What if your HOA suddenly passed a rule that no member could ever convert his home to a rental?
Homeowners rent out their homes for many legitimate reasons: to stall for time until sales values go back up; to bring in some money while Dad’s is relocating to a job out of state. Some parents invest in homes near a college so a child can decrease living expenses by taking in a roommate.
Poorly maintained rental property certainly brings down values of nearby homes. But well-maintained rentals harm no one.
So, what’s the harm in outlawing non-owner occupancies?
We may soon find out.
The City of West Saint Paul has passed an ordinance that says no more than ten percent of the homes on a block may be used as rental property. It was adopted because of fears that banks would convert foreclosed homes to rentals instead of selling them.
Several questions come to mind: what protects neighborhood values more, a number of well-maintained rentals? or waves of foreclosed homes sitting empty waiting for an economic turnaround that may never come? And another: if you knew you were buying a house you could never convert to a rental under any circumstances, would that raise it’s value? or would you be tempted to low-ball the seller? And wouldn’t your low-ball purchase bring down ‘comps’ on all other nearby houses?
And a final question: would lenders be more or less eager to lend money to a borrower who might have to default because he could never rent out his home in a future emergency?
West Saint Paul, Winona, and any other cities with such bans, you haven’t just shot yourself in the foot. You’ve shot, re-loaded, shot, re-loaded, shot, re-loaded……..