How does the number of rental properties in a gated community affect the value of homes for sale?

Asked by Tom Hill, Edmond, OK Sun Jul 8, 2012

Is there a percentage of homes that are rentals that if exceeded will negatively impact home values?

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Josh Barnett, Agent, Chandler, OK
Mon Jul 9, 2012

Yes/no and yes/no. As with everything Real Estate there are two, three,.... different sides to a question and especially not a direct, 100%, spot on answer to any questions because the variables are too great.

More questions to think on:
1. Are the rented homes being properly maintained and well cared for by the current tenants?
2. Are the current tenants in a lease purchase or rent-to-own situation?
3. Do you see the neighborhood renter to owner ratio going higher in the future?

Short answer: If the properties are not being properly maintain and the rent-to-own ratio will continue to increase, adding more no caring tenants, this could cause property values to drop.

Long answer: Is there planned expansion of a major employer that will increase the demand for housing in that neighborhood, thereby raising rents and creating a higher value in the neighborhood?

I know this is a lot to think about, but there is no direct answer when it comes to Real Estate. These are some thoughts to kick around when analyzing neighborhoods.

Josh Barnett, Realtor
Metro First Realty
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Bill Hayden, Agent, Edmond, OK
Sun Jul 8, 2012
Hi Tomhill,

In gated Condominium communities if the ratio of leased units to own reaches a certain level the community loses its eligibility for FHA and VA financing and this does impact sales in the community, especially with first time buyers.

As a Realtor performing CMA’s we do not know which homes are leased or owned. We establish our value based upon the homes’ similar and historical comparables in the addition or macro area. This also applies to the performance of appraisals. In addition, all sales statistics do not differentiate between leased and owned homes.

There has and continues to be conflicting views on the question you’re asking. I went to my favorite source Google and searched your question. There are ten plus pages of different articles on this subject.
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John Phillips, , Oklahoma City, OK
Sun Jul 8, 2012
Hi Tom:
Wally Kerr is absolutely right a about rental properties in a neighbor hood. If you are looking to sell your home I will be glad to pull comps and do a good CMA for you.

Thank You
John Phillips
0 votes
Wally Kerr R…, Agent, Edmond, OK
Sun Jul 8, 2012
I think the number of rentals would have to be NUMEROUS on a particular street to negatively impact values. Homeowners associations generally do a good job disseminating information and informing renters about "how things are done in their neighborhood.".
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