Renting out a condo is a fast way to earn passive income. Let’s say you start renting out a condo priced at $1,800 per month. That means you’ll be earning an additional $21,600 of gross rental income every year! Not only will you receive positive cash flow, but you’ll also have the advantage of reduced taxes from expense deductions and increased property value over time. Renting out a condo will give you the financial security you’ve been looking for.
While there are many pros to renting out a condo, you’ll quickly realize there’s a lot more that goes into putting a condo up for rent than you realized. One of the biggest hurdles in renting out a condo is dealing with the HOA or Homeowner’s Association. A popular question we hear is, “can you even rent out a condo when the HOA is involved?” In this article, we’re going to answer this question and share everything you need to know about renting out a condo with the HOA. Let’s start with defining what exactly the HOA is.
What is the HOA?
The HOA is an organization in a subdivision, planned neighborhood, or condo building that puts together and enforces rules for properties and residents. The goal of the HOA is to uphold standards that ensure a safe, clean, and stable neighborhood community. An HOA will use a Declaration of CC&Rs or Covenants, Conditions, and Restrictions to describe its rules. Below are a few items an HOA can have control over:
- Noise complaint policies
- Rental occupancy limits
- Pet size and quantity restrictions
- Types of landscaping permitted
- Trash and recycling rules
In addition to these rules, an HOA charges fees to the landlord or tenant (depending on what’s agreed upon in the lease). HOA fees take care of a variety of important issues ranging from necessary cosmetic maintenance and landscaping to neighborhood services such as trash or snow removal. Now that you know the rundown on the HOA, let’s take a look at how to navigate working with the HOA as a landlord.
Here’s the Protocol for Renting Out a Condo with the HOA:
We often get questions from condo rental owners who don’t know whether or not they need to tell their HOAs that their property is a rental. If you just purchased a condo or townhouse intending to make it an investment property, it’s normal to feel intimidated by the thought of dealing with the HOA.
In our experience as property managers, we’ve seen that most HOAs do not need to be notified that you are renting out your condo. The good news is that most HOAs do allow landlords to rent out a condo without many problems. However, it’s still important to contact the HOA and ask if you’re required to fill out any paperwork. Additionally, read the HOA rental rules before you rent out your condo because there may just be some important regulations you don’t want to miss. Once you’ve communicated with the HOA, keep in mind that some HOAs place restrictions on rental condominiums. We’ll share a few common restrictions you may run into when working with the HOA.
HOA Restrictions on Condos to Be Aware Of:
Below are a couple of boundaries you may need to consider before renting out a condo with the HOA around:
- Rental Caps: A rental cap is the maximum number or percentage of rental condos allowed in the community at any given time. After reaching the maximum amount, you will be told to wait to rent out your condo. Rental caps usually come on a first-come, first-served basis. If the HOA tells you that you can’t rent out your condo, you’ll be added to the waiting list until further notice.
- Lease Restrictions: Lease restrictions are prohibitions you must include in the lease agreement if you wish to rent out your condo in an HOA neighborhood. A common restriction is requiring a minimum lease period. Each lease period varies, but usually, one is placed in the lease to avoid vacation rentals and a higher turnover rate.
- New Condo Owner Requirements: While this one is a rare restriction, it’s important to ask your HOA if it applies to your rental condo. Generally, a condo owner’s requirement states that you must have lived in the condo for at least a year before choosing to rent it out.
Learning all the HOA lingo can be overwhelming at first. You might even have more questions coming to mind as you read this! Lucky for you, our Southern California property management company is here to help you navigate the world of HOA and rental condominium ownership.
We’ll Help You Deal with the HOA and More
Let’s say you decide to rent out your condo, get the stamp of approval from the HOA, and fill it quickly with the perfect tenants. However, one month later you run into a problem—your tenant has violated the HOA’s rules. Fortunately, TrueDoor Property Management can handle this conflict for you. From day one, we’ll be on your side. Our team of pros will help you navigate the waters of HOA rules, fees, and violations. We’ll make sure to have your current and future tenants sign a lease that thoroughly explains the consequences of not complying with the HOA. In addition, we’ll make sure you know everything about your condo’s HOA so that you’re set up for success.
For over 40 years, our team in Orange County and the Inland Empire have helped rental condo owners find success. Stop fretting over the HOA regulations, and let us do the work for you. Contact our team today to experience financial abundance while effectively renting out a condo in an HOA neighborhood.
Should you inform your HOA that your condo is now a rental property?