If you are considering purchasing a property and then renting it out you must first check with the HOA to ensure that there are no restrictions?

These restrictions are very common with condo developments, often they will restrict the number of units that can be rented, or may not allow any rentals.

These rules are often implemented by an HOA for a number of reasons. For a start, people often feel it’s not desirable to live in a place which contains too many rentals. But the main reason is to do with FHA Condo loan restrictions which dictate that if too many units are rented in a development, it cannot be an FHA approved project, and therefore no FHA loans can be used for mortgages. This is obviously not very desirable, because it reduces the number of potential buyers, and makes it difficult for condo owners to sell their unit.

While people may be aware of the condo restrictions imposed by HOA’s, often buyers do not consider similar rules imposed by single family home developments. Almost all modern developments have some sort of HOA, and can potentially impose similar rental restrictions. These restrictions are becoming even more common with the advent of companies like Airbnb which allow for people to find short-term renters.

An example of these restrictions can be found in the Daybreak Community located in South Jordan Utah. This master-planned community contains 1,000’s of homes of all types and of course comes with its own HOA. In order to control the rental units within the community they have implemented a number of restrictions, for example:

• A property must be owner occupied for 12 consecutive months before it can be rented.
• The minimum rental period is 30 consecutive days (obviously aimed at restricting Airbnb type rentals).
• You can only rent the entire property, you cannot rent a single room or group of rooms (unless you have an approved mother in law unit).
• Once you have owned and occupied the property for 12 months you can buy 1 additional property for rental purposes which can be immediately rented.
• You cannot rent more than 1 property.

As you can see these rules can be pretty extensive and restrictive, so it’s very important that you check with the HOA to ensure what you are planning to do does not conflict with its requirements.