How to Crash Property Values in an HOA!

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……..

Ward Lucas
Author of
Neighbors At War: The Creepy Case Against Your Homeowners Association

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About

Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

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