private investment organizations targetting HOA

If the investors repairs or improves a a run-down house, and either sells it or rents it long-term to same tenant, it would be a benefit to the home owners in the area likely. The only downside I could see is if the investor operated the house as a daily rental, an AirBnB for example, (people renting by the day for parties, criminal acts from day renters etc.) For that risk you could adopt a restriction that prohibits day/short term rental of properties - I think some HOAs restrict rental less than six months or more.

There is also a risk that developers could buy half the properties then vote to dissolve an HOA so they could turn the area into commercial development. To prevent that your Association could set a lower percentage to amend the CCRs but set a very high rate to abolish the CCR entirely. For example, it could amend the CCRs to set a minimum 90% vote to end the restrictions, then the developers would have to buy almost all the homes in order to make the area commercial then at least all would be fairly paid for their properties versus the last sellers being runoff by the developers.

The problem is what exactly? Your going to get investors who will pay the dues most likely. That is a good thing. Plus most of them will not want to be involved with the HOA. If they rent them out, then they will most likely be more hands off with the HOA. If they sell the house, that is even better. That means a new owner/member in the HOA that is to pay dues.

So what is the complaint exactly? Just that you don't understand how the new way of Real estate is going? Right now it's investors targetting ANY home not just in HOA's. They pay good money, fix them up, and then rent/sell the property. A good business plan if you ask me.

I'd be OK with it only if tbe homes were then sold to owner occupants. However, I live in a townhouse community and have seen how much trouble investor-owners cause. Too many font pay attention to who they're renting to and don't care how much trouble they tenants cause. There's a revolving door if odopkevmoving in and out, creating more trash and noise throughout the community.

Investors are only interested in the rent and do they yell about assessments having to be increased because they don't want those eating into profits. They certainly don't get active with the board and it's already hard enough to get people to join and stay there.

In some areas, these investment companies are having up rates so much, it's more and more difficult to find affordable housing. They've even targeted communities of color to the point long time residents can't afford to live there because the property taxes have risen to 8nfinity and beyond.

On its face Investor owners sounds like a good idea and there are good ones, but I'm cynical about the rest because I've fount too many don't give a flying fig about anything but money.

How to stop it? Well you can't dictate who people can sell to, but many communities are beginning to amend their documents to require the owner wait two or three years before renting out the place. However enforcement can be very challenging and I haven't seen anyone on this website come up with an effective 2ay to do this because some people will have financial hardships that require renting for a shirt time and others will game the system

Another thing that could help is rules enforcement that's fair, consistent and the board doesn't hesitate to drop the hammer when everything else has failed. That's not always 3asy either, because you can face appeal after appeal, run all over creation trying to serve court summons and the only who come out ahead are the lawyers.

I am hoping to address this in our community. Here are some thoughts I have documented:

Lease Restriction Suggestions

1. Lease Requirements

Any rental must require a lease agreement with the following requirements:

• Lease must include a clause that specifies homeowner may evict tenant and end the lease if
they violate the association’s rules.
• Lease must include a clause that specifies homeowner may pass violations fees on to the
tenant.
• All leases shall be in writing and shall be for an initial term of no less than six months.
• Notice of any lease, together with such additional information as may be required by the
Board, shall be given to the Board by the Lot Owner within ten days of execution of the
lease.
• The Lot Owner must make available to the lessee current copies of the Declaration, Bylaws,
and the rules and regulations available from the Board.
• The lease must list all residents who will reside at the property
• The number of tenants in a property may not exceed the number of bedrooms plus two.
That is, a four-bedroom home may have no more than six tenants.
• The lease must forbid pets of any kind
• The lease will specify that tenants may not bring guests to the amenities
• Any homeowner who does not notify the board of a lease, fails to provide a copy of the
lease to the board, or fails to include in the lease all of the terms required will be subject to
fines that should be listed in our Fines Schedule.

2. Rental Immediately after Purchase
A homeowner may not lease or rent their home until at least one year has passed since their
purchase date. A homeowner with a hardship may request a temporary waiver of this
restriction and the board may, at its sole discretion, grant such waiver. Waiver will be automatic
under the following circumstances:

• Homeowner is called to serve in the military
• Homeowner has been transferred for their job to a town more than 100 miles from (our town)

3. Rental Cap
No more than 10% of homes in the community may be rented or leased. That would be 65
homes.

4. Whole Home Only
Lot Owners entering into a lease agreement may only lease the entire home. This is to prevent
turning the home into a multi-family unit

The thing about rules enforcement is that the homeowner is fined, not the lessee, and tenants rights are strong. So the HOA needs to require safeguards in the lease agreement, and needs a copy of all lease agreements. Then they do need to, as you say, enforce the rules strictly. Especially lawn care and keeping up the home.

I agree with others that lease restrictions - especially a ban on renting for the first year or two of ownership - are probably the only effective tool, and that there is a window of opportunity that closes pretty quickly once you start getting rentals in your community.

Ideally we could convince developers of the value of including such a provision in the CC&Rs from the get-go. (FWIW, the new home builder I work for does this.)

This may be an uphill battle. You have to be realistic about the fact that you're up against the Big Money Crowd. This means you have to convince developers that lease restrictions are in their best interest - eg. people won't buy their homes if they believe that their communities will become overrun with tenants. It would be nice to convince lawmakers are well, but you know.... $$$$$.

The ironic thing is that tenants are attracted to HOA/COA rentals because of the high proportion of owner-occupants in the community. So investors are actually undermining their main selling point while also adding some distinct disadvantages (absentee landlords who may or may not know what they're doing).

So... education and lobbying efforts may help:

* Prospective buyers should be encouraged to avoid communities without a robust lease restriction in the CC&Rs.

* Developers need to know that lease restrictions are in their best interest unless they plan to sell entire communities to investors.

* Tenants need to understand the disadvantages of living in a community with a large number of absentee landlords whose only interest in the community is the rent check. (In this respect, a well-managed rental community is probably a better bet.)

* Boards need to see the writing on the wall and hop on the lease restriction amendment while the lease numbers are low enough that the amendment can pass.

* And boards need to educate the homeowners:

- Too many owners may think "oh, I may want to rent out my place in the future" and not realize that by the time they get around to it, the community may be unappealing enough to discourage good tenants.

- If this is a condo community, there is always the possibility of investors buying up enough units to deconvert the entire HOA/COA to a rental community and forcing out the remaining owners.

- The interests of owner-occupants and those of the investor/landlords do not coincide, and the owner-occupants get the short end of the stick:. 1. They have the risks and responsibilities of home ownership along with the disadvantages of living in a rental community. 2. Too many rentals can result in depressed home prices since buyers won't be able to get a mortgage. 3. Too many rentals often results in greater numbers of violations of the restrictions and rules, making the community less pleasant to live in. 4. Communities that are completely owner-occupied can still have problems getting enough volunteers to serve on the board and handle other chores - this problem gets even worse when a significant proportion of owners don't live in the community.

Our Covenants say a unit cannot be rented during the first year of ownership. So far, this has stopped any investment companies. We have kept our "eyes shut" when a family member of the buyer was involved. Several are adult children. Another is the father of the owner.

What David posted is pretty typical of the rental restrictions I've seen, with some exceptions. I disagree that it's overreach. People forget that members of an association aren't free to act as they please - they have obligations to their fellow members, especially in condo communities.

The limit on the number of people based on the number of bedrooms is probably a local ordinance. It's not the HOA getting intrusive - every rental in that area would have to comply with this.

Forbidding pets may be difficult in a community that allows them - however, a landlord in such a community is allowed to forbid pets if he wants to. Leases can be more restrictive than the CC&Rs as long as they comply with the state's landlord-tenant laws.

Forbidding tenants to bring guests to the amenities may be hard to enforce even if it's legal. IMHO you shouldn't have rules that can't be effectively enforced - it just encourages a contemptuous attitude.

Tenants won't care about fines because the HOA will fine the landlord unless the CC&Rs allow it to fine the tenant. I think that opens the door to legal wrangling between the association and the landlord (eg. tortious interference in a contract). Our association attorney emphasized that the association's legal relationship is with the landlord, not with the tenant, and that we should direct everything to the landlord.

However, a savvy landlord will put a clause in the lease allowing him to pass fines on to the tenant, which is perfectly OK. The savvy landlord will also include a clause that will allow eviction after a certain number of proven violations (well managed apartment communities in my area have such language in their leases, and certain violations are "one strike and you're out").

Worth noting IMO: Georgia statute section 14-3-802 permits only "natural persons" to serve as directors of nonprofit corporations. As long as the OP's bylaws permit only members to be on the board, and as long as the Bylaws do not create a way for corporations (that own units/homes in the COA/HOA) to get around this, the COA/HOA can prohibit corporations from sitting on the board. That means that even the partners in an LLC, that owns a condo unit, may not sit on the Board, since these partners are not on the home's deed.

Georgia and many states are crystal clear that they do not want corporations playing games (by getting on the boards of nonprofits, for one), exactly as JeffT2 describes.

I found restrictions from different communities that directly prohibit any owner from owning more than a few units.

1. A board rule from Florida:
"Owners/family unit may not own more than two (2) units in XX One."

2. from Louisiana:
"No Unit Owner shall own more than three Units at any given time. This section shall not apply to Unit Owners who own more than three units as of October 30, 2019, as said Unit Owners shall be 'grandfathered' in and exempt from this Section."

[note: this is really bad grandfathering, because it lets an owner who already owns more than three units to continue buying more units. Maybe they needed those owners to get enough votes to pass this amendment.]

3. Delaware condo:
"No Unit Owner shall own, directly or indirectly, in trust, as a majority owner of an entity, or otherwise, a legal or beneficial interest in more than two (2) Units of XX Condominium at the same time, provided that this restriction does not require those Unit Owners who own more than two Units on the date of recordation of the Certificate of Amendment evidencing this Amendment to divest any of his/her/its Approved Rental Units."

4. From a condo in Florida:
"No more than two (2) apartments my be owned at any one time by a person, his/her spouse, or ownership by a trust where the person or his/her spouse is the trustee or beneficiary to the trust, with the exception of the Association itself, a first mortgagee obtaining ownership through a deed in lieu of foreclosure and anyone obtaining ownership through a mortgage foreclosure sale. Any ownership in excess of the limits set forth in this section existing at the time of passing this amendment will be grandfathered in and may continue."

[note the definition of "person" has to include corporations, LLC etc., which it often does.]

Hence the requirement in many states (including Georgia) for directors of nonprofit corporations to be "natural persons" (and so not corporations). [wink]

Seriously, by my reading and as noted elsewhere at this forum, these laws prohibiting corporations* from being on boards were created precisely to thwart shadow corporations from perpetrating all manner of mayhem and mischief.

* This includes prohibiting the corporation from just picking a 'corporate representative'; who is a natural person; but whose name is not on the deed; and so said named person is not a member in the first place, meaning the person is not qualified to be a director (unless the bylaws offer a patch for such situations).

I agree that often times, corporations simply buying up units or homes and exercising their voting rights on xyz issue as owners, without even getting on the board, can cause (lawful) mayhem all by itself. E.g. and as you indicated, with enough owners' votes, condo associations can be dissolved.

Yeahbut....

I fear that in most cases this will boil down to legal action of some sort, and HOAs/COAs don't have the deep pockets needed to really make these provisions stick. Resolve needs financial assets to back it up.

I also wonder if passing legal fees onto the owner of multiple properties is legal. Maybe, I just don't know. Unfortunately, this is another instance of where an owner with deep pockets can litigate until his opponent runs out of money.

Provisions like the ones above can work against individuals who buy up several condos, for instance, or for the smaller "mom and pop" investor LLCs. But I'm pretty convinced that they will not work against big corporate investors unless HOAs/COAs as a group can convince the big guys that investments like this are not easy money. And HOAs/COAs don't have the money or the organizational firepower to make this happen.

I hate it that this isn't a level playing field. In the end it will make housing increasingly unaffordable for many and will further concentrate wealth in the hands of those who already have it. I just don't see any options beyond nibbling at the problem around the edges.

That does not mean they are aiming for HOA. They are aiming to buy property whether or not it is in a HOA. Many homes are in HOA now a days. So can not say they are aiming for an HOA. It is where the property resides already. Not like it can leave it.

There seems to be stats on everything nowadays, so I wonder if there might be some on the % of associations a that are majority-owned by investors.

Maybe Wendy can produce the stats that say 1/3 of her city's homes(not not solely HOA homes) bought in 2021 were bought by investors.

Fyi when sold my last house I got an "investor" to buy it. They paid twice what purchased for originally and over my sale price.

Mind you this was during the "boom". The house had already remodeled myself. Was able to sell it as is. It was a good deal overall for both parties.

Now do I like the whole investors buying and renting Uber high trend going on now a days? Not that much as it hurts new young people buying first homes etc ... However, was it worth it? Yes for my situation. It was a good thing to unload the house instead of making it my own rental property.

Again they are not focusing on HOA. That is where the property are.

Fyi: the "new" tactic in my area now is that investors are straight out building houses just for rentals. You can not purchase the houses at all.

It is almost a new form of HOA. The investor actually owns the houses and property. It is then managed by a management company. So it is basically an all inclusive HOA situation. There are no real owners on board. Maybe just advisory at best.

That is the new trend not focusing on buying HOA up.

Re Max's remark, that's what I was trying to get at above. Are invest using in HOA to the extent they can control an HOA a widespread phenomenon?

Oh, I entirely agree, David that a large % of rentals in an HOA is not a good thing for numerous reasons. Lenders don't like it either.