Homes owned by investors are probably more likely to go into foreclosure than owner-occupied homes. So your proposal may be good.

However restricting the buyer pool may keep your properties longer on the market and also beat down the prices. So this is a tough call here. You may be trying to create more headache here than it's worth it, as the investor-owners are surely going to fight this.

Hello Cornelius. I am wondering why such an amendment has been proposed. Have there been any problems with tenant occupied homes?
I have seen communities where there was a limit of total units that could be tenant occupied and I have seen self-imposed restrictions in larger planned developments that mandated not selling to investors.

In general, I think a blanket prohibition on selling to some who intends to rent could affect future value of the properties. Lets put it this way, I did not see that the properties that were part of communities with restrictions on # of tenant occupation did not enhance the value. I don't know if the days on the market was longer than average or if the homes were worth less. I just think that the pool of potential buyers was smaller.
Does the proposal mention anything about what happens when some purchases and moves in, but then later the need to rent out arises? Would that be permitted?

I think the current proposal primarily would serve the needs of a few home owners who may have had issues with tenants. Other than that, I can't see any true benefit to imposing such a restriction.

If the HOA restricts selling to invertors or restricting existing owners from renting their property you are narrowing you selection of buyers when it is time to sell and can effect values.

Many Associations have conditions where the property owner needs to mainting the property in good condition. I am not sure if this is a condo complex or a neighborhood with an association.

I live in single family home that is part of the association and we keep a pretty tight enforcement on the exterior of properties (yard and house).

Cornelius,
I am sure the re ason the HOA wants to apply this restriction is because they feel renters don't keep property up as well as homeowners. This can be a valid point. They may fear their property values will decline if they have a lot of renters. Maybe in lieu of restricting rental property, they could demand that the upkeep of the property be a priority. You may want to engage in a discussion of this type before the vote!

Take a step back and let's look at what your HOA is doing. Let's not assume that your HOA has no idea what they are doing as in a previous answer and assume that if passed, there would be no problems defending it. This type of restriction is common, FYI.

You are limiting your buyer pool (as in another answer) a buyer pool who typically buys homes that are under market and then rents it, leases it, or sells again.

I think if you look statistically at the neighborhoods that prohibit this and neighborhoods that don't, on average the numbers favor restricting the investors. Depending on the size of the neighborhood you might suggest restricting investor owners to only a handful of homes.

Investors are good for Realtors and real estate as they keep transactions going. I for one would not want an investor to buy the home next door.

There are situations, and every good Realtor knows one, where there are great investors that look out for the neighborhood and screen their clients. However, stereotypes come from somewhere, and there are very few GOOD RENTERS out there.

To make it simple for you, if you want to know how to vote answer these questions:

1. Would you care if your neighbors (adjacent) rented out their home?
2. Would you want the option in the future to sell your home at a deep discount to someone that you knew would rent out the home later?
3. If a renter does something detrimental to the neighborhood, would that hurt your chances of selling your home - i.e Lack of maintenance? You're in Auburn, so I doubt you're in a community with a maintenance company that does EVERYONE's Property.

What are the effects? Longer Average Market Time and Moderate Increase in Average Sales Price.

Hi Cornelius:
This is a tough call. Restricting the residents in such a manner could have a negative impact on sales - most especially in the sense that no one can predict the future.

One scenario for you: You have lived in your home for two years now. You must move because you have a new job on the other side of the state. You must sell.... the market is soft & you can't afford two mortgages - what do you do in the interim?

So many homeowners are opting to "rent" or lease purchase their homes in order to alleviate the monetary burden of two mortgages. A restriction of this sort would hurt anyone in this position.

There are valid reasons a Resident run HOA would go to this extreme; but there are some that would actually violate basic housing non-discrimination laws.

Be sure that whomever is behind this movement understands that even if you incorporate something like this - if it is challenged in court - will it stand & what financial impact will it have on your HOA?

Remember - residents must pay all fees and liabilities acquired by the HOA as a whole.

I would really move slowly on this and know what exactly you are "restricting".

I wouldn't put any restrictions on your buyer pool. It could come back to hurt you someday. Suppose you want to move, but can't sell. You might be able to move on, if you could rent out your unit to pay your mortgage. If you are in a resort area, you have prime real estate for investors who may want to rent until they can retire there.
Putting that restriction and removing investors from your perspective buyers will definately have an effect on future home selling as you are removing a portion of buyers from your market. As far as what that would do for values? that's hard to say.
If your HOA is concerned about owners renting, there are other ways around it. You could limit the number of time a year a person can rent their unit, thereby prohibiting weekly rentals or monthly rentals. You could restrict to seasonal rentals, perhaps 2X/year. That would eliminate transient tenants. You could also require board approval for all leases and stipulate they be presented with credit check and/or background check for all potential tenants.
As I myself am an investor, I find the more restrictions, the less likely I am to purchase in the Association. Email me through my website, if you'd like to contact me to discuss this further.