It's every real estate investor's worst nightmare: you buy a condo as a rental property, get a tenant, and everything's going great.
You're getting positive cash flow, paying down the mortgage, and getting a bit of appreciation and tax savings to boot.
And then the association decides that you're not allowed to rent it out anymore.
Can they do that?
Yep. Real estate attorney Benny Kass, who also writes for Inman.com, explains in a column that with a supermajority, the homeowners association can generally rewrite the bylaws to ban rentals.
Should those of us who own rental properties governed by HOAs be terrified of having to sell quickly in a weak market after a capricious HOA decides it doesn't like renters?
Probably not. For one thing, such a policy would make no sense. Allowing homeowners to rent their units provides flexibility and, in a market where it sometimes seems like the only people buying are investors, why eliminate an entire potential resale market?
And that's to say nothing of the depressing impact that forcing a throng of investors to sell all at once has on a market.
Basically, the draconian step of banning renters makes no sense for anyone and if your board finds itself considering such a measure, you should be able to talk some sense into your fellow homeowners.
Of course, keeping renters below 50% helps maintain eligibility for mortgages. But any condo association that could come anywhere close to getting a supermajority vote to ban renters would have to be way below that threshold, making it a non-issue.
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