Bought a condo with an HOA that doesn't allow STRs. What do I do?

Question

Hi everyone,

I recently purchased the B unit of a two-unit condo association and it has a main house and a separate garage apartment. My plan was to cover most of the mortgage through Airbnbing out the garage apartment since it does not have a kitchen, but come to find out as I am closing there are restrictions on STRs in the HOA. The seller's agent communicated to my agent verbally that there would be no restrictions on short term rentals and that there was also not an HOA. They also did not include this in the MLS listing, but it was included in one of the seller's disclosure notices. I believe this is on myself and my realtor for not thoroughly reading the details before I signed everything, however I am wondering if there is anything that I can do. I have already talked to the owners of the front unit and they are ok with long-term renting, but not short-term. This puts me in a bit of a bind since there is no kitchen to the garage apartment unit, making it hard to rent long-term. I am considering putting a kitchen in the garage apartment, but need to know who to speak to if this is even allowed or not.

Any and all advice or resources for me to reach out to would be greatly appreciated!

Thanks,

Daniel

Joe Splitrock · Answer

@Daniel Tisdale get a current copy of the HOA agreement and read the exact wording before you do anything. It should define specifically what type of renting is allowed. It may say something like stays over 30 days, which would give you the option to do monthly furnished rentals. Traveling nurses, professors or business professionals sometimes have 30-90 day type assignments and they want something more than a hotel. You also want to make sure that there is any limitation at all. You may have been told one thing, but it isn't in writing in the bylaws. I was told my neighborhood had covenants and even given a list, but come to find out it was not filed with the city so it is non binding.

Marian Smith · Answer

@Daniel Tisdale  You are a two member condo association!  What is unit one going to do? Fine you?  Are they the only "board" members?  Shouldn't unit 2 have a seat on the board?  Shouldn't unit 2 be able to make a motion and vote on, say, no fines over 25 cents.  Come on.  The two member condos were just formed to sell two dwellings on one lot and maybe share one water meter.  why does 2 have a garage apartment with no kitchen if not for str?  it sort of implies str usage.  how can #1 prove you are str and not letting brand new friends stay and give you a housewarming cash gift?  Please!

Nina Hayden · Answer

So sorry!  Sloppy agents on both sides wanting to make that quick sell. Not much you can do.  In order for you to add that kitchen you’re going to need to get solid contractors and you will certainly need city permits.  Terrible how something like HOA was easily  missed.

Account Closed · Answer

Sell the property and try to break even. For the last three properties I sold they were selling in one day and buyers were offering $20k to $50k more than my asking price

I sold all my homes in Las Vegas and one of the reasons I sold was because the HOA's were driving me crazy with their monthly fees, complaints and fines.

If you are into Bnb then sell, but it seems like a high percent if cities are banning them, or putting restrictions on them to make operating them difficult and expensive.

Stephen DeThample · Answer

@Daniel Tisdale

At this point you could move into the garage apartment and add a June Oven and a plug-in induction cook top.  The June oven is amazing and much cheaper than a remodel. The rent from the main unit will help pay your bills.

Best of luck 🍀

Kenneth McKeown · Answer

Oh gosh yes.. this is bad. And it’s not all on you - it’s really on the agent. Your agent. Your agent was well aware of what your intentions were and should have had your back covered completely.

Michael Bennett · Answer

Maybe you can just rent out both sides to a large or multi generational family.

Mel Hayes · Answer

@Daniel Tisdale Start looking for another property & 1031 exchange.

Joe Splitrock · Answer

If you are going to add a kitchen, also make sure the HOA agreement doesn't require them to approve the changes. An efficiency kitchen isn't very expensive, but the the stove and refrigerator put extra demands on the electrical panel. You will need to run new circuits for both. I suspect renting an efficiency unit could still make you good money.

Consider joining the HOA board if you have the opportunity. You can influence from within. Be careful because HOA have been known to change the rules, so 6 month lease could turn into 12 month or even not allowing rentals at all.

I personally would never buy with an HOA, because they are often horrible to deal with. Usually staffed by older people with nothing better to do than make your life miserable. They are also known to mismanage money, which can result in huge assessments for common area improvements. Don't sweat it too much, make the best of it and if it becomes problematic in the future, sell the property and move on.

Bill B. · Answer

If it’s anything like Las Vegas they had to give you the HOA dox and 3 days to peruse them. Then you have to sign a document saying there is an HOA, you’ve seen the paperwork including financials and CC&R’s, and you know the use of your property may be limited. I would talk to a Texas realtor and find out if they have the same rules.

Bought a condo with an HOA that doesn't allow STRs. What do I do?

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