subject: Limiting The Number Of Condo Rentals On The Property [print this page] Despite the benefits to owners, there is often a limit on the number of condo rentals on a given property. This tends to be an issue that tends to get a lot of attention, especially with new owners that were not aware of the regulations. If you have recently purchased a unit and planned to use it as an investment property, there are several things that could affect your ability to bring in a renter.
Problems With New Owners Getting Financing
Too many condo rentals mean that new owners may not be able to obtain financing. The Federal Housing Administration and several lenders will not back mortgages in buildings that have at least fifty percent of the owners occupying the homes. This can be a real problem for someone looking to sell his or her property.
New owners that are looking at condo rentals as investment property are not as concerned about the number of units occupied by owners. They just want to make the purchase and be able to turn it around and find a renter. However, if there are limits, it is important that the owner know well in advance of the purchase. The limit can interfere and prevent him or her from being able to turn the unit around.
Property Values
If there are a large number of condo rentals in a given building, it could cause the property values to drop or at the very least, stay the same. Most people want their investments to grow in value and when there are not enough owners in the unit, there is a chance that the increase in value could slow considerably. With less of an ownership mentality, there is a chance that the units, as well as the common areas, will not be taken care of in the same way, also decreasing the value.
The More Information, The Better
When the rules of the condominium association change, it only applies to new changes. For example, if you are currently and owner and choose to lease our your unit to another person, you will not be affected. However, if you are considering changing your property to condo rentals in the near future, there is a chance that this could hinder your opportunities. Some properties are considering moving to a requirement that an owner occupy the unit for at least two years before leasing it out.
Make sure that you understand any and all limitations before you purchase property. All guidelines are written down and should be presented to a potential buyer in advance. However it is important to remember that much like the monthly maintenance fees, things can change over time. Be aware of any and all changes that take place along the way and how they will affect your investment.
