Rental Restrictions Charge vote HOA

7 Replies

I wanted to hear everyone's thoughts. Two (2) of the singe family homes I own are in the same HOA. I received a letter asking me to vote on if the HOA should restrict homes to be purchased in that HOA for the purposes of being a rental home. I would be grandfathered in, so it does not change anything for my current properties. I would like to purchase more homes in this HOA, however, the prices went up, and the rent has stayed the same, thus making it difficult to meet the 1% rule. However, if a yes vote comes I will not have much competition with other landlords, and since I am a buy and hold investor this may be good as I believe people that can not buy, will want to live in such neighborhoods.

I am thinking to move with a yes vote, however, I wanted to hear other opinions.

Thank you in advanced. 

There is a difference in not allowing homes to be bought as rentals and homes allowed to be bought as principal residences and then converted to rentals.  I would also question if you will really be "grandfathered" in.  Could be that when your current tenants leave you are no longer grandfathered.

I would put more effort in keeping the environment nice whether with renters or owners.  A good landlord will generally go out of their way to be better than the owners in a nice NBHD.

I never thought of that and it is a good point. I actually just called the HOA and asked and they said that it follows the home not the tenant. So if my tenant leaves, I can still rent the home out to another. As for keeping the environment nice, that is on the top of my list as well.

Thank you for the input.

Originally posted by @Peter Rigakos :

I never thought of that and it is a good point. I actually just called the HOA and asked and they said that it follows the home not the tenant. So if my tenant leaves, I can still rent the home out to another. As for keeping the environment nice, that is on the top of my list as well.

Thank you for the input.

 Personally...that is what they think it is today. What happens if/when there is a list of people waiting to be able to rent out their home? I bet those people raise a fuss over your "monopoly" on the approved rental slots. And then what happens....in fairness you should lose your approval anytime a tenant moves out, and the next person in line should get to rent out theirs. Then you could go back on the list to wait again. That's my personal opinion were I another owner in the neighborhood and couldn't rent because the first 2-3 landlord in there essentially had become the good ol' boys club and unless/until they sold I'm locked out.

Personally I'd completely vote against this even if I was the only LL in the neighborhood and would have the monopoly. It's never good for business to have a partner (HOA and every neighbor) that don't contribute to or have a vested interest in your business success.

"the HOA should restrict homes to be purchased in that HOA for the purposes of being a rental home."

Did you get an answer to this?  Can the home be rented if it was purchased initially as a principal residence?  What provisions are made for job transfers, long nursing home stays?  What happens if an owner gets in a bind and can't sell but doesn't have money to maintain but could get a good renter.  Owner in crap house vs. renter in a maintained house. 

Is there a problem that needs to be resolved?  Could it be resolved in a less restrictive way?  Once voted in this could cause way more problems and be harder to remove.

As for those issues the document states:

"The rental Cap will grandfather all of those currently renting their home and current homeowners that have owned a home for more than 5 years so they will be allowed to rent a home.  New homeowners, though, will be required to live in the home for 5 years before it can be rented"

So if you own/live in the home for under 5 years, and you need to leave, but the home is not selling, you run into problems. 

Basically she told me over the phone this is because large companies are purchasing multiple homes for purposes of renting, but they sit empty. This neighborhood has 500 homes, and one large company has 40 of them.  She further explained the landlords that are local is not the issue.

You should vote against this because it is fundamentally unfair. It is an idea promoted by people who think they should control not only the property they paid for, but also the property that others paid for. As @Peter Rigakos noted, it poses a big financial problem for someone who has a job transfer or another need to move at a time when the real estate market is down. 

If you cater to these people now, wait for them to come up with more extreme proposals that affect you directly.

Also, if people don't like rentals, they should attempt to deal with the behavior they don't like: not mowing lawns, parking too many vehicles, etc. They should not assume that everything they don't like is caused by the property's rental status or that all rentals create the same problems.

If one large company has 40 homes and they look great, then the neighbors should be pleased. If the company has 40 derelict homes, the HOA should impose fines and foreclose if necessary. If a home is vacant and well-maintained, the neighbors should get over it.

Peter Rigakos makes a lot of sense why the Board is moving to this policy. You should highly consider to sit on the Board if you aspire to grow your portfolio in this Association - you'll be able to control and understand your investment better. As for the vote, It's a toss up for me based on what I have heard. We're obviously unfamiliar with the politics of the Association but it just sounds like the Board is comprised of homeowners, and, as usual, the investor is not appreciated, thus, they're desire to cap the rentals. I'd be concerned for the people who haven't lived there for five years and fall on hard times and need relief (I.E rent their unit). I'm willing to bet most of those 40 properties purchased were foreclosure a anyway - how did the HOA think they would be purchased? Sometimes a bank won't even finance a house, hence, the need for the investor. If this were a condo community, I think I'd be more in favor, but not a SFH Association. Once again, I don't know the politics of this place, but as far as the general membership is concerned, I feel they have more to lose considering a SFH costs more to operate, and if they can't rent cause they fall within the 5 yr term, they have been harmed. Of course, there are hardships typically granted, but I'm not sure how they would handle such a matter. Last point, another reason to vote yes if to promote homeownership. If home prices are increasing already, why cap rentals? Perhaps better regulation needs to be put in place for the rental units. One company owning 40 units is not exactly good, but isn't even 10% of the development. If 50% of the HOA are rentals, then that's not good - and maybe voting yes is warranted.

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