Home Selling in 07020>Question Details

Gcsk, Both Buyer and Seller in Chicago, IL

If you rent out your condo, does it decrease your home's value?

Asked by Gcsk, Chicago, IL Wed Apr 15, 2009

Also, if many units in a condo building (e.g. 50%) are rented out to tenants by the homeowners, does that decrease the value of other units in the building where the homeowners actually reside in their units?

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If the majority of owners in any condominium rent out their units, you will have difficulty to sell since banks will refuse to loan money to any purchaser. A healthy condominium should keep a ratio of 70%+ owner occupied units. I had a few deals falling apart because banks refused to loan money when the ratio of renters was too high.
1 vote Thank Flag Link Sat Dec 10, 2011
Gcsk your question is very good. I can't say that the value is going to decrease because the unit is rented out, but if more than 50% of the building is NON OWNER OCCUPPIED (NOO)it may be very difficult, even impossible for a buyer or an owner to get a mortgage loan. Fifty (50%) percent of all loans for purchases are FHA and that percentage is higher for condos (Speculation defaults by investors has Fannie & Freddie shying away from condos)and unless the complex is FHA approved, it won't pass a spot approval with a 50% non owner occupancy rate.
So it may be assumed that a condo complex with a high rental rate (NOO) may end up decreasing in value becuase mortgage loans for the complax may be difficult to come by.
1 vote Thank Flag Link Wed Apr 15, 2009
Not at first. It really depends on the tenant and if they can care for it. As far as condos that are 50% tenent occupied there certainly is a devaluing of value. It also may be dificult for an owner occupant to recieve a mortgage because of it's status with many mortgage guidelines that will not fnance a condo complex that is more than 20% investor owned.
0 votes Thank Flag Link Wed Apr 15, 2009
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