The downside of making your condos available for rent
Does your condo feel like an apartment with more rules?
One of the most attractive parts of owning a condominium is to be able to be a homeowner and work with your neighbors to split the costs of home expenses. It can be overwhelmingly hard to be dumped with the full cost of plumbing repairs, roof repairs, tuckpointing, extermination, power washing, maintenance, gardening, laundry appliance repairs and so forth. In a single-family home, you’re the only one using it so the wear and tear may be considerably lower. But when it does fail, it’s solely on you to make those adjustments.
For some people, investing in a condo is a way to make supplemental income. Buy enough units to get a steady stream of income in, and that renter can pay off your mortgage if (s)he stays there long enough. With a really good tenant who wants to be there for the long haul, you may get to the point of paying off the mortgage and now this tenant is covering condo assessments. Still, repairs will be needed, and who can predict when a special assessment will come up? Life happens.
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However, not every condo unit owner is invested in the property. Just as there are slum apartment landlords, there can be disengaged condo landlords, too. They more often than not have no interest in being condo board members. They couldn’t care less about Rules and Regulations or the condo bylaws. They ignore the phone calls about repairs, are dismissive of board regulations (ex. pet policies), and barely pay attention to tenant complaints but always want their money on time. It happens. Condo unit owners who don’t live in the building have an easier time doing this than those who are a doorbell’s reach away.
Recommended Read: “Homegrown podcast: Meet Karla Thomas, Managing Broker of Urb & Burb ~ Step 2 to homeownership: Find a real estate agent who understands your taste”
While a condo board can terminate the agreement with a property manager who doesn’t do the job, a condo association cannot just immediately separate from a condo owner. The process of separation from a condo owner is even more involved than tenant evictions. (And during COVID-19, sheriffs in some cities and states put a freeze on tenants who hadn’t paid rent in months! Meanwhile mortgage companies still want their money from property owners.)
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So when a condo unit owner sells his or her unit and a new one wants to purchase it, there’s a reason that the condo board must meet to decide whether they want to exercise the right of first refusal. There’s also a reason that some bylaws have a 30-day waiting period so that other unit owners can first purchase the unit before it’s released to the public for potential purchase. Condo owners already know who they’re dealing with when it comes to their current set of owners. Who knows who will move into the building next?