Renters in Subdivision

[ericsonga]

My HOA on my house in Gwinnett has a no leasing policy. There was some people that tried to have it changed a few years back, however, the board was very unwilling. I know of several other neighborhoods in Gwinnett that have similar policies or have adopted them after the recession began.

[cittic10]

Originally Posted by wilful

I live in Suwanee in the Townsend Creek Subdivision and have noticed over the past several years a number of renters taking over houses that were previously occupied by owners. The neighborhood is still well maintained, in a good school district, and Suwanee gets high marks as a place to live and raise a family. We have about 270 houses in the subdivision and an HOA official told me we are now approaching close to 40 rental properties. I am getting a little concerned as to where this is all headed as I have heard that once you get above 20% rentals, the subdivision will begin to experience a decline in terms of appreciation, re saleability, and overall appeal. I know rentals are the new normal but am I right to be concerned? Any comments on this matter and or personal experiences will be appreciated.

Unfortunately this is going on everywhere.
People can't sell their house (many are underwater and they just aren't moving anyway), people can't get loans, and there's still a lot of new homes selling for the same price in newer areas. And there are still people that think they're going to strike it rich being an "investor" because they watched an episode of "Flip This House" and will do anything to avoid getting a job. Yeah I said it.

However, that's not necessarily going to mean your house won't appreciate any more.
Your neighborhood could be 100% renters, and if there is nowhere else to live, the values will soar.

It's not just maintenance, by the way. Renters sometimes don't trash the place and their owners keep up the property to an acceptable level but they don't do stuff to add value such as large improvement projects, decks, patios, landscaping, pools, room additions, kitchen upgrades and so on. So it'll effect values but it doesn't mean there won't be any appreciation, especially if the houses are selling. Banning rentals may even adversely impact values since right now, there are a lot of "investors" calling up asking if they are allowed to rent here. If the answer was no, they'd move along to the next sub where they can. Not to mention, the people that are currently landlords would probably end up in foreclosure and that's never good for values.

Originally Posted by lorilove

How would a bank or mortgage company even know how many homes are being rented? When I bought my house and each time I refinanced (2x) this information was never requested.

I can see a condo association requiring you to report this information, but do most HOA's require this information?

The banksters have never requested that info from our assn but they're Banksters. They already know.
That said, I don't think this matters to them.
And why should it? Make good loans... make bad loans... What's the difference It's not like there's any consequences for them if they make a bunch of bad loans.

Originally Posted by ericsonga

My HOA on my house in Gwinnett has a no leasing policy. There was some people that tried to have it changed a few years back, however, the board was very unwilling. I know of several other neighborhoods in Gwinnett that have similar policies or have adopted them after the recession began.

This was brought up at our members meetings years ago. At the time I didn't support it and now I'm glad. I knew that if anyone was ever in the situation where they couldn't sell due to being underwater, they would want to rent it. Funny thing is one of the big supporters of banning rentals ended up becoming a landlord once they moved out.

I do actually think that right now a "No Rentals" policy will more adversely impact values than the other way around because so many of these "investors" are looking for properties so they can get rich. Right now, there are a lot of "investors" calling up asking if they are allowed to rent here. If the answer was no, they'd move along to the next sub where they can. Not to mention, the people that are currently landlords would probably end up in foreclosure and that's never good for values.

[lorilove]

Originally Posted by cittic10

Unfortunately this is going on everywhere.
... And there are still people that think they're going to strike it rich being an "investor" because they watched an episode of "Flip This House" and will do anything to avoid getting a job. Yeah I said it.

I have heard that "Flipping" of houses has gotten popular again but only for investors that have cash.

Gone are the days of buying a house on little to no more down and trying to flip it. The new breed is flush with cash, are able to scope out properties with great potential at low prices.

This is actually creating problems for home buyers, that are competing for the same properties but with a traditional mortgage. They are getting out bid by the cash offers and immediate closing potential.

I could see this working in my neighborhood with the remaining 2 foreclosures. The banks were dumping them as is - they were in horrible shape and would scare off most new buyers. Thankfully 1 is gone and totally renovated , one final one to go!

[researchnerd]

Originally Posted by cittic10

It's not just maintenance, by the way. Renters sometimes don't trash the place and their owners keep up the property to an acceptable level but they don't do stuff to add value such as large improvement projects, decks, patios, landscaping, pools, room additions, kitchen upgrades and so on. So it'll effect values but it doesn't mean there won't be any appreciation, especially if the houses are selling.

Sometimes? I would say that renters "trashing the place" is more the exception than the rule, especially now that rents are rising and good, affordable rentals are harder to find. The rental market is a lot more competitive now than it was even five years ago. Renters want to get good references.

[rzzzz]

I don't feel like renters "trash" private houses worse than people who live in it. I'm renting a house from a guy at my job, and the state he left it in as an owner was pretty bad. Most of my friends who have houses are so hosed on their mortgages they don't have any money to even do simple fixes like repaint the interior.

[Onthemove2014]

Originally Posted by ATLTJL

My neighborhood recently adopted a rule that only 5% of the neighborhood is allowed to be rental.

I think that's stupid and all it does is encourage people to rent under the radar. However, I would think that it could be legitimate for an HOA to require owners to run criminal background checks on anybody they wish to rent to and give the HOA right of refusal to any potential renter. If that's legal, and I think it is, because I lived in an apartment that did it.

Something like that would be way more beneficial than just setting some kind of arbitrary cap. After all, a neighborhood with 90% renters could have much better residents than an area with only 20% if those 20% are the wrong kind of people.

Sounds like that could lead to some shady refusals.

[brook2ga]

Originally Posted by ericsonga

My HOA on my house in Gwinnett has a no leasing policy. There was some people that tried to have it changed a few years back, however, the board was very unwilling. I know of several other neighborhoods in Gwinnett that have similar policies or have adopted them after the recession began.

We have a "lease to buy" policy, but no rentals. A friend's neighborhood allows rentals and the people renting next to her are a nightmare. Some owners are so desperate they will rent to anyone. If the right people are renting, the neighborhood should be fine.

[researchnerd]

Originally Posted by rzzzz

I don't feel like renters "trash" private houses worse than people who live in it. I'm renting a house from a guy at my job, and the state he left it in as an owner was pretty bad. Most of my friends who have houses are so hosed on their mortgages they don't have any money to even do simple fixes like repaint the interior.

Agreed. In just the past year, the house I'm renting has had 4 roof leaks and a rotted floor that was only partially repaired. But the worst offenders are the 2 sets of "restored" 100-year-old french doors that are warped and rotted and leaky. The property management folks have sent 5 different experts to look at the doors, and they all said they are not fixable and need to be replaced -- but it's not a cheap prospect and the owner simply can't afford to do it. I can sympathize, but we're paying for it too; my A/C bills were $400/month over the summer, and the rent is high.

I truly don't believe the house would be any better maintained if the owner lived here herself. In fact, she might have decided to just live with some of the issues she's had to fix for us.

[ATLTJL]

A realtor once told me she believed that HOAs can not institute policies against renting your home to:

1) A family member
2) An employee

Does anyone know if this is actually true?

[wilful]

Originally Posted by lorilove

I have heard that "Flipping" of houses has gotten popular again but only for investors that have cash.

Gone are the days of buying a house on little to no more down and trying to flip it. The new breed is flush with cash, are able to scope out properties with great potential at low prices.

This is actually creating problems for home buyers, that are competing for the same properties but with a traditional mortgage. They are getting out bid by the cash offers and immediate closing potential.

I could see this working in my neighborhood with the remaining 2 foreclosures. The banks were dumping them as is - they were in horrible shape and would scare off most new buyers. Thankfully 1 is gone and totally renovated , one final one to go!

My fear, though, is that the investors tend to "low ball" the seller especially those that are looking to move fast which could result in a lower price rather than a higher price. I know a family two doors down that took a lower offer rather than take a chance that the buyer trying to get financing might not be successful. Bird in hand type thinking. If this happens often enough overall appreciation in the subdivision could suffer. Guess time will tell.