Florida is the land of the HOA, with 45% of homes being part of an HOA. This can present a challenge to rental property investors. Deciding not to buy an HOA-governed home can cut the potential market in half.
However, rentals in an HOA community can come with some serious restrictions. These five facts will help you decide if an HOA rental is the right investment.
1. HOAs Can Allow or Prevent
Florida law allows HOA rental restrictions. Before buying a rental property, check the bylaws to ensure you can rent the property out. You don't want to buy a home and then find out afterward that you can't rent it out.
The purpose of an HOA is to maintain the community to a certain standard. This helps the individual properties gain and retain their values.
Renters do not have a vested interest in the long-term value of the rental property. Because of this, some HOAs do not allow renters within the community.
2. HOAs Can Dictate Type
Section 718.110 of the Florida Statutes allows an HOA to limit how many times a property owner could rent a property out in a specified amount of time. This is a complicated way of saying the HOA can allow short or long-term rentals.
This is an important distinction, especially for property investors in Florida. An HOA community near the beach could be an enticing place to purchase a vacation rental. However, vacation rentals invite noise and increased activity.
Those who live in the community may not want to live next door to a vacation house. An HOA can avoid this by only allowing long-term rentals.
3. They Could Require Approval
Some HOA regulations require an applicant to apply to the HOA board. However, this doesn't mean the HOA has unlimited power to approve or deny potential tenants.
Florida law sees the right of approval as a restriction on the property owner. So any denial must be reasonable. An experienced property manager can help you navigate this potentially confusing element of landlord/tenant law.
4. They Could Cap the Rentals
An HOA may be willing to allow renters but not want too many. They can control how many tenants live in the community by placing a cap on the number of rental homes.
This ensures a sense of community with homeowners who stay longer than renters. It can be challenging to maintain a sense of community with tenants constantly moving in and out.
5. Everyone Must Follow the Rules
HOA rental property is subject to the same rules and regulations as HOA homeowner property. Tenants must follow the rules, or the property owner can face hefty violation fines. The association management will typically have the tenant sign an agreement stating they will follow the rules.
Because of this, it's wise to include additional lease terms to address potential habitual rule breakers.
Manage Your Rentals in an HOA Community
Do your due diligence if you want to buy rentals in an HOA community. Review the HOA bylaws to confirm that they allow the types of renters you want to target. Then protect your investment by adding HOA-specific terms to your lease agreements.
Request a free rental analysis and make a smart real estate investment.