LTR in a subdivision with an HOA, make sure you check the HOA legal by-laws closely first before closing - this may become more wide spread in the future here.

Huntsville, Alabama

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Steve Stinson
  • Real Estate Agent
  • Huntsville, AL
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Steve Stinson
  • Real Estate Agent
  • Huntsville, AL
Replied Jan 22 2022, 07:58

@Michael S.almost all of the newer subdivisions have a 6 month/12 month minimum lease term in the HOA CC&Rs. I think you'll see most of the older (still active) HOAs without that provision attempting to amend the CC&Rs to include it.

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Michael S.
  • Huntsville, AL
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Michael S.
  • Huntsville, AL
Replied Jan 23 2022, 06:33

@Steve Stinson - have you seen HOAs also putting a restriction on the number of properties in the subdivision that can be LTRs?  That was a new one to me, and seems to be a dicey proposal.  I get the STRs;  I think the LTR restriction is very problematic.

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Steve Stinson
  • Real Estate Agent
  • Huntsville, AL
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Steve Stinson
  • Real Estate Agent
  • Huntsville, AL
Replied Jan 23 2022, 06:37

@Michael S.No, I haven't seen that yet. I am familiar with an older townhome community that prohibits any rentals. I don't see how that would hold up if ever challenged.

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Theresa Harris#2 Marketing Your Property Contributor
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Theresa Harris#2 Marketing Your Property Contributor
Replied Jan 23 2022, 07:12

This nothing new. Many HOAs (not speaking about Huntsville specifically, but any where) already limit the number of rentals. Some don't allow rentals at all- LTR or STR. This is one of the things to keep in mind when buying a property that has HOAs, rules can change.

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Tim Sharkey
  • Real Estate Consultant
  • Woodstock, GA
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Tim Sharkey
  • Real Estate Consultant
  • Woodstock, GA
Replied Jan 23 2022, 08:00

This is certainly not something new.  Many subdivisions in Atlanta have started implementing this strategy to help deter institutional investors from buying properties in subdivisions that are at a higher propensity for becoming a rental community.  This is a way for these HOAs to control the perceived long-term values of their personal residence.  

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Nicole Heasley
  • Lender
  • Youngstown, OH
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Nicole Heasley
  • Lender
  • Youngstown, OH
Replied Jan 23 2022, 08:44

This is why I generally advise investors against HOA's and avoid them myself.

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Michael S.
  • Huntsville, AL
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Michael S.
  • Huntsville, AL
Replied Jan 23 2022, 09:28

@Theresa Harris and @Tim Sharkey To clarify - it does appear to be NEW in the Huntsville/Madison area, as Mr Stinson validated with his comment above. I am aware that this may be very common for other areas of the country, as you have seen in your markets. But I have never previously paid close attention to HOA covenants for local SFH opportunities here in Madison county, and wanted to make other investors in this area aware to watch out for it.

@Nicole Heasley - I think it can be case by case. We have a couple SFHs in HOA neighborhoods, and the HOAs have previously been a non-factor - if anything, they are keeping the neighborhoods looking nice, and the tenants for those properties have been great about paying rent and not causing problems thus far. But obviously I may be in for a rude awakening if the local HOAs here start limiting the number of LTRs, or start getting aggressive board members in the future. To be determined.

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Jay Hinrichs#5 All Forums Contributor
  • Real Estate Broker
  • Lake Oswego OR Summerlin, NV
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Jay Hinrichs#5 All Forums Contributor
  • Real Estate Broker
  • Lake Oswego OR Summerlin, NV
Replied Jan 23 2022, 11:12
Originally posted by @Theresa Harris:

This nothing new. Many HOAs (not speaking about Huntsville specifically, but any where) already limit the number of rentals. Some don't allow rentals at all- LTR or STR. This is one of the things to keep in mind when buying a property that has HOAs, rules can change.

 the high end subdivisions in MisSissippi   specifically in Madison county do not ALLOW ANY rentals.. 

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Susan Maneck
  • Investor
  • Jackson, MS
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Susan Maneck
  • Investor
  • Jackson, MS
Replied Jan 23 2022, 14:26

Even some of the HOAs in Jackson, MS don't allow any rentals. I was about ready to buy one there when I found out it couldn't be rented. 

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Bruce Woodruff#2 All Forums Contributor
  • Contractor
  • Arizona
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Bruce Woodruff#2 All Forums Contributor
  • Contractor
  • Arizona
Replied Jan 23 2022, 16:15

It's beyond me why any investor would spend their money buying anything in an HOA controlled community.....

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Matt M.
  • Contractor
  • Easton, PA
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Matt M.
  • Contractor
  • Easton, PA
Replied Jan 23 2022, 18:11

@Bruce Woodruff

My parents had a condo years ago and mom couldn't even put a small flag in her 3'x3' plant area. And forget painting the front door how you'd like. HOA's are the worst.

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Nicole Heasley
  • Lender
  • Youngstown, OH
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Nicole Heasley
  • Lender
  • Youngstown, OH
Replied Jan 24 2022, 16:54
Originally posted by @Michael S.:

@Nicole Heasley - I think it can be case by case. We have a couple SFHs in HOA neighborhoods, and the HOAs have previously been a non-factor - if anything, they are keeping the neighborhoods looking nice, and the tenants for those properties have been great about paying rent and not causing problems thus far. But obviously I may be in for a rude awakening if the local HOAs here start limiting the number of LTRs, or start getting aggressive board members in the future. To be determined.

I remember a BP podcast episode where the guest was dealing with a difficult HOA, so they joined the board to help influence their decisions. Might be a smart move if there's an opening!