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Sometimes you need a majority of homeowners to agree to change rules regarding no renting for first 1-2 years, so if you have many renters now you might not get what you want.
Hi All,
I am on an Hoa board and would like to know what can be done to make our neighborhood less apealing to investors? I've read about changing CC&R's to require buyers to live in the home for two years, unless they could prove they needed to lease it out to avoid financial hardship. My neighborhood was built in 2005 and hit hard by the housing crisis so we have a lot of rental properties. Unfortunately, homes in this neighborhood are still being advergised as "investor specials". We pay higher HOa fees than most other neighborhoods in our area, and yet ours looks awful in comparison due to the rental homes not being keppt up.Many of the investor owned homes are delinquent with their HOS fees as well. Any advice would be welcome!
Address those things you see as problems first. It would be extremely rare for the HOA rules not to have enforcement teeth in them. Until the things that make a difference are addressed they will continue. Someone needs to have the determination to enforce the rules or the deterioration will continue. Whether or not this will dissuade investors is questionable but if the problems you're complaining about are remedied it won't matter.
It's unfair to those who pay their HOA fees on time to let others be seriously late. On-time payment of HOA fees should be strictly enforced. And if there are any blights in the common areas, the fees should be increased to do whatever it takes to resolve those problems and make the whole place nicer. But it's also very important that the money be spent wisely with strict accountability. Such as not giving contracts to friends or anything. Every homeowner should get documents of everything, including the minutes of all board meetings, all finances, all accounts, etc. Any attempt to hide any details should be addressed very strictly and openly. It's especially important that no auditors of the HOA finances be friends of any board members, as that gives the appearance of corruption.
Rental problems can be solved by strict enforcement of rules. If tenants violate rules, landlords can be required to evict them or pay fines.
Keeping things fixed up as a community ages is an ongoing issue but a critical one in terms of owner occupancy.
It essential that HOAs have good fiscal policies in place to ensure that dues are paid in a timely manner and that these dues are used to keep the assets well maintained.
If homeowners are not paying dues and/or not keeping their properties according to the covenants they agreed to when the bought the place, then the HOA needs to deal with this.
Ultimately, the only way to keep investors at bay is to keep property values high enough that they are no longer attractive to investors.
Sometimes you need a majority of homeowners to agree to change rules regarding no renting for first 1-2 years, so if you have many renters now you might not get what you want.
In Florida, a rule change that restricts property use does not apply to any owner who votes against the change. If they sell, the new restrictions will apply to the new owner.
In NC the HOA I have experience with had a number of horribly delinquent accounts....
They switched management companies and attorneys and instituted this
60 Days - by 60 days if you are late you have received 2-3 notices already and receive first lien warning notice
90 Days - by 90 days processing and filing of lien in progress
120 days- by 120 days foreclosure warning on perfected lien goes out
180 days- by 180 days if the lien isn't settled the HOA board can decide to follow through on foreclosure
My HOA foreclosed and owned like 8 properties last year forcing the banks to either take possession and do maintenance or allowing the HOA to rent the properties out to recoup income and maintain the properties. Worked out very nicely.
That policy has been in place now for 3 years and delinquency is WAYYYY down. If people know the neighborhood is serious, it will be the first bill they pay.
In NC the HOA I have experience with had a number of horribly delinquent accounts....
They switched management companies and attorneys and instituted this
60 Days - by 60 days if you are late you have received 2-3 notices already and receive first lien warning notice
90 Days - by 90 days processing and filing of lien in progress
120 days- by 120 days foreclosure warning on perfected lien goes out
180 days- by 180 days if the lien isn't settled the HOA board can decide to follow through on foreclosure
My HOA foreclosed and owned like 8 properties last year forcing the banks to either take possession and do maintenance or allowing the HOA to rent the properties out to recoup income and maintain the properties. Worked out very nicely.
That policy has been in place now for 3 years and delinquency is WAYYYY down. If people know the neighborhood is serious, it will be the first bill they pay.
Exactly.
For years, our HOA had a number of properties where the owners collected rent but did not pay the mortgage or the dues. It was a nightmare. Once we got serious about liens and letters from the attorney, things picked up.
Banks take forever to foreclose and when they do, all the back dues and liens are lost in the foreclosure. If the HOA forecloses in a timely manner, you may have several years of rent to help cover common expenses.
Address those things you see as problems first. It would be extremely rare for the HOA rules not to have enforcement teeth in them. Until the things that make a difference are addressed they will continue. Someone needs to have the determination to enforce the rules or the deterioration will continue. Whether or not this will dissuade investors is questionable but if the problems you're complaining about are remedied it won't matter.
Exactly.
I wouldn't jump to the idea of 2 year residency right off the bat since your HOA is not really managing things properly legally as it is. That's just going to be an ineffective band aid that may leave you with a bunch of vacant units IMO. WHO is going to even buy there and live there if it's not an attractive community either visually or financially? Or more realistically...at market prices.
I'm assuming you don't have a very strong community since it is relatively new so you need to address it.
FIRST of all everyone should be being INTERVIEWED by the HOA before buying and renting. This is to reinforce the bylaws; it's not ~exactly an interview to deem them "acceptable" or whatnot. IT's subliminal.
I think if you tighten things up as everyone else reviewed, you could allow a certain amount of rentals without the residency requirement that may leave you with more empty units than you can absorb. THEN you'll all be paying more in fees for what?
While I'm not crazy about the idea of living next to renters, the unit next door is managed well by a realtor and the owners come down twice a year or so until they retire full time. I always have to educate their tenants even if they're "nice"...because YES, they do things that "we" don't do here. Like leave all their shoes and personal possessions out in the common entrance. Renters have a different mind set. And we have it in our bylaws that rental units are limited to a certain number and no short terms allowed (I think under six months). But I stipulate our HOA is in existence since 1987 and we have a management company that keeps things running well for the most part. AND an active board and community.
I wouldn't jump to the idea of 2 year residency right off the bat since your HOA is not really managing things properly legally as it is. That's just going to be an ineffective band aid that may leave you with a bunch of vacant units IMO. WHO is going to even buy there and live there if it's not an attractive community either visually or financially? Or more realistically...at market prices.
I'm assuming you don't have a very strong community since it is relatively new so you need to address it.
FIRST of all everyone should be being INTERVIEWED by the HOA before buying and renting. This is to reinforce the bylaws; it's not ~exactly an interview to deem them "acceptable" or whatnot. IT's subliminal.
I think if you tighten things up as everyone else reviewed, you could allow a certain amount of rentals without the residency requirement that may leave you with more empty units than you can absorb. THEN you'll all be paying more in fees for what?
While I'm not crazy about the idea of living next to renters, the unit next door is managed well by a realtor and the owners come down twice a year or so until they retire full time. I always have to educate their tenants even if they're "nice"...because YES, they do things that "we" don't do here. Like leave all their shoes and personal possessions out in the common entrance. Renters have a different mind set. And we have it in our bylaws that rental units are limited to a certain number and no short terms allowed (I think under six months). But I stipulate our HOA is in existence since 1987 and we have a management company that keeps things running well for the most part. AND an active board and community.
Renters are not the problem. It is the owners who rent are the problem if they don't do proper due diligence and make sure the tenants understand the rules the condo should be contacting them. We never ever contact or talk to tenants directly.
We have zero rules on renting, no fees, no background checks, don't even ask for the names of tenants. Guess what the majority of complex is owner occupied and 100% of our issues is with owners. Never tenants.
I would never put rules on tenants or rentals. It would hurt our resale value. Plenty of coops and fake condos with rental restrictions that folks can buy into
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Renters have a different mind set. And we have it in our bylaws that rental units are limited to a certain number and no short terms allowed (I think under six months). But I stipulate our HOA is in existence since 1987 and we have a management company that keeps things running well for the most part. AND an active board and community.
