For long-term investors, investing in HOA rental properties can help boost rent while simplifying property management processes. However, HOA rental rules and regulations add a layer of complexity for investors. Still, with the right knowledge and planning, savvy investors can capitalize on the benefits of HOA rentals while successfully navigating any HOA obstacles or restrictions.
The Benefits of HOA Rental Properties
Investing in an HOA rental property can be an advantageous endeavor for investors, as several HOA “perks” help enhance appeal and overall property value. Some of the top benefits of HOA rentals include:
- Enhanced Property Values: Well-maintained and safe HOA neighborhoods and communities can significantly increase property value for single family residences (SFR) and townhomes.
- Attractive Amenities: Nothing attracts renters more than additional amenities. Within HOA communities, investment properties can come with desirable amenities like pools, clubhouses, playgrounds, and green common areas.
- Reduced Upkeep: For investor landlords (learn how to be a successful landlord), HOAs can lighten your workload by handling area maintenance for tenants (landscaping, snow removal, salting, etc).
- Security: Tenants and landlords can feel better protected within HOAs. Many communities include additional security measures, HOA board members/community members, and HOA codes that help protect the safety and integrity of the neighborhoods.
While these benefits are alluring to landlords and tenants alike, they do come with heightened rules, restrictions, and expectations that must be met.
HOA Rental Rules: Why They Matter…
Understanding and following HOA rental rules is important for investors because non-adherence to such rules can significantly impact the profitability and success of a rental property. Many HOAs have restrictions that can make a property difficult to rent or unrentable altogether.
Sample HOA Rental Restrictions
Let’s look at some of the more significant HOA restrictions on rentals that investors should be aware of:
- Rental Caps: Some HOAs limit the number (or percentage) of properties that are rent-eligible within a community.
- Lease Duration Restrictions: Many HOAs do not allow rentals like Airbnb and enforce lease duration restrictions to eliminate short-term rentals. This can limit an investment property’s flexibility.
- Tenant Approvals: Some HOAs require tenants to be approved through the HOA, limiting investors’ authority in approval processes.
- Additional Fees: Certain HOA rental rules require investors to pay additional fees for rental properties.
Tips for Navigating HOA Rental Rules & Regulations
While the benefits of HOA rentals can, in some cases, outweigh potential downsides, understanding how to navigate additional rules and regulations will help you optimize your investment and avoid unnecessary fees, legal actions, or even forced evictions along the way.
Here are some tips to simplify HOA rental investing:
Here are some tips to simplify HOA rental investing:
Do Your Homework
First things first. To successfully navigate HOA rental rules, you must first know and understand them. This requires thorough research of an HOA’s governing documents, including:
- HOA Covenants, Conditions, and Restrictions (CC&Rs);
- Committee bylaws;
- Any other rules, regulations, or fees attached to rentals.
HOA governing documents vary from community to community–especially regarding rental rules. So, it’s important to seek clarification from the HOA board for any restrictions or clauses that may seem confusing.
In general, investors should look for answers to:
In general, investors should look for answers to:
- Rental cap percentages
- Any waitlists for rental approvals
- HOA board discretion clauses
- Additional fees for rentals
If there are other investors in the HOA community, touch base with them to better understand the HOA, its committee, its rules, and how they’re enforced. In many cases, fellow investors can provide vast insights into the pros and cons of short or long-term investing within a specific HOA community.
Work With the HOA, Not Against It
While the HOA is an additional layer of authority for investors to navigate, it doesn’t have to be a negative experience. As the old saying goes, “You catch more flies with honey.” By forming a collaborative and friendly relationship with HOA boards, investors gain a partner who is more willing to help rather than deter any strategic investment planning.
To get on the HOA board’s good side:
To get on the HOA board’s good side:
- Follow all HOA rental rules and regulations!
- Be transparent about your intent to rent your property.
- Be present by attending both in-person and virtual HOA meetings.
- Be proactive when it comes to communicating plans or needs to the committee.
Keep Tenants Informed
In addition to researching and following HOA rental rules, it’s your responsibility to manage your tenants and ensure they are informed and within compliance of HOA rental bylaws. The best way to accomplish this is by integrating HOA rules into your lease agreement.
Ensure tenants are up to date on neighborhood bylaws regarding:
Ensure tenants are up to date on neighborhood bylaws regarding:
- Parking
- Trash and recycling removal
- Noise
- Lawn maintenance
Additionally, it’s best to keep an open line of communication with both your tenants and the HOA for updates regarding HOA rental rules and regulations.
Finding HOA Rental Investment Success
Some of the key indicators of a good long-term rental property are often tied to rentals within HOA communities. While HOA rental rules and investing require additional due diligence, the benefits are worth the burdens for savvy investors. By immersing yourself within the HOA through research, relationship building, and clear communication, you can acquire a profitable investment property with added amenities and security to attract tenants.
Finding the Right Financing for Your HOA Rental Property
Success in long-term investing goes beyond adherence to HOA rental rules. Experienced and successful investors know that reliable, flexible, and fast financing is another essential piece to investment success. For over a decade, investors have turned to Finance of America Commercial (FACo) to achieve their business and financial goals. Our speedy loan approval processes and loan flexibility allow our clients to tailor the ideal lending program to meet their unique needs.
FACo’s Rental Portfolio and Single Rental loan options offer:
FACo’s Rental Portfolio and Single Rental loan options offer:
- Competitive 30-year term loan options
- DSCR with no W2s, paystubs, or tax returns required
- SFR, warrantable condos, townhomes, PUD, and 2-4 units eligibility
Want to unlock reliable and flexible financing for your long-term rental investment? CLICK HERE to schedule a FREE consultation with a FACo expert today.
