Does this complex require owner occupancy or can I buy the unit and rent it?

Asked by David, Stokes, NC Mon Jan 26, 2009

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Vinicius Bra…, Agent, Cupertino, CA
Mon Jan 26, 2009
Hi David,

I will have to answer your question in two parts, 1) the Home Owner's Association (HOA) regulations and 2) your lender's requirements for the Common Interest Development (CID) the condominium project.

There are no restrictions on this complex against home owners renting their units out. The only exception is that the owners are required to comply with the rules and regulations of the HOA and that usually require that owners notify the HOA that they are renting out their unit.

An HOA my decline your request based on the number of rentals in the complex. Reason being is part 2 of this answer the lender regulations.

Which brings me to the second part of the answer, the lender. Most lenders will require that the Common Interest Development (CID) maintain a ratio of at least 70% owner occupancy. When that ratio exceeds the number of renters, most lenders will no longer lend on those projects or will classify the loan differently than a conventional loan. This is regardless if you are buying the property as an investment or to live in.

So if you are interested in buying an investment property, you can make an offer subject to the approval of the loan and the HOA documents, which is typical for any buyer of a CID. You will have to make sure your loan is approved and that they are aware of the CID's occupancy ratio. As long as the ratio is well within the 70% owner occupancy rate you should have no problem getting permission to rent out your unit.

The truth of the matter is that many owners don't even notify their HOA's that they are leasing their units. This is not recommended since you are liable for your unit and any damage caused by any occupants.

If you have any other questinos about rents or property values in Santa Clara please give me a call. I have several rentals that I help my clients with in the area and am experience with investment/rental property transactions.

All condo complexes will have regulations requiring home owners to notify them in the event that the owner would like to rent the property.
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The Medford…, Agent, Fremont, CA
Mon Jan 26, 2009

You should be able to purchase and then rent out immediately. However, be advised that since this is a short sale, some banks are not willing to cooperate as much as if you were going to reside in the property. If you want to buy and rent, your best bet is to go with REOs.

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