Do you realize that you might be prevented from renting your investment home? Prohibiting property owners from leasing their properties is a trend that is growing increasingly popular with some developers and many Homeowners' Associations (HOA).
It's rare that you can buy a new home in a development that does have a HOA. As a homeowner you are bound by the HOA restrictions found in the Covenants, Conditions and Restrictions (CC&Rs).
The CC&Rs regulate your use of your property, restricting everything from the color of the house, window coverings, holiday decorations, sports courts, pets, to landscaping and etc.
One of the most recent restrictions that builders are including in their CC&Rs is a restriction that prohibits the homeowner from leasing their property. Builders have a provision in their sales contracts stating that the home will be a primary or secondary residence and that the purchaser will occupy the home. The owner is strictly prohibited from renting the home.
Why this trend? The idea is to limit the number of rentals in a subdivision because lenders believe that a high number of rentals in a community affects the value of the property and can erode the security of their loans.
Existing HOAs like the idea of no rentals and there seems to be a growing movement to amend their CC&Rs to add the "no leasing" provision.
Investors Beware!
The new homebuyer should be made aware of the no leasing restriction when they buy. But what about the investor who buys a home a few years later? If the investor fails to read and understand the CC&Rs he or she may end up owning a property that they cannot rent.
You can't count on the home seller alerting you to the restriction. They may be the third or fourth owner of the home and not even be aware of the restriction.
Oh sure, you could buy the home, rent it and hope you are not discovered violating the CC&Rs.
However, anyone who has ever dealt with a HOA soon discovers that there are always a few other homeowners with an eagle eye out for the slightest infraction of the CC&Rs. They delight in notifying the HOA management company,,, and the management company is bound to investigate and enforce the rules. For you the investor is no appeal... and there is no recourse.
This is a strong reminder that every investor should have a clause in every purchase contract that says the purchase agreement is contingent upon you receiving, reading and approving a copy of the CC&Rs.
This is a potential ulcer-creating situation that no investor can afford to ignore.
About the Author:
Mark Walters is a third generation real estate investor who shares his experience from his Web sites: http://www.CashFlowInstitute.com http://www.ThePowerLetter.com
|
|
 |
Home
Business Search
Business
Career
Internet-Marketing
Marketing
The Secret To Having A Successful Online Business
For three years in Internet Marketing, I’ve tried to find what the secret was to having a successful online business. During the first 9 months it was pure money-loss. I’ve lost count the number of downline clubs, retire early opportunities and...
...Read More
Make It Happen Now!
Most people think that when they have chosen a path that's it - that's the path to follow. This is far from the truth according to leading Business Coach… Brad Tonini who has just released his latest book "Make It Happen Now!" I asked Brad to...
...Read More
Trade Writing - for Cash!
Often considered as “plain Jane’s” of the print world, trade magazines prove that there is more to a market than just a pretty face. Trade magazines are written for a specialized audience and typically focus on one specific area or industry. ...
...Read More
People Are The Heart Of Your Organization
Do you let your people express their thoughts about the roles and responsibilities they have in your organisation? Don't just take it for granted that everything's fine because no one complains. Organisations often spend a fortune on...
...Read More
Virtual Assistance; A Money Saving Opportunity For Employers.
What is a Virtual Assistant? A Virtual Assistant is a highly skilled, independent entrepreneur who provides business services in a remote or virtual environment. Some have used terms like telecommuter or working from home. Employers are...
...Read More
|
