An HOA is an exclusive community, but it's not uncommon to find rental homes in these communities. This happens because not everyone who purchases an HOA property intends to live there, and others move out for various reasons. Instead of reselling these vacant properties, renting them out is usually an attractive prospect.
However, allowing rentals in an HOA community has upsides and downsides. If you're a part of your Delaware HOA's leadership, you might be at a crossroads on whether to allow, restrict, or impose a total ban on rentals.
Read on to learn the good and the bad that can come from allowing them.
Pro: Make the Community Attractive to Home Buyers
The exclusivity HOAs offer is one of the things that makes the community attractive to buyers. Ironically, though, the same homeowners want the freedom to rent out their property whenever they wish.
When you allow rentals, you're telling prospective buyers that when they buy the home, they'll not be stuck with a dead property should they choose to live there. They can make it a rental and earn passive income.
Con: The Burden of Dealing with Bad Renters
Not all renters are terrible people, but one thing is certain: renters don't have any vested interests in the community. As such, they aren't as likely to follow HOA rules or go the extra mile to preserve their community's assets.
So, when rentals are allowed in an HOA, it's inevitable that there will be cases of bad tenants. As HOA management, you don't want to waste your time dealing with tenant evictions, but it's something you could be handling from time to time.
Pro: Prospect of Turning Tenants into HOA Property Owners
At the end of the day, an HOA is a business that needs to make a sale. Finding home buyers can be challenging.
Allowing rentals in your HOA can create an unlikely source of clients. Most renters eventually want to become homeowners, so when one comes to live in your community, their aim could be to get a feel of the estate before making a purchase decision. If you're doing everything right, don't be surprised to see a few renters starting to make inquiries about available properties.
Con: Declining Property Values
One of an HOA's primary missions is to preserve HOA home value. Allowing rentals can undo the hard work you've put into achieving this mission.
If you allow too many rentals, for example, the community can start to lose its exclusivity. Some dissatisfied homeowners may want to move out, putting their homes on the market at lower prices to get a quick sale. This can have a ripple effect on the values of other homes in the HOA.
Rentals in an HOA Community: A Poisoned Chalice?
Allowing rentals in an HOA community can be a trivial issue, but the move has benefits and downsides. It's all about weighing them and deciding what's best for your community.
What's not in doubt, though, is the fact that your HOA will benefit from hiring professional association management services. Based in Hockessin and staffed with licensed and experienced real estate professionals, PMI First State is committed to serving Delaware HOAs.
Contact us for more information.
