Rental condos

Rental condos are great, and can be found in moderately priced and luxury developments alike, in cities across the United States. But the percentage of rented condos in a particular development is an important piece of information to know for many people interested in buying condos there.

 One reason the percentage of owner-occupied condos in a complex is an important consideration for many condo buyers is that if they are looking for an FHA mortgage, the percentage will have a bearing on whether they will be approved for the loan or not. The FHA recently made a slight adjustment to its rules, permitting 50 percent of the condos to be owner-occupied, whereas the minimum used to be 51 percent. This was done in part to encourage ownership. More people are applying for FHA loans now because they only require 3.5 percent down payment, while banks and other lenders want a 10 percent down payment, which many people are unable to come up with.

But the issue remains a conundrum for many condo associations. So while the FHA is becoming more lenient, many condo associations want to reduce the allowable percentage of rental condos in their own buildings to as little as 25 percent, if they are allowed at all. Of course, any change in the condo laws have to be approved by a majority of owners, and if most of the owners are investors who don’t live in the complex, they might not go along with it.

If there are too many rental condos, owner-occupants in the building often feel like they are living in an apartment complex, and express concerns that others considering moving into the building might be hesitant to move in for the same reason.

 At the same time, having the ability to lease condos give owners more flexibility, if their job takes them out of the city and they are not ready to put the property up for sale. Also, many people like the idea of being able to rent a condo, rather than an apartment, because condos are usually larger and there are often more amenities in condo developments than in apartment complexes. Many also sign rent-to-own contracts, so they will eventually become owners.

So the two sides have come to some sort of “happy medium” regarding the issue of  rental condos, because while some condo owners would rather not have any rented units in the complex, feeling that renters do not have as much invested in, others point out that having units rented is definitely better than having them empty.

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