Buying a property in a community with a homeowner’s association (HOA) can be challenging for those looking to purchase an income property.
These associations have specific rules and regulations, so it’s important to review them before purchasing a property there to understand what limitations you will need to abide by.
As the amount of investors purchasing homes has increased, HOAs have made it more difficult for landlords to acquire property with the intent to rent it out.
But can a homeowner’s association actually stop an investor from purchasing a property they intend to rent? Here’s what you need to know.
HOAs Can Limit the Number of Rental Properties in a Community
If you intend to buy a property in a community with an HOA and rent it out, you may not be able to. Homeowner’s associations can put a limit on the number of rental properties in a community. So once that number has been reached, additional investors will not be able to purchase property with the intent to turn it into a rental home.
It’s also possible that the HOA can outright ban a property owner from renting out the property in that community. So if you purchase the property, you may be stuck with it and not be able to rent it out, making it essential to understand the limitations of the community before you buy.
Limitations That Associations Can Enforce to Discourage Investors
While an HOA may not outright ban a property owner from renting out their home in a community, they may enforce limitations that can discourage investors from purchasing the property in the first place.
For example, the association may require that all tenants for the property be approved by them before the lease is signed. They can also require that the landlord leave the property vacant for several months before renting it out.
These restrictions are designed to dissuade investors from purchasing a home and turning it into an investment property. In some cases, the association may allow renters and then change their restrictions later on, making it more difficult for landlords to maintain a profitable investment or find tenants.
How Landlords Can Make a Smart Investment
The first and most important thing is to know what you’re getting into before purchasing an investment property in a community with an HOA. Do your research and ask questions to understand any restrictions or limitations you may need to abide by as a landlord in such a community.
Know too that while there are benefits to owning an investment property located in a community with an HOA, it may be difficult to get past the red tape some associations put up to discourage investors. So as a landlord, you’ll need to determine if this is worth it for you or not.
It’s also essential to understand if the association has the power to or plans on changing its rules later on, which could make running your investment property more challenging and less profitable.
Understand Your Options
Have questions about whether an HOA investment property is right for you, or do you have an income property in a community with an HOA and need tips for making your investment more profitable? Find out by contacting the professional property management team at FAS Management today at (202) 337-5080.