I’ve heard lately of a number of older Homeowner Associations (HOA’s) voting to reduce or limit for the first time, the number of homes in a community that can be offered for rental. The impetus behind this movement is to stave off the slide of home values perceived by having rental properties in the neighborhood. However, I have personal experience with a client where this has had an unintended consequence.
In my client’s community, she needed to sell her home, but owned more on the property than the market would bring. She got on the waiting list to rent her home, because there were already too many rented in the neighborhood as per the local covenants. While she was “waiting”, she purchased another home and moved because of a job change and marriage. After being unable to sell the home (because of market) or rent the home (because of HOA rules), she just chose to let the home go back to the bank. Of course, the foreclosed property hurt local values much more than a rented property. So, that could be the double-edged result of being “smart” about rental limits. Choose carefully, HOA boards. If you need some expert advice, I’m always available to give you the local numbers.