Does rental % lower home sales?

Our HOA has a 25% limit on rentals.
I would like to know if there are any statistics indicating whether or not rental percentages affect home sale prices?

Carol,

I have no direct input or answer to your question. However, I would tend to agree with William. It really doesn't matter if your development is 100% owner-occupied or has 100% of the units occupied by tenants. There are good tenants and bad tenants. Just as there are good owners and bad owners. The overall value of the properties is based upon several conditions including appearance, maintenance, location and the economic status of the Association.

Now, I'm going to hijack your thread and go off on a slight tangent. How does your HOA administer the 25% limit on rentals? Is it “first applied, first allowed” or is there some other way this is determined? It would seem to me that unless there is some way of periodically refreshing the list of allowed units, there is an unfair bias that creates an inequity between units. Just curious.

Carol & Paul,

I would have to agree with William on this one.
I live in an HOA in Georgia and we are in the process of becoming a POA (property owners association). This will limit the number of rental properties and help the association with its number of delinquent assessments.

Many of the tenants in our community are regularly in violation of the CC&Rs. I have been told we can not send a violation notice to the residents home we must send a notice to the lot owner either by first class mail or certified mail. They (the tenants) just don’t care. So we have decided to limit how many rental properties we allow into our community. I think once we limit the number of rental properties, our community will begin to clean up. We won’t have such a difficult time enforcing the CC&Rs

Best of luck and keep us posted.
I’ll be following along,
Chuck W.

The answer to this would seem to depend upon the economic picture at the moment. In the 90's in some areas advestor properties got hit bad with foreclosures as opposed to non rental property. This is what I read and makes sense because rental investment propert is a higher risk property than homeowner properety, that is why the mortages rates are different. Tons of investers sign a secondhome condo rider that states they will used the property for theeir use only, then turn around and rent. Most banks and mortgage companies will question the administration of the condo as to how many rentals they have total and set rates accordingly.

Also I am not convinced that having a lot of rentales in a condo does not create a liability problem. I am not sure how but it seems to me if largew numbers of renters are allowed to rent in a unit that automatically increases libility because of sheer numbers.

I have read that if the economic situation turns sour and you want to sell your unit your market will be restricted and the number of people qualifying to be able to purchase your unit will be depressed. Also seems to me if a condo at a resort area allows overnite or weekend or weekly renters (no occupancy levels) you are just setting the scene for a bunch of different people to rules as opposed to just one family to train for a year or two. This has got to be look upon with disfavor by mortage lenders. Certainly Fannie Mae and Freddie Mac scrutinize and as far as I know will not loan unless the regime is not overloaded with rental investors, unless they attach a second home rider. Just my opinion, nothing more............yet.

Bob, Since it's so difficult to actually discover the real rental percentage in non-vacation communities, I'm wondering if the rental % guidelines are actually used often in lending decisions? Or am I missing something?

Thanks.

I think that too many rentals will certainly lower the price of the homes. I know that my parents condos (one in Washington DC area and one in Florida) both limit the percentage of rentals. In the case of Florida, the rental can only be for the "full season" or not at all. The reasons both condos gave me, when I asked this question is: Property values and traffic.

Mary

Reply to Joe54,
Collectively, you may be right and I would agree.
Individually, if you want to sell your unit and your buyer wants to finance, his lender will base his financial requirements on; among other things, how many units in the complex are rental as compared to non-rental. See other remarks in this thread. When the one doing the lending makes his decision it will be influened by the a collective figure, not a single unit sale price. This means in effect, the lender may not finance (FHA etc)or switch the buyer to a lender willing to fianace the purchase knowingt full well the rental picture of the comp-lex, and will charge the buyer a premium. This, of course, means the qualifications for a buyer to buy your unit will be more demanding er. go., less market for the seller.
And to me that may well be illegal. Sure would like to know.