Realtor · Washington state · Member since 2026 · 9 posts · 2 votes
Quick one for anyone looking at condos or townhomes as rentals.
A lot of HOAs limit renting, and you usually won't see it in the listing. Some cap how many units in the building can be rented at once, and new owners go on a waitlist. Some ban leases under 6 or 12 months. Some make you wait a year or two after buying before you can rent at all. And some charge a lease registration fee or make tenants go through their own application.
Any one of those can wreck the numbers on a deal that looked fine on paper.
My rule now:
- Get the CC&Rs, bylaws, and any rental policy before my offer, or at least make the deal contingent on reviewing them - Ask the management company how many units are rented right now and whether there's a cap or a waitlist - Read the last year of board meeting minutes to see if they're talking about adding limits
If I can't rent it the month I close, I run the numbers as if I'll carry it empty for a while, and most of the time the deal doesn't survive that.
P.S. Look atthe resale cert like you're about to marry someone and their finances..
One more item for that checklist is the owner occupancy ratio in the building, because many lenders will not finance a unit in a project with too many renters, and that can shrink the pool of buyers when you sell. A deal that works on rent today but cannot be financed by the next buyer carries real exit risk. Checking the rental share before the offer keeps that risk visible while the numbers are still easy to change.
I recommend should go as far as to request financial statements and the most recent reserve study. I have avoided many deals where I see the finances may be good enough for insurance, but if there are major items on the reserve study that haven't been addressed it can mean a large special assessment for you in the not-so-distant future.
Rental restrictions are one thing, easily solvable by viewing CC&R's so your rule is good, but you should be cautious of avoiding major assessments especially in Condo's with HOA's that cover exterior maintenance/common areas.
Another pro tip - try to speak to the HOA PRESIDENT, not the community manager, president should know exactly what's going on, and if you charm them, you may find yourself getting referrals for sellers in the neighborhood.
Good stuff.. Definitely.. I've seen hundreds of nightmare HOA situations.. it's a ticking time bomb and if the budgets become so bad. welll. expect your values to go down 50% when the unit becomes unfinancable
While it is certainly important to obtain the current copy of all the Governing documents (Articles of incorporation or Charter; By-laws; Declaration/DCC&R's; Architectural restrictions; House Rules. Some states use different document titles) for each specific COA/HOA project, as while there are similarities, each is still quite unique. In most cases, you will not be able to obtain those before an offer has been accepted, so you must identify all documents desired in your offer. Most recent Reserve Studies need to specifically be requested, but are in most cases considered public documents...meaning they must be available if they have one. Cost often deters people from requesting documents. Besides the Governing docs, you must also obtain the current (or upcoming year if available) Annual Budget and their Reserves Funding Plan. This funding plan is the most important of all documents, as it should clearly indicate if there is a Special Assessment in your future...if you know how to interpret it and exactly what it is telling you. Very few agents, Board members, or Management company reps fully understand these plans or how they are actually developed.
The numbers on the plan is where there can be major discrepancies, and often Boards will "adjust" the monthly Reserves contribution amount solely to "keep the monthly fees low". They also often use outdated estimates for replacement cost amounts, or straight up guesses. Unfortunately too many Boards do not take their fiduciary responsibility seriously, and fail to properly plan for long term replacements and updates that are absolutely unavoidable.
Your Declaration is very important as well, as it spells out what elements are your responsibility, and which are "common" or "limited common" elements that the HOA is responsible for. These can be pretty confusing in some cases, so need to be studied closely.
With regard to the OP's original comments, "asking" anyone...management company, Board President, or neighbors about anything is a waste of time, as very, very, few are able to speak to facts. They will look you in the eye and tell you one thing, they you dig a little and find out how wrong they are. Everyone has their own agenda. Reviewing Board meeting minutes is a good idea, but those also need to be requested in your offer. The fact is, especially for smaller projects, the Secretary does not know how to properly record the minutes (which are supposed to only reflect what was done, not what was said), so they may or may not be reasonably accurate. Also, generally the only time there is any discussion about a need for Special Assessment or monthly fee increases occur at budget time, typically 2 or 3 months ahead of when a budget actually has to be approved for the upcoming year, usually November for calendar fiscal year (typically By-laws require minimum of 30 days notice prior to increase taking effect).
Peter, this is a really good point. HOA rental restrictions are one of those things that can completely change the numbers after someone has already fallen in love with the property.
I'd add one more step to the underwriting: run the numbers assuming the most restrictive scenario you could realistically face. If there's a rental cap, waitlist, or required waiting period, account for the carrying costs during that period rather than assuming the property will immediately produce rental income.
That also makes the tax and financial projections much more realistic. The property may look great on paper, but the actual rental timeline matters just as much as the purchase price and projected rent.
The resale restrictions are a great point too. You're essentially underwriting the property's future flexibility, not just today's rent.
One more item for that checklist is the owner occupancy ratio in the building, because many lenders will not finance a unit in a project with too many renters, and that can shrink the pool of buyers when you sell. A deal that works on rent today but cannot be financed by the next buyer carries real exit risk. Checking the rental share before the offer keeps that risk visible while the numbers are still easy to change.
Same rule, different document. I only buy single-family houses in Memphis, no HOA, but the test is the same: if I cannot rent it the month I close, the numbers have to survive the wait.
I buy BRRRR houses under $100K, rehab to an ARV of $180K-$265K, and rent 3BR+ homes on Section 8 for $1,395-$1,950. Every month a house sits empty waiting on a rental cap or an approval is a month of no rent and a month of holding costs. At 236 properties, that vacancy cost is what kills a deal, not the purchase price.
Your checklist is the right one: rental cap, minimum lease, tenant screening rules, and what happens if the rules change. Get it in writing before the offer, not after.
What is the one HOA rule that has killed a deal for you?
@Peter J Kim Good reminder—the question isn't just "Does the HOA allow rentals?" but "Can I rent this specific unit when I need to?" I'd want the current rules, cap status, and any waiting period confirmed in writing rather than rely on the listing. Your point about carrying it empty is key: if the deal only works with rent starting immediately, I'd want that uncertainty resolved before committing. And yes, the resale certificate deserves more than a quick skim.
This is the rule I give every out of state buyer looking at condos on the Emerald Coast. Around Destin, PCB, and Miramar Beach you'll see rental caps, minimum stay rules (some buildings won't allow anything under 7 or 30 nights), and waitlists before a new owner can rent at all. I'd also pull the latest reserve study and any special assessment talk in the board minutes, because a few buildings out here have had big SIRS / milestone surprises that change the investment overnight. If the docs don't clearly let you do what you planned in month one, walk or price the wait into the offer.
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