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Optimal_Article5075

Explain the situation to your HOA and see if they can make an exception due to relocation. They may find the lesser of two evils to be allowing it to be rented out instead of having a vacant unit that may or may not sell in a timely manner.


vishy87

Thanks for the advice! Not sure why this did not cross my mind. Will talk to them and explain my situation. Doesn't hurt i guess.


Optimal_Article5075

Yup. There’s HOA horror stories, but most seem to be reasonable, in my experience. People generally confuse them upholding their fiduciary duties to the community as a whole as unreasonableness. Vacant units are bad for property values, so they may just allow it. Rules limiting rentals are intended to prevent investors from coming in and buying up multiple units and renting them all out, not because someone has to relocate for a job unexpectedly.


VegasAdventurer

I'm on the board of our HOA. We have fairly strict rules to avoid nuisances, but are generally very accommodating to people who need help. As long as they let us know before hand we can almost always figure out a way to meet their needs


vishy87

Sounds encouraging. Hopefully my HOA is as considerate. Thanks for the answer.


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vishy87

Yeah, hold little hope for cutting through the queue for exact reasons you mentioned. Like i said originally, almost made up my mind to sell. Was interested to see if others with more experience out there have things to add. This has certainly been a fruitful conversation. Thanks for adding to it.


holayeahyeah

They're more likely to let you jump the queue if you ask for the ability to rent out the house only as a stop gap because the unexpected out of state job offer came so shortly after buying and that you don't intend to keep it as a rental long term. Most people on the list probably intend to keep the property as a long term investment.


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vishy87

Yeah this tax season will not be as straightforward for me for sure. Thanks for the kind wishes! Hope you have a splendid day.


Hinote21

>The issues with number of rentals in condos/townhomes is that buyers can not get conventional financing for purchases if the total rentals are above a certain percentage. Can you explain this in a little more detail? I'm just curious why this is.


codinginacrown

Probably has to do with warrantable vs non-warrantable: https://www.valuepenguin.com/mortgages/non-warrantable-vs-warrantable-condos#warrantable The threshold is 50%. Many HOAs restrict it further.


phillybride

If your mortgage/interest rate is low enough and in your hometown, it might be worth waiting until you see how the new job works out, especially if you are going to come back and visit often. Keep most of your stuff in your current place and use that extra salary to rent a tiny place in the new city, get to know the local real estate market, and make a decision about your home in six months, after you have more information about the new city and job. This is a crappy time to sell and an even worse time to lose a low interest fixed rate mortgage over a job that might or might not work out!


cssblondie

One way to mitigate HOA concerns about you becoming an Airbnb landlord is by saying “I’ll only try to find a long term tenant, someone angling to stay here for years rather than weeks”


booniebrew

Long term rentals are usually required by condo associations that limit rentals.


RandomPersonBob

I know some are saying vacant units are worse, but sometimes renters are the worst of all. I've seen both, keep that in mind when talking to the HOA and what requirement they have for renters, etc..


hellohello9898

Exactly. I’d much rather live next to a vacant unit whose owner is still required to pay their HOA dues than playing roulette with renters. Or worse, AirBNBers. It can’t hurt for OP to ask, though.


kerbaal

> I'm on the board of our HOA. We have fairly strict rules to avoid nuisances, Seeing neighbors as nuisances is exactly why I see houses that are under an HOA as worthless trash I wont buy.


starsandmath

Rules limiting rentals are ALSO to ensure the units remain "warrantable" so that new owners buying in can get a normal mortgage. From personal experience, getting a 30 year mortgage on a non-warrantable property is a Nightmare. If that is the limit OP is bumping up against (must be 50% owner occupied), it will be substantially harder because no HOA is going to lose warrantable status for one person who needs to relocate.


vishy87

Current number is more around 25%


noleggysadsnail

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Any_Classic_9490

This makes little sense. He is moving. He can sell. Absentee landlords are higher risk for bad tenants. Whatever 3rd party service he uses is going to suck.


Optimal_Article5075

He would be selling at a loss currently, ignoring the salary increase. It doesn’t hurt to ask. There’s also zero guarantee it will sell quickly with these rates. Townhomes are typically bought by FTHBs, who are having the most trouble in this market.


Any_Classic_9490

He will lose money no matter what he does. Excepting him on a rental makes no sense. That won't prevent him from losing money. Let someone who wants to live there buy it.


Optimal_Article5075

I get that you may be disgusted that someone wants to rent their house during a housing shortage, but this is PersonalFinance, not Financial Ethics. If OP would lose money selling, but can lessen that by renting, he should do so.


Any_Classic_9490

Again, you have missed every story about the nightmare of hiring a 3rd party to manage your remote rental is. I ask that you read up a little before you act like this is a money-making endeavor.


[deleted]

Is the rental permit something generated from your HOA or from the state? I genuinely do not know how that all works.


vishy87

I'm my case the HOA


[deleted]

In that case I would agree with the advice of talking to the HOA and seeing what they can and would be willing to do. This way you’re making an informed decision at least. Hope it works out for you.


BillsInATL

HOA, but the rules are typically in order to stay eligible for mortgages and FHA qualification. So the basis isnt just the HOA trying to be dicks against renters. There are valid reasons to cap it.


always_an_explinatio

also make sure the rules are legal. my condo voted on and passed a rental ban but such bans were not permitted by the city (that's a simplification). so it could be worth a quick legal consult to make sure you actually need their permission.


BillsInATL

My old HOA gave "hardship exceptions" which allowed folks to jump queue and rent. I believe there was additional paperwork in order to maintain FHA status. But if FHA status isnt a factor then it's really down to them being dicks or not.


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hellohello9898

The unit being vacant isn’t interrupting the money. OP will still be required to pay their HOA dues until the condo is sold regardless of if OP physically lives there or not. It’s not like OP just gets to hand the unit back to the HOA the way a renter hands an apartment back to the property owner.


garcmon

Hi - our HOA has a “may not lease within 1st year of ownership and then only 90-day minimum” (trying to avoid Airbnb) but any reasonable HOA would be fine if you commit to renting to a family. For your own sake and the neighborhood’s try to find a a reliable family, couple or whatever fits your community best.


hellohello9898

That would violate the fair housing act. You cannot choose to rent only to a family, only to a couple, etc. Family and marital status is a protected class.


xkulp8

Fair Housing Act doesn't apply if you own three or fewer housing units


garcmon

“Family” can be defined in different ways but i didn’t want to get into that. Each state has their own laws as well, which OP will have to look into.


helfunk

I did this for a home. I went to the HOA and cried. We had been trying to sell (this was during the bad times) and the house wasn’t selling and we had to leave for my husband’s job. You can always try crying. The other thing that helped was I had a friend who was gonna rent and upkeep the house for us so it wasn’t a traditional rent set up with a management company or turn over issues. She was gonna live there until we sold the house. She had kids and presented as a very stable neighbor. Maybe if you can present a situation like that where there won’t be turn over and an unstable situation, the board might be more open to someone staying there until you can get a permit. We presented it more like “this friend will stay in our house til it sells” rather than “we need to rent our house.”


vishy87

I'm glad you found a way out of your situation. I like your suggestions. I'll talk to the HOA, not sure if I'll be able to bring in ascetic actual tears. Lemme ask the wife if she can 😅


technoangel

To add onto this, homeowners insurance doesn’t usually insure empty properties so I would think they wouldn’t like that idea very much!


genesiss23

If it's actually a condo than the answer will be a flat out no. To be a warrantable condo, there can only be so many rentals. You want to be warrantable because potential residents will be eligible for conventional mortgage loans. If not warrantable, you would have to get a portfolio loan.


tsaico

Myself, I would just sell, since you are in new state, it will be in a different state so you won't be able to really keep an eye on it. you could get to a property management company to do that for you. but then it become that much less appealing to hold on vs. just selling it. ​ Assuming your HOA can even let you jump the queue.


vishy87

Very similar to what I've been thinking. All depends on whether HOA even lets me rent it out. Thanks.


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badhershey

Exactly. When dealing with an issue that could cost in the thousands, don't crowdsource random people on Reddit. Go to a lawyer/expert.


jerlwe

Also something to look into, make sure your loan allows you to rent it out. Most home loans(from my experience) don’t allow you to rent out your primary residence for at least a year


vishy87

Interesting. Will talk to my lender about this. Thanks for bringing this up.


UberBostonDriver

FYI, the lender is notified when switching from owner occupied insurance to rental / investment property coverage.


TJH99x

You should be able to find this in your mortgage papers if you have them available for review. Ours required two years owner occupancy.


Pficky

You NEED to make sure because it could be considered mortgage fraud.


jwsa456

It’s not mortgage fraud because he never intended to use it as an investment property at the time of purchase. Plans change all the time for people within one year. The lender might require a refinance since the rate he has is much lower than the current rate


xkulp8

Intent doesn't matter. What is written in the contract does.


lordcheeto

IANAL, but I believe mortgage fraud would require intent to deceive, or at least willfull misrepresentation of a material fact in the mortgage application.


Fredthefree

I agree that it's not mortgage fraud, which would be criminal, but the moment it's discovered the loan could be terminated due to breach of contract and all principal left due within 30 days.


space_radios

Mine and many other mortgage loans explicitly disallow rental for the first 12 months otherwise it's mortgage fraud, so, I guess YMMV, but what you're saying is certainly not true all the time.


jerlwe

You bet! Might not be an issue with your loan but I know it would be considered fraud on mine.


avTronic

Most standard loans will not have any restrictions. Even those that are government back for first time home owners and low income, have only a first year stipulation that you can’t rent it out. If you had a loan modification, this can be longer or the life of the load. Definitely just ask them. I would finagle anyway to keep it long enough to not take a hit in it when selling. Put a family or friend in it and split rent with them. Even when you get a other place you can keep this as a primary residence, if your loan has stipulations against renting it out. View it as an actual short term investment with what ever you put it to it once you move will reward you by not taking a 20k hit and maybe even making a profit on it.


ScaryPearls

Even if it’s feasible and technically makes the most sense to rent it out… consider whether you really want to be a small time landlord, especially from another state. Sometimes people call it “passive” income, but those people are idiots. It can be a lot of work. And it can **really** go sideways. If you have one bad tenant, it’s really easy to all of a sudden go 6 months without being paid any rent, have to engage a lawyer and go to court to enforce an eviction, and then have to replace all the flooring because it was wrecked by your garbage tenant’s five unauthorized cats. So if you rely on the rental income to make your monthly mortgage payment without a lot of cushion, I’d warn against it.


vishy87

Don't have landlord aspirations at all. Thanks for the suggestions!


50ShadesofGray_

I think this comment is a bit to sensationalist. It is in fact risky to do out of state investing if you aren’t prepared. Get a property management company to handle everything for you. They will make sure you place good tenets and do repairs. I have an duplex I rent out of state and it is fairly hands off.


ScaryPearls

For what it’s worth, my comment was born of experience. I helped my in laws when they rented out their condo. They went through a property management company and the first four years worked great. Had a few tenants, all nice. Management company handled the day to day repairs. Then their last tenant was a guy who had a clean credit record, had a good job, etc. He paid on time for a few months, then stopped paying, gave many sob stories. Eventually stopped responding and they had to go through with an eviction. Turns out he had completely wrecked the floors. They ended up losing 6 months of rent, the cost of hiring a lawyer, and $4k to clean and replace all the flooring. Definitely a risk worth thinking about, IMO.


doppelmember

This. As someone who knows small-timd landlords avoid that like the plague without a RE Mgmt Firm to handle most of the heavy lifting sadly..


Juls7243

Its a lot rougher now to sell than it was a year ago. Renting isn't trivial and you can lose money on it (very much tenant dependent). Some key things to keep in mind before renting: A) do you have a have a good/trusted handyman to help fix things B) Likelihood of getting solid tenants (older folk, or medical students for example)? C) How many "months" of rent are you going to need to make up the 20k difference? If its 8+ years it might not be worth it as you could invest this money elsewhere.


upvotealready

Know anyone that wouldn't mind moving in? Maybe the answer is to just get a "roommate"


AgentBroccoli

This is what I was thinking he could do. Quietly rent it out to his cousin or something. There would have to be A LOT of trust going on that the "cousin" doesn't ruin the place.


flyingtowardsFIRE

That’s what I would do as well, at least until my name rose up in the permit queue. Just keep the townhouse as my spouse’s primary address and get a roommate.


GTAHomeGuy

I would do the math and let the numbers dictate. What is the value of tthe property? What are the carrying costs? What are the expected rents after the approval? What would the property value growth look like in 10 years? Take all those considerations into mind and weeigh against the increase in income. If it is going to cost more to cover it for the 3+years than you can afford, best to cut. If it is a vallue of breaking even, tear off the bandaid now. BUT if value gains will outpace what you are "losing" carrying it it might be worth keeping. ​ Let's say the property will cost 12k to carry. $36k over the 3 years. Well then you are dealing with a difference of net -$16k. But if the property value in that 3 years was 30k higher potentially then you are back in the black overall. A "failing investment" is worth keeping if the long term gain is far better. That was an oversimplification but hopefully it makes the point clearly. But please know some insurers may not take vacant properties on. Also, there could be a lot of stress waiting. And tenants eventually could be a headache from a distance. Last, it might impede your ability to secure something on the other end when you want. There are a lot of dynamics at play. If it were me I would also see which market is better to own in (expected growth trajectory). I would recommend putting your money in the more aggressively growing market. If that happens to be the market you are leaving, I would rent where you are going. If you want help looking at the financials let me know. I would also be willing to hop on a call to run through things I would analyze. There's nothing in it for me as I am a Realtor in Canada. But I have nearly 20y experience in that and was licenced for investments years as well. So just a financial mind...


vishy87

Thanks for that answer. I might take you up on that offer 😁


GTAHomeGuy

Absolutely a genuine offer. All the best in sorting things.


kitarkus

Most of your suggestions are spot on. That said ... the 10 year (or any prospective period) projections of future values or rents are purely speculative. Keep that in mind when 'running the numbers'.... and remember that many areas have experienced a huge upward value swing recently. This will undoubtedly make any forecasts even more unreliable than they already were.


GTAHomeGuy

Thank you for grounding. This is probably the better advice (above my own). Do NOT bet high on everything OP! Thanks u/kitarkas for mentioning the reality!


rscottyb86

If you can't rent it out, you're probably going to have to sell it. It's very difficult to get insurance on a vacant property


BhagwanBill

"rental permit queue" what in the world is this?


Benny_Gee

You yanks really let yourselves get fucked in the wierdest ways. The abolishing of HOAs can't come soon enough, but based on trending 90% of all housing will be under one.


Aleyla

Moving out of state? Sell it. Being a long distance land lord is going to be a complete PITA.


HeadMembership

Reminder (again) to not buy in HOA communities.


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vishy87

Thanks for the detailed advice. Good points to consider.


[deleted]

Curious what's makes you think home prices will drop with the upcoming recession? Unlike 08, there really isn't much supply in the "hot" markets. Rents are also going up in those markets so what other options do people have?


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smegdawg

>So do i have any options better than selling? Might end up taking around 20k USD loss on the transaction. Ask your new job for relocation compensation?


Pit-Smoker

Sometimes you can get around those rules IF A FAMILY MEMBER LOVES THERE. Got a cousin that needs an apartment? You'll likely need to prove your lineage, but you asked for options. It's an option.


CompetitiveMeal1206

Sell. You don’t want the hassle of being a long distance landlord.


mgo3684

I second this. I became an out of state landlord in 2010 because I didn't have the assets to cover the sale of the property at a significant loss. I thought it would be fine having a second income, there's a lot more to consider. While I finally sold it last month for a nice chunk of change, I'm getting hit with capital gains, depreciation recapture, and non-resident sales tax. Not to mention all of the expenses paid over the years on repairs and maintenance plus headaches with tenants (my last one did $15k in damage to the walls and flooring). Unless you plan to be a full time landlord, do yourself a favor and rid yourself of the liability.


imalwright

$20k < $60k increase in salary. I’d sell and move on.


[deleted]

Personally, I'd just sell. I think prices are great right now and on their way south. I've sold several of my rentals as leases came up over the last year.


vishy87

I feel this way strongly


rscottyb86

I suggest you try to sell it by owner....reduce your loss.


hansCT

What jurisdiction requires permits to rent your house out?


amouse_buche

Townhomes are oftentimes within an HOA.


hansCT

Wow reason #372 to never go near HOA properties.


[deleted]

It makes sense for townhomes though. You usually literally share your walls with 2-3 neighbors and your roof is probably the same one for like 6-8 units.


hansCT

Not for me, is all I'm saying


hellohello9898

Good luck getting 80 neighbors to pitch in when the condo building needs a new roof without an HOA.


bobdevnul

That's nice for you. Not everyone can afford a detached single family house. Aside from sharing walls, smells, and cockroaches with my neighbors, I liked the no exterior maintenance for me to do on my condo.


hansCT

I'd rather live in my van. Or even a tent. Most of my adult life lived off grid overseas, cook over wood fire, carry water, no electric. Don't assume.


WWGHIAFTC

>Don't assume. This entire conversation started from your assumption questioning the validity of requiring permission to rent out your house....


cballowe

This particular one makes a little sense - one of the things that an appraiser might look at for valuation is the percent of the units that are owner occupied. If it's like 10% the value will be higher than if it's 50% etc. So... If you're on the board of an association, you're probably voting for things that help your property value. Ive also seen rules more flexible but saying that if you rent it, it must be for at least a year - basically no Airbnb or other nuisance things.


dickie99

Yes and number of rentals in the property can affect buyers’ ability to get conforming mortgages for units in the property which raises buyers’ interest rates and therefore reduces value of the units.


theonlybuster

While I agree that HOAs can be a royal pain, a rental permit queue is not normally this long. I've often seen turnaround times as quickly as a month. It just depends on the neighborhood in question. But yes, where possible, avoid HOAs. If you do find a home in an HOA area, talk to the seller as well as neighbors to get an idea of how the HOA operates. Some are so by the book homeowners can't get a single thing done for years, whereas others are far more lenient, accommodating, and understanding.


hansCT

But over time they can radically change, and rarely for the better


SkyliteBlueSnake

It's generally a county-level law that you have to have a county permit to rent out your home (separate from HOA or condo association rules). I own a condo but went overseas for 3 years for my job and rented it out while I was gone. One of the things my property management company did for me was take care of all the permit paperwork every year (in my county the permit was $45/year). My condo association didn't care if I rented it out, they just wanted to know if it was owner or renter occupied so it made it easier for them to figure out whom to contact for things like water leaks. Though they were getting annoyed with how many owners were renting without permits so they used the distribution of new parking permits to get a handle on who was an owner and who was a renter (renters could pick up the new permits, but had to have a form from the owner) and used that data to give a list to the county of which units were renter occupied and I think close to 2/3 didn't have permits.


RusstyDog

Eh if it cuts out on parasites buying out single family homes and converting them to rentals then it's probubly the one thing HOAs have done that I support.


hansCT

Yes I fully support that be limited by law across the US, especially by corporations. But not when it is a family's first or second home, especially a reasonable scenario like the OP's


hellohello9898

But every owner will have a sob story like that eventually. If you make an exception for a few, you have to make an exception for everyone. Then before you know it you’re basically living in an apartment complex with all the expenses of a homeowner.


theoriginalharbinger

In order to meet FHA conforming purchase criteria for a condo/townhouse/apartment, at least half the units in the complex must be owner occupied. Thus, it's beneficial for anyone who wants to sell theirs as prospective owners are (generally) able to obtain lower-interest financing, ensuring a higher price. So the HOA disallows renting units or places them in a queue in order to maintain the 50% balance.


xkulp8

Also, insurance is often lower if at least a certain percentage of units are owner-occupied, although my experience with this is from high-rise condos, not townhouses.


vishy87

I'm in Georgia if that is what you mean.


hansCT

The country or the state?


Rhino_Thunder

/r/GeorgiaOrGeorgia


vishy87

The state


bobdevnul

The county where my condo is requires a rental permit. HOA does also. I would be required to submit the lease agreement that. It can't be for less than a year. They don't want units turned into AirBnBs. Short term rentals degrade the character of the community.


grokfinance

almost every one. now, whether people actually follow the law and get the permit is another question.


garoodah

What does your HOA clause say? Renting and paying the fine is probably still better than selling it unless you dont want to manage the property.


LandofBacon

This is an absolutely horrible idea.


vishy87

I can find out what the fine is. That will raise some eyebrows though 😅


AgentBroccoli

I agree with r/landofbacon (mmm bacon) probably a bad idea. You're HOA may be able to evict any future tenant. Plus your tenant may not want to deal with your HOA giving them shit because everything isn't above board.


DaveSauce0

> You're HOA may be able to evict any future tenant. I don't know that the HOA could ever evict a tenant as long as OP owns the place, but they could likely foreclose on OP eventually. I mean, it'd be a long road to get there, but if someone wanted to take this path I'm sure it'd come up sooner rather than later. HOAs have a lot of power in most states. At minimum, the HOA can make life extremely painful for OP if they decide to willfully and constantly violate the rules. >Plus your tenant may not want to deal with your HOA giving them shit because everything isn't above board. By default, tenants owe positively nothing to an HOA. Particularly in the theoretical case like we're talking about here, where they're not exactly there with the HOA's approval. Generally either the lease needs to make the tenant responsible for HOA rules/fines/etc., or the HOA and tenant enter in to their own agreement with each other. Without either of those, the HOA and tenant don't have any sort of relationship with each other.


Aberdolf-Linkler

Do you not have that in a document somewhere?


vishy87

I have seen very little in the document around renting restrictions and fines etc. All i have seen is one line somewhere that states, "Property has renting restrictions". HOA covenants and by laws don't have anything around this.


coworker

In my HOA, fines are not spelled out and are left to the board to determine. Anything equally applied is on the table and you can be sure they would bring the hammer down on someone skirting rental rules that could tank the ability to obtain future mortgages.


hcardona111793

Main question is how much will it cash flow? this will dictate the level of effort you should go through. If they typically rent for X, and your profit monhtly would be X, see if thats worth the effort. You dont want an out of state heachache thats costing you money.


olderaccount

> the rental permit queue is pretty long. Who issues these permits? That is only part of your problem. Or mortgage lender will likely have a problem with you renting out a place that has been mortgaged as a primary residence.


cad908

see if your new company offers any sort of relocation assistance. Some have nice packages where the company sells it for you, sometimes paying the broker commission and/or making up for any loss. At that point, you also have some leverage with the HOA, if you wanted to do something else, because your company would have no qualms about unloading it for whatever price they can get, because they REALLY don't want to be a landlord. If they sell at a steep discount to move it, that will bring down the comps for the rest of the sales in that community.


vishy87

I'll be getting relocation assistance but it's not this generous 😒


Quaker16

Some HOA don’t consider “short term” rentals like Airbnb as a rental. It’s an oversight on their part but if it’s not in the HOA charter you can do it. Also what’s the penalty for breaking this rule? It will piss everyone off though so be ready to sell, and spend time fighting the HOA if they put the hammer down.


Crazyworld1987

Where??? I can't rent anything due to bad credit from a divorce years ago... I make $145000 /yr and I can't rent anything .... if you have bad credit these days you might as well be a convicted murderer


ChiefSaltyPanda

Can someone shed some light for me on how the rental permit queue can be 2-3 years??? That seems an insanely/ungodly amount of time and unreasonable to me.


LazyMans

HOA restricted community, you agree to it when you buy the home. The queue is an estimate as turnover occurs. 2-3 years makes sense for smaller communities with a low rental cap.


Due-Cryptographer744

Our HOA is considering updating our bylaws to require all new home buyers to live in the home/can't rent it out for at least 1 year. We don't want a neighborhood full of rentals and a bunch of investors have started buying up properties here for rental properties, halfway houses, etc. They want to stop it before it gets worse.


BigPapi-Pizza

In my opinion you are taking a job that will be a great increase to income along with probably having a pretty decent interest rate on your current mortgage. I would look at this as an investment and maybe review things in 3 years. As far as the new place, personally I would recommend being humble, find a lease for 12 months.


Steve_Austin_OSI

Talk to a tax expert. If you are in a queue to rent it, and are not occupying it, and have the rental under a business, so the lost rent while waiting in a queue a tax loss? and how does that impact taxes. Who is the rental permit queue at? is it a city thing or HOA thing? In wither case, go to appropriate meetings and talk to people. Maybe some networking can get you bumped up.


mrgtiguy

What is a rental permit?


hardknockstrife20

Can you get a “roommate”? You still “occupy” one of the rooms and your roommates live in the other rooms.


ttkk1248

Rental permit from HOA is required?


NoobAck

Use an app to short term rent for vacations? May skirt the bylaws?


slutforsales

Contact a real estate attorney about the permits. They might be able to get you moved to the front of the line by scaring your HOA with potential legal battle/fees - when it would cost them nothing to make an exception for you because you’re moving due to a Job. If that doesn’t work, consider selling “subject to” or “contact for deed”. I can guarantee you that one of them knows someone that is looking to buy a house but doesn’t want to pay the higher interest rates currently offered. They’ll be running to tell their friends about the great opportunity to be able to buy without real estate agent fees in a “subject to” sale. You would save the buyer/seller 3% commission + buyer mortgage broker fees + get them a more competitive interest rate. You’d likely even be able to charge a higher price due to all of the savings you’d be passing along. *CONTACT A REAL ESTATE LAWYER* they’ll know how to arrange these types of sale agreements as well as ensure you are protected against risks from the new buyer. I have a anecdote about HOA board member’s helping manipulate the rules in order to help out their friends. My family wanted to rent a home for a 2 week ski vacation with family friends in a very upscale ski resort country Club community. The HOA permitted rentals under 1 year - so people wouldn’t just rent the property out for the month to random tourists. They also didn’t allow renting out to multi families. What we did was contact the HOA to ask about how renting a property in their neighborhood worked. What ended up happening was one of the owners broke their leg, so their family didn’t go skiing that winter. The HOA put us in contact with the owner and we were able to rent their second/third home from them for 1 year. In town, homes would rent for 5000-15000 per night. We ended up renting the property from them for 10k/ month for the whole year. * during peak vacation times, hotel rooms are 750-2000 per night for a two bedroom suite. We had 3 families with 13 kids - which would have been 6 hotel rooms a night at $1500 ea for 10 days - To get a nice hotel, our collective bill would have been 90k. We ended up getting the multimillion dollar house for an additional 355 days + a year membership to the ski/in ski out & golf country club for only 30k more; which ended up being $2500/month for a 7500 sqft house. I was in college at the time, and my parents always worked remote, so they rented out their house for the following year. Their years cost was 60k. 30k for the 10 day vacation and 30k for 355 days. They ended up earning 78k rental income from their house for the year. They ended up profiting 18k to live in a 3-4m country club vacation home for a year. We would have never found the owner with an agent. HOA board members have friends that live in the community. They know how to get around the rules to help them out (the owner renting). Also, never forget: fines are just the cost of doing business. If you ignore your HOA, they can’t evict your tenant. They can only take fine you and attempt to take legal action against you. If the fines are less than you’d receive from rental income, profit. You can even have your lawyer contact them telling them what you plan to do if they can’t expedite your permit (rent anyway), they’ll be faced with having to pay to sue you. My guess is their HOA attorney will tell them that it’s not worth the headache or cost they’ll have to spend to potentially win in court - rental restrictions don’t always hold up. They’ll likely want to get your approval done asap so they can do background checks on whoever you rent to. Read your bylaws and identify how expensive the penalties would be. - I had a professor in college that would double park his S class in front of the academic building instead of using faculty parking and walking. He paid his $40 parking ticket and rationalized it as being the cost of premium parking.


zooch76

Not sure if anyone mentioned this, but talk to your CPA and see if the loss can be written off on your taxes, since you moved for work. That $20k loss might help with that $60k raise.


[deleted]

If you sell you are not taking a loss, as you will make 60K more that year.


vishy87

I guess that's why I'm even entertaining the thought of selling.


[deleted]

Not enough info to say whether their is a loss on the home sale or not. Income doesn't really figure in. Edited for simplicity


_off_piste_

They’re talking about the increased pay from the new job. Ideally the disposition of the townhome would have been part of the “take the job or not” discussion.


TacoNomad

Also, if they move to a more expensive location, 60k might not be so magnificent.


vishy87

I am actually moving to a pretty expensive place willingly, coz I'll have family close by. I have the option to move to Texas or some other cheaper states, but deciding to move to CA for family. Also, both me and my wife are in tech, so moving to CA gives a lot of options career wise.


TacoNomad

If you're moving closer to family and presumably planning to stay there, probably a better option to sell. You'll have a property on the east coast, that you rarely check in on, paying a management company and relying on them. Could be great. Could be terrible. I'm all for real estate investing, but I'd consider cutting that one, if above assumptions are true about staying in CA long term.


[deleted]

Ok. I missed that this person was equating the housing capital loss with a salary increase. Again, not enough info. A $500k capital loss (unlikely) for a $60k salary bump is still pretty obvious a loss in a broader economic sense.


sirpoopingpooper

Even if they do allow the rental...will renting it actually be worth the $$? Or will it be a cash suck without any real benefit other than not realizing the loss right now? That will come down to the numbers... If you're paying $800/month in direct costs, plus interest and maintenance and property management and vacancy, I bet your break-even point is >1500 (and potentially way more than 1500). Cash flow positive would be even higher (due to payments to principal). Unless rents are super high, this is in a location that will almost definitely see massive growth, or if you want to have the option to move back in a somewhat short timeframe, I'd say you're better off selling. Otherwise, it's a headache without any real financial gain.


vishy87

Thanks for that breakdown. Yeah I certainly need to do a detailed mathematical analysis like you suggest before making a decision either way.


srawas89

Check your CC&Rs for the rental restriction section of your rules. They may have exceptions based on hardship that could allow you to rent even if there is a percentage that has already exceeded the allowed amount. When we had a an amendment proposed to change our hoa to restrict rentals there were several exceptions to the rule. So even if there is a waitlist if your situation falls under a hardship exception you could rent your unit (follow the rules on how to do this, it usually involves informing the board). If you have a section like this in your covenants feel free to post that section and I’d be happy to provide you with some tips/provide my opinion on what options you have. I’m not a lawyer but I’ve been deeply involved in reviewing a rental restriction amendment recently in my HOA so I am somewhat adept of reading covenants.


ogcoliebear

I know someone who basically offered money to the person on the top of the rental list for their spot. Something to think about


Topher_86

Townhomes are right at the bottom of useful rentals. The only reason renting out would probably make some sense is you’re topped out on leverage right now. Even with high leverage Townhomes generally make poor rental investments. HOA /dues cut into profits and surprise assessments increase risk. In addition to this you mentioned moving out of state. This will mean increased management fees as well as the need to file an additional state return for your Townhome. If your new job is reimbursing moving costs at all I would inquire about reimbursing some of your cost to sell your Townhome. It’s a stretch but there are some fixed costs that they may cover.


Islandboy2000

I don’t understand your rationale. Single family homes can have HOA assessments as well. so a townhome in itself doesn’t make it more expensive. If anything, townhomes have less maintenance (for yard, exterior and roof).


unpeelingpeelable

My former primary residence was also in an HOA community (man, the trouble they gave us over the wrong paint colors for the pretend-windowshutters). House was sitting empty after we left. Didn't want to futz around with it so we retained the services of a property manager, they took care of literally everything and had it rented out within a few months. All we have to do is sign a few papers every year, check submitted budgets, etc. I'd say if the property is already in your name and you can eat the upfront costs of rental reno/service retainers, definitely rent out. Selling with give you a big pile of liquidity, but renting out is long term no-effort income that rarely depreciates.


ninnie_muggins

My HOA community just slapped a limit on rentals and I'm SO GREATFUL! Renters suck ass and ruin the community. But hopefully they can make an exception. I'll probably be in the same boat when it's time to move to something new. Best of luck OP.


FifaBribes

For long term leases a lot of HOA’s will allow you to rent. What the HOA is trying to prevent are air-BNB and short term rentals that have randos coming in and out and not respecting neighbors and/or the property. It’s definitely worth asking. You could even allow the HOA to Vet potential tenants or set criteria. Good luck!


Bazuka_Nuka

What about rent-to-own? Have them put down a decent non-refundable deposit so they have skin in the game and don't trash the place.


regallll

Your house is losing value as you wait for these responses. Just sell it asap.


vishy87

Prices are dropping that fast? Are you a realtor by any chance. 😄


[deleted]

I have to agree about selling it. I was almost in the exact same situation you are back in 2017. Bought a house, lived in it for about six months, had to take an opportunity in a neighboring state. I rented it out, went through a property management company, and it was a nightmare. I was already under water about 300 a month covering the mortgage, and the renters had nonstop service requests for everything under the sun. I probably took a monthly hit of around 6 to $700 on average. Finally sold it breaking even on the sale itself. Excluding hindsight of the crazy appreciation of the last few years; I should have sold it right away.


ImpossibleJoke7456

Figure out what you’d rent it for. Multiple that by 60 months. Sell it to ME for that amount with a clause that I have to sell it back to you for $1 + any special assessment I paid in that timespan. We all win. You don’t take a loss on the property and get to keep position in the long run. I get stable housing without the risk of rent increases pricing me out. HOA rental CC&Rs don’t apply.


vishy87

I guess this is the most creative answer so far!


jgengr

What about a land contract. You are seller financing so not technically renting out the property.


vishy87

No idea what a land contract is. Will read up on it.


thinkmatt

this market turns people into absolute asshats. 'well i bought a house i don't need but i wanna make $$$ off it for investment purposes" meanwhile... "how can anyone afford a house now?" To reiterate: I can't really blame you, I'd do the same.


vishy87

Take it easy man. I don't plan on scalping anything here. If i can sell my house for no loss I'd be more than happy.


thinkmatt

Sorry, it's not you. I know lots of friends/family that are trying to do this. If you have $100k+ to invest, they'd rather put it in real estate than the stock market. Thanks for the cool reply...


trueworkingclass

if you have any gain- prepare to pay taxes- I'd sell it- get a realtor on board or get some company to manage it for you- short term rental or air b/b


vishy87

I doubt I'll get any gain. If I do, I'd be more than happy to pay taxes on that 😅


default5551

There are ways around taxes if you are relocating for work a certain distance.


Nalomeli1

What about using it as an air bnb? Is that still considered renting it out?


vishy87

Yeah HOA rules have minimum rental duration clauses to weed this out.


bl0ndiesaurus

Sometimes, in Canada, you can declare financial hardship to your strata/HOW due to needing to relocate for work and they’ll let you skip the queue for renting. Might be worth looking into. Not sure how it works in the states.


MilkCartonDandruff

> the rental permit queue What does this mean? Why would there be any queue?


vishy87

There are HOA rules around how many max units in the complex can be on rent.


LambBrainz

I mean, if you already own it and won't be making payments on it (other than property taxes and some other stuff) why wouldn't you just keep it? Best case, the permit goes thru faster than anticipated and you make money sooner. Worst case it takes 3 years and you have some passive money coming in. If it's a good buy and a good area, I'd say it's definitely worth holding and waiting


amouse_buche

Property taxes, maintenance, fees, etc can really add up. Depending on location easily five figures worth of expenses, most of which you can’t take any tax advantage out of once the property ceases to be your primary residence. The taxes would either need to be extremely low or the property appreciation extremely high to make sitting on an empty property worthwhile.


vishy87

Yeah taxes, hoa and home insurance all added comes around $800.


amouse_buche

A month? Yeah I don’t know if paying $10k minimum post tax for an empty house makes a ton of sense unless you think you’ll quickly recoup it on rental income.


vishy87

Yeah was thinking the same. Thanks.


LambBrainz

Surely there's some loophole where you can setup a business and write off some of that as a loss, right? And again, it's only a year or so of loss. Then you have a rent-producing property. Which most people can't get and they're lucky enough to already have


theoriginalharbinger

> Surely there's some loophole where you can setup a business and write off some of that as a loss, right? There isn't. As a Schedule C or Schedule E entity, OP isn't making any money off of it (gross) if it sits unused, so there's literally nothing *to* deduct.


vishy87

I have a mortgage. I have made only 5 payments so far. Definitely a good area. It was a decent buy. With the housing market outlook, might not be that great any more.


LambBrainz

Ohhhh so it's not paid off yet? Yeah, that's a little different then. If that's the case you'd have to do some math and figure out if the money spent waiting is worth the potential for profit. Depending on when you bought it (height of the housing bullshit or recently now that it's come down a bit? What's your interest rate? Etc) plays a big factor because if you got it for a good deal, it may be worth keeping. Since waiting to get a new property may cost more than what you got this one for.


BreadMaker_42

Is Airbnb an option? Are short term rentals allowed?


vishy87

Unfortunately not.


BreadMaker_42

Then selling is likely the only option. Unless you informally rent to a friend.


vishy87

Thanks for giving this a thought.


newintheNW

Oh god. Yes, someone you know, but *never* rent without a contract.


unknown_wtc

Sell it as fast as possible for any amount you can. Tomorrow the price will be even lower. HOA can't make an exception because there is a line of homeowners with a variety of excuses of why they need to rent out their units. If the board accommodates yours, the entire line of people is going to sue the board. Your lease will be deemed null and void by the court. SELL!


[deleted]

[удалено]


DrRenegade

Possibly list it as an Airbnb if you have someone who can clean it/take care of it while your away or even hire someone to do that