All Forum Posts by: Sarah Schwab

Who knows about the laws and rules regarding the # of units within a condo that are allowed to be rentals vs. owner-occupied? My understanding is that HOAs typically require at least 50% of units to be owner-occupied. But where does that number come from? - building insurance requirements? banking requirements? I see that the "Housing Opportunity Through Modernization Act of 2016" changed the FHA rules regarding condo financing and reduced the owner-occupied threshold from 50% to 35%. Is this where the 50% originated?

We own in a small building of only 7 units. So currently only 3 can be rented, but a 4th owner would like to rent out his unit so I'm trying to understand all these rules and laws to see if we can collectively change our HOA rules accordingly. The building was built in the 50s. Thanks in advance!

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Who knows about the laws and rules regarding the # of units within a condo that are allowed to be rentals vs. owner-occupied? My understanding is that HOAs typically require at least 50% of units to be owner-occupied. But where does that number come from? - building insurance requirements? banking requirements? I see that the "Housing Opportunity Through Modernization Act of 2016" changed the FHA rules regarding condo financing and reduced the owner-occupied threshold from 50% to 35%. Is this where the 50% originated?

We own in a small building of only 7 units. So currently only 3 can be rented, but a 4th owner would like to rent out his unit so I'm trying to understand all these rules and laws to see if we can collectively change our HOA rules accordingly. The building was built in the 50s. Thanks in advance!

Thanks, Rick and Alecia. I agree. Just wanted to make sure I wasn't missing something. 

Hello all,

Total newbie investor here, looking for some advice. My wife and I would like to purchase our first investment property. Our experience is just our previous 2 owner-occupied SFRs. We're currently living in that 2nd SFR, which is in LA, CA.
 
We thought Long Beach, CA would be a good place to invest since it’s close, we like it there, and it’s less expensive than LA. But as I dig into the numbers, as far as I can tell, any investment would be negative cash flow initially, by about $200-500 monthly. The rents are shockingly low, at least compared to what I’m used to in LA. 

Our budget is anything up to 700ish and we have cash on hand to cover 20% down-payment as well as unexpected expenses. 
We could even subsidize negative cash-flow, but that seems anathema to me. 

We’re looking at both SFRs and condos with lower HOAs. The rental would most likely be long-term since the condo HOAs don’t allow STRs. We could potentially do an Airbnb in a small SFR, but I’m nervous about the time-commitment needed. We both have careers that are not very flexible time-wise. 

I understand that one of the strategies for turning a property to cash flow positive is to upgrade the property. But unless we do a total rehab, I can’t quite understand how that additional investment is always a good idea given the opportunity costs of what I could potentially do with that $ with other investments. If I invest $20k in property upgrades, how can I know how much my expected rent will increase? Even though we plan to keep this property long-term, it seems like it would be a very long time before that additional capital investment would be recouped. 

All advice and insights are greatly appreciated.